Rich rewards often carry great risks, and so does a very volatile cryptocurrency market. Uncertainties in 2020 have led globally to increased interest from the masses and large institutional investors in cryptocurrency trading, a new-age asset class. Increased digitalisation, a flexible regulatory framework and the lifting of the Supreme Court ban on banks doing business with cryptocurrency-based companies have halted the investment of more than 10 million Indians last year. Several major global cryptocurrency exchanges are actively exploring the Indian cryptocurrency market, which shows a continuous increase in daily trading volume over the past year amid a sharp drop in prices as many investors looked to buy value. As the cryptocurrency craze continues, many new cryptocurrency exchanges have emerged in the country that enable buying, selling and trading by offering functionality through user-friendly applications. WazirX, India’s largest cryptocurrency trading platform, doubled its users from one million to two million between January and March 2021.
What drives the world’s largest crypto exchanges on the Indian market?
In 2019, the world’s largest cryptocurrency exchange by trading volume, Binance bought Indian trading platform WazirX. Another crypto start up, Coin DCX has secured an investment from Seychelles-based BitMEX and San Francisco-based Coinbase giant. Crypto and blockchain startups in India attracted investments of $ 99.7 million by June 15, 2021, for a total of about $ 95.4 million in 2020. In the last five years, global investment in the Indian crypto market has increased by an incredible 1487%.
Despite India’s vague policies, global investors are making big bets on the country’s digital coin ecosystem due to a number of factors such as
• Technologically savvy Indian population
The predominant population of 1.39 billion are young (average age between 28 and 29) and technically savvy. While the older generation still prefers to invest in gold, real estate, patents or stocks, the newer ones accept high-risk cryptocurrency exchanges because they are more flexible. India ranks 11th in the 2020 Chainalysis report on the list for global adoption of cryptocurrencies, showing excitement over cryptocurrencies among the Indian population. No less than the government’s friendly attitude towards cryptocurrencies or rumors swirling around cryptocurrencies can shake young people’s confidence in the digital coin market.
India offers the cheapest internet in the world, where one gigabyte of mobile data costs around $ 0.26, while the global average is $ 8.53. Thus, nearly half a billion users benefit from affordable internet access, which increases India’s potential to become one of the world’s largest crypto-economies. According to SimilarWeb, this country is the second largest source of web traffic to the peer-to-peer bitcoin trading platform, Paxful. While the mainstream economy is still struggling with the “pandemic effect”, cryptocurrency is gaining momentum in the country as it provides young generations with a new and fast way to make money.
It is safe to say that cryptocurrencies could become Indian millennials, which is gold for their parents!
• The rise of Fintech start-ups
The craze for cryptocurrencies has led to the emergence of multiple trading platforms such as WazirX, CoinSwitch, CoinDCX, ZebPay, Unocoin and many others. These cryptocurrency exchange platforms are highly secure, available on a variety of platforms and enable instant transactions, providing a friendly interface for crypto enthusiasts to buy, sell or trade digital assets indefinitely. Many of these platforms accept INR for purchases and trading fees of only 0.1% so simple, fast and secure platforms represent a lucrative opportunity for both first-time investors and local retailers.
WazirX is one of the leading cryptocurrency exchange platforms with more than 900,000 users, providing users with the possibility of equal transactions. CoinSwitch Kuber provides the best cryptocurrency exchange platform for Indians and is ideal for beginners as well as for those who work every day. Unocoin is one of the oldest cryptocurrency exchange platforms in India with over one million traders via mobile applications. CoinDCX provides users with more than 100 cryptocurrencies as an exchange option, and even provides investors with insurance to cover losses in the event of a security breach. So, global investors are looking at the multitude of cryptocurrency exchange platforms in India to take advantage of the emerging market.
• Mixed government response
A bill banning virtual currency that would criminalize anyone involved in the possession, issuance, mining, trading and transfer of cryptocurrencies could be passed in law. However, Finance and Corporate Affairs Minister Nirmala Sitharaman eased concerns from some investors by saying the government had no plans to ban the use of cryptocurrencies altogether. In a statement given to the leading English newspaper, Deccan Herald, the Minister of Finance said: “For our part, we are very clear that we are not closing all options. We will allow certain windows for people to experiment on blockchain, bitcoins or cryptocurrencies.” It is obvious that the government is still examining the national security risks posed by cryptocurrencies before deciding on a total ban.
