Rich rewards often come with great risk, and the same can be said for the highly volatile cryptocurrency market. Uncertainty in 2020 around the world has led to increased interest of the masses and large institutional investors in trading cryptocurrencies, a new age asset class. Increasing digitization, a flexible regulatory framework and the lifting of the Supreme Court’s ban on banks dealing with crypto-based companies parked investments of more than 10 million Indians last year. Several major global cryptocurrency exchanges have been actively exploring the Indian crypto market, which has seen a steady surge in daily trading volume over the past year amid a significant drop in prices as many investors looked to buy on value. As the cryptocurrency craze continues, many new cryptocurrency exchanges have sprung up in the country that allow you to buy, sell, and trade, offering functionality through user-friendly apps. WazirX, India’s largest cryptocurrency trading platform, has doubled its user base from one million to two million between January and March 2021.
What brings the world’s largest crypto exchanges to the Indian market?
In 2019, Binance, the world’s largest cryptocurrency exchange by trading volume, acquired the Indian trading platform WazirX. Another crypto startup, Coin DCX, received investments from Seychelles-based BitMEX and San Francisco-based giant Coinbase. As of June 15, 2021, new crypto and blockchain startups in India have attracted USD 99.7 million in investments, up from USD 95.4 million in 2020. Over the past five years, global investment in the Indian crypto market has increased by a whopping 1,487%.
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• Tech savvy Indian population
The overwhelming population of 1.39 billion is young (average age 28 to 29) and tech-savvy. While the older generation still prefers to invest in gold, real estate, patents or stocks, the new generation is accepting high-risk cryptocurrency exchanges as they are more adaptable to them. India is ranked 11th in Chainalysis’ 2020 Global Crypto Adoption list, which shows the enthusiasm for crypto among the Indian population. The not so friendly attitude of the government towards crypto or the rumors circulating around crypto cannot shake the confidence of the youth in the digital coin market.
India offers the cheapest internet in the world, where one gigabyte of mobile data costs about $0.26, while the global average price is $8.53. Thus, nearly half a billion users enjoy affordable internet access, increasing India’s potential to become one of the largest crypto-economies in the world. According to SimilarWeb, the country is the second largest source of web traffic for 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 gives the younger generation a new and faster way to earn money.
It’s safe to say that cryptocurrency can be to Indian millennials what gold was to their parents!
• Growth of fintech startups
The craze for cryptocurrency has led to the emergence of several trading platforms such as WazirX, CoinSwitch, CoinDCX, ZebPay, Unocoin and many more. These cryptocurrency exchanges are highly secure, cross-platform and allow instant transactions, providing a friendly interface for crypto enthusiasts to buy, sell or trade digital assets limitlessly. Many of these platforms accept INR for purchases and trade fees starting at 0.1%, so the simple, fast and secure platforms present a profitable opportunity for both novice investors and local traders.
WazirX is one of the leading cryptocurrency exchange platforms with over 900,000 users, providing customers with peer-to-peer transaction capabilities. CoinSwitch Kuber provides the best cryptocurrency exchange platform for Indians and is perfect for beginners as well as everyday users. Unocoin is one of the oldest cryptocurrency exchange platforms in India, serving more than a million traders through 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. Therefore, global investors are eyeing the many cryptocurrency exchange platforms in India to take advantage of the emerging market.
• Mixed government response
A virtual currency ban bill that would criminalize anyone who owns, issues, mines, trades and transfers crypto-assets could become law. However, Finance and Corporate Affairs Minister Nirmala Sitharaman allayed the concerns of some investors by saying that the government has no plans to completely ban the use of cryptocurrency. In a statement to the leading English newspaper Deccan Herald, the finance minister said, “From our side, we are very clear that we are not closing all options. We will allow people to have certain windows to experiment with blockchain, bitcoin. , or cryptocurrency.” Clearly, the government is still carefully examining the national security risks associated with cryptocurrencies before deciding on an outright ban.