In March 2020, the Supreme Court overturned a central bank decision to ban financial institutions from trading cryptocurrencies, prompting investors to accumulate in the cryptocurrency market. Despite the constant fear of a ban, the volume of transactions continued to grow, and user registration and cash inflows on the local cryptocurrency exchange increased 30 times compared to a year earlier. One of India’s oldest stock exchanges, Unocoin added 20,000 users in January and February 2021. The total volume of Zebpay per day in February 2021 is equivalent to the amount generated throughout February 2020. Addressing the cryptocurrency scenario in India, the Finance Minister in an interview with CNBC-TV18 said: “I can only give you this clue that we are not closing our minds, but looking for ways in which experiments can take place in the digital world and cryptocurrency.”
Instead of sitting on the sidelines, investors and stakeholders want to make the most of the expansion of the digital coin ecosystem until the government imposes a ban on “private” cryptocurrency and announces a sovereign digital currency.
Is India moving towards financial inclusion with cryptocurrencies?
Formerly considered a “boys’ club ”due to the dominant engagement of the male population in the cryptocurrency market, the ever-growing number of female investors and traders has led to more gender neutrality in new and digital forms of investment methods. Women used to stick to traditional investments, but now they are becoming increasingly risky and entering the crypto space in India. After the Supreme Court clarified the legality of the “virtual currency,” India’s cryptocurrency platform, CoinSwitch witnessed an exponential increase of 1,000% of female users. Although female investors still make up a small percentage of the crypto community, they are creating fierce competition in the Indian market. Women tend to save much more than their male counterparts, and greater savings mean greater diversity in investments such as high-return assets such as cryptocurrencies. Also, women are more analytical and better at assessing risks before making the right investment choices, so they are more successful investors.
Increasing the usual institutional adoption of cryptocurrencies
Uncertainty and panic caused by SARS-Covid 19 led to a liquidity crisis even before the economic crisis erupted. Many investors have turned their funds into cash to protect their finances, resulting in falling bitcoin and altcoin prices. But even though the cryptocurrency suffered a major crash, it still managed to be the asset class with the best performance in 2020. With the increased vulnerability of the system and the loss of confidence in central bank policies and money in its current design, people have an increased appetite for digital currencies resulting in the return of cryptocurrency. Due to the great performance of cryptocurrency in the midst of the global financial crisis, the upward trend has strengthened interest in the virtual currency market in Asia and the rest of the world.
Furthermore, to stimulate society’s demand for practical and reliable transactional solutions, digital payment applicants such as PayPal have also demonstrated their support for cryptocurrencies that can enable consumers to hold, buy or sell virtual assets. Recently, Tesla CEO Elon Musk announced an investment in the cryptocurrency market worth $ 1.5 billion, and that the electric company will accept bitcoin from customers, which led to an international jump in the price of bitcoin from $ 40,000 to $ 48,000 within two days . The two largest payment platforms worldwide, Visa and Mastercard, also support cryptocurrencies by introducing them as a medium for conducting transactions. While Visa has already announced that it allows transactions with stable coins on the Ethereum blockchain, Mastercard will start transactions with cryptocurrencies sometime in 2021.
What is the future of the cryptocurrency market in India?
The Indian cryptocurrency market is not immune to the terrible declines of cryptocurrencies. Despite huge investments from global partners, local investors continue to stay away from crypto investments due to uncertainty over the legality of India’s digital coin ecosystem, as well as high market volatility. Although the cryptocurrency market has been booming since last year, Indians own less than 1% of the world’s bitcoin, creating a strategic disadvantage for the Indian economy. The Indian government plans to appoint a new panel to study the possibilities of regulating digital currencies in the country, as well as focus on blockchain technology and propose it for technological improvements.
The ability of blockchain technology to provide secure and unchanging infrastructure has been understood by various industries to embed transparency in transactions. For a country with more than 15 million cryptocurrency users, the new board recommendation could be of great value in determining the future of cryptocurrency in India. However, stakeholders believe that technical and economic power will make India a key player in the crypto and blockchain market. Gradually, cryptocurrency is becoming increasingly accepted, which could lead to greater adoption of digital currency.
According to another TechSci Research report on “Indian cryptocurrency market By offer (hardware and software), by process (mining and transactions), by type (Bitcoin, Etgereum, Bitcoin Cash, Ripple, Dashcoin, Litecoin, others), by end user (banking, real estate, stock exchange and virtual currency), By regions, forecasts and opportunities, 2026 “, the Indian cryptocurrency is projected to grow with significant CAGR due to the growing demand for transparency and reduced transaction costs. In addition, increasing digital currency adoption and growing blockchain technology are boosting the Indian cryptocurrency market.