In March 2020, the Supreme Court overturned the central bank’s decision to ban financial institutions from dealing in cryptocurrencies, prompting investors to flock to the cryptocurrency market. Despite the lingering fear of a ban, transaction volumes continued to grow, with user registrations and money inflows on the local crypto exchange growing 30x year-over-year. One of India’s oldest exchanges, Unocoin added 20,000 users in January and February 2021. Zebpay’s total volume per day in February 2021 was equivalent to the volume received in the entire February 2020. Looking at the cryptocurrency scenario in India, the Finance Minister said in an interview with CNBC-TV18, “I can only give you a hint that we are not closing our minds, we are looking at ways in which experimentation can happen in the digital world and cryptocurrency.”
Instead of sitting on the sidelines, investors and stakeholders want to do their best to grow the digital coin ecosystem until the government bans “private” cryptocurrency and declares a sovereign digital currency.
Is India moving towards financial inclusion with cryptocurrency?
Once considered a “boys club” due to the predominantly male population of the cryptocurrency market, the steady growth of female investors and traders has led to greater gender neutrality in the new digital form of investment methods. Women used to stick to traditional investments, but now they are taking risks and venturing into the crypto space in India. After the Supreme Court clarified the legality of the ‘virtual currency’, an Indian cryptocurrency platform, CoinSwitch witnessed an exponential growth of 1000% in the number of female users. Although women investors still make up a small percentage of the crypto community, they are creating stiff competition in the Indian market. Women tend to save a lot more than their male counterparts, and more savings means a greater variety of investments, such as high-yielding assets like cryptocurrencies. In addition, women are more analytical and better at evaluating risks before making the right investment choices, which is why they are more successful investors.
Increasing widespread institutional adoption of cryptocurrencies
The uncertainty and panic caused by SARS-COVID 19 led to a liquidity crisis even before the economic crisis began. Many investors converted their holdings to cash to protect their finances, causing the price of Bitcoin and altcoins to fall. But even though crypto suffered a major crash, it still managed to be the best-performing asset class in 2020. With the increasing vulnerability of the system and the loss of trust in central bank policies and money in their current design, people have an increased appetite for digital currencies, which has led to a rebound in cryptocurrency. Due to the excellent performance of the cryptocurrency in the midst of the global financial crisis, the upward trend has increased the interest in the virtual currency market in Asia and the rest of the world.
In addition to driving societal demand for convenient and secure transaction solutions, digital payment gateways such as PayPal have also demonstrated their support for cryptocurrencies that allow consumers to store, buy or sell virtual assets. Recently, Tesla CEO Elon Musk announced a $1.5 billion investment in the cryptocurrency market and that the electric company will accept bitcoins from buyers, causing the international price of bitcoin to jump from $40,000 to $48,000 within two years. days. Two of the largest payment platforms in the world, Visa and Mastercard, also support cryptocurrencies as a means of making transactions. While Visa has already announced that it will allow stablecoin transactions on the Ethereum blockchain, Mastercard will begin crypto transactions sometime in 2021.
What does the future hold for the cryptocurrency market in India?
The Indian cryptocurrency market is not immune to the horrific crypto crashes. Despite huge investments from global peers, local investors are still staying away from crypto investments due to uncertainty about the legitimacy 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 possibility of regulating digital currencies in the country, and to focus on blockchain technology and propose it for technological improvements.
Blockchain technology’s ability to provide a secure and immutable infrastructure has been implemented by various industries to ensure transaction transparency. For a country with more than 15 million cryptocurrency users, the committee’s new recommendation could be of great importance 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, the cryptocurrency gains mass acceptance, which may lead to a wider adoption of the digital currency.
According to another TechSci Research report on “The Indian Cryptocurrency Market By Offering (Hardware & Software), By Process (Mining & Transactions), By Type (Bitcoin, Etgereum, Bitcoin Cash, Ripple, Dashcoin, Litecoin, Others), By End User (Banking, Real Estate, Stock Market & Virtual Currency ) , By Region, Forecast and Opportunities, 2026″, Indian cryptocurrency is expected to grow at a significant CAGR due to increasing demands for transparency and reduced transaction costs. In addition, rising adoption of digital currency and growing blockchain technology are driving the Indian cryptocurrency market.