Rich rewards often come with high risks, and the same is true of the highly volatile cryptocurrency market. The uncertainty of 2020 increased the interest of the masses and large institutional investors globally to trade cryptocurrencies, a new age asset class. Increasing digitization, inflexible regulatory frameworks and the Supreme Court’s lifting of a ban on banks dealing with crypto-based companies have parked the investments of more than 10 million Indians in the past year. Several major global cryptocurrency exchanges are actively looking into the Indian crypto market, amid a steep price decline that has been showing a steady rise in daily trading volume over the past year, as many investors looked to buy value. As the cryptocurrency craze continues, many new cryptocurrency exchanges have sprung up in the country that enable buying, selling and trading through simple apps that provide functionality. WazirX, India’s largest cryptocurrency trading platform doubled its users from one million to two million between January and March 2021.
What is driving 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. Coin DCX secured investment from Seychelles-based BitMEX and San Francisco giant Coinbase. Crypto and blockchain companies in India attracted USD 99.7 million in investment by June 15, 2021, for a total of about USD 95.4 million in 2020. In the last five years, global investment in the Indian crypto market has increased. A whopping 1487%.
While India’s policy is unclear, global investors are betting big on the country’s digital currency ecosystem due to various factors such as
• Tech-savvy Indian population
The main population of 1.39 billion inhabitants is young (average age between 28 and 29) and they are technological. Older generations still prefer to invest in gold, real estate, patents or stocks, while the newer ones are embracing high-risk cryptocurrency exchanges as they are more adaptable to them. India is ranked 11th in Chainalysis’ 2020 report list for global crypto adoption, which shows the excitement about crypto among the Indian population. Neither the government’s respectful attitude towards crypto nor the rumors surrounding crypto are able to shake the confidence of the young population in the digital coin market.
India offers the cheapest internet in the world where a gigabyte of mobile data costs around $0.26 and the global average is $8.53. Thus, nearly half of the billion users are taking advantage of affordable internet access, which increases 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 struggling from the “pandemic effect”, cryptocurrency is gaining momentum in the country as it offers the younger generation a new and fast way to earn money.
It’s safe to say that cryptocurrency can become the Indian millennial who is gold to their parents!
• The rise of Fintech Start ups
The cryptocurrency craze spawned many trading platforms such as WazirX, CoinSwitch, CoinDCX, ZebPay, Unocoin and many more. These cryptocurrency exchange platforms are highly secure, available on multiple platforms, and enable instant transactions, providing a user-friendly interface for crypto enthusiasts to buy, sell or sell digital assets without limits. Many of these platforms accept INR for purchases and trade fees as low as 0.1%, making simple, fast and secure platforms a win-win for first-time investors and local traders.
WazirX is one of the leading cryptocurrency exchange platforms with over 900,000 users and offers its customers unparalleled transaction capabilities. CoinSwitch Kuber offers the best cryptocurrency exchange platform for Indians and is ideal for beginners as well as everyday users. Unocoin is one of the oldest cryptocurrency exchange platforms in India and has over 1 million traders through mobile apps. CoinDCX offers users 100+ cryptocurrencies as options to trade and also offers investors insurance to cover losses in the event of a security breach. So, global investors are looking at the plethora of cryptocurrency exchange platforms in India to take advantage of the emerging market.
• Mixed response from the government
A bill to ban a virtual currency that would criminalize anyone involved in the ownership, issuance, mining, trading and transfer of crypto-assets may become law. However, Finance and Corporate Affairs Minister Nirmala Sitharaman allayed investors’ concerns by saying that the government has no plans to completely ban the use of cryptocurrency. In a statement to a leading English newspaper, the Deccan Herald, the finance minister said: “On our part, we are very clear that we are not closing all opportunities. We will allow certain windows for people to experiment with blockchain, bitcoins or cryptocurrencies.” It is clear that the government is still considering the national security risks posed by cryptocurrencies before deciding to impose a total ban.
In March 2020, the Supreme Court overturned the central bank’s decision to ban financial institutions from trading in cryptocurrencies, prompting investors to flock to the cryptocurrency market. Despite the lingering fear of the ban, transaction volume continued to grow, and user registration and local crypto exchange revenue grew 30 times from a year ago. One of the oldest exchanges in India, Unocoin added 20,000 users in January and February 2021. The total Zebpay volume per day in February 2021 was equivalent to the volume generated in the entire month of February 2020. The minister said in an interview on CNBC-TV18: “I can only give you this hint that we are not closing our minds, we are looking at ways that experiments can happen in the digital world and in cryptocurrencies.”
Instead of sitting on the sidelines, investors and stakeholders want to make the most of the growing digital currency ecosystem until the government bans “private” cryptocurrency and announces a sovereign digital currency.
Is India Moving Towards Financial Inclusion With Cryptocurrency?
Once considered a “Boy’s Club” due to the male-dominated engagement of the cryptocurrency market, the ever-growing number of female investors and traders has brought greater gender neutrality to new, digital forms of investment methods. Earlier, women used to stick to traditional investments, but now they are taking risks and entering the crypto space in India. After the apex court cleared the legality of ‘virtual currency’, Indian cryptocurrency platform, CoinSwitch saw an exponential growth of 1000% in its female users. While women investors still constitute a small percentage of the crypto community, they are putting up stiff competition in the Indian market. Women tend to save much more than men and more savings means more diversity in investments, such as high-return assets like cryptocurrencies. Also, women are more analytical and better at assessing risks before making the right investment choices, so they are more successful investors.
Increasing mainstream adoption of institutional cryptocurrency
The uncertainty and panic created by SARS-Covid 19 caused a liquidity crisis even before the economic crisis began. Many investors converted to cash to protect their finances, which caused bitcoin and altcoin prices to collapse. But even though crypto suffered a major crash, it still managed to be the best asset class of 2020. With the increased vulnerability of the system and the loss of confidence in the current design of central bank policies and money, people. they have increased the appetite for digital currencies which caused the cryptocurrency to bounce. Due to the excellent performance of cryptocurrency in the midst of the financial crisis, the upward trend has strengthened the interest in the virtual currency market in Asia and the rest of the world.
Furthermore, to feed society’s demand for convenient and reliable transaction solutions, digital payment gateways such as PayPal have also shown support for cryptocurrencies that allow 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 would accept bitcoin from buyers, which caused the international bitcoin price to rise from USD 40,000 to USD 48,000 in two periods. the days Two of the world’s largest payment platforms, Visa and Mastercard, are also accepting cryptocurrencies as a means of making transactions. While Visa has announced that it will allow transactions with stablecoins on the Ethereum blockchain, Mastercard would begin transactions with the crypto in 2021.
What does the future hold for the Indian Cryptocurrency market?
The cryptocurrency market in India is not immune from massive crypto crashes. Despite massive investment from global counterparts, local investors are keeping their distance from crypto investments due to uncertainty about the legality of India’s digital coin ecosystem and high market volatility. Although the cryptocurrency market has been growing since last year, Indians own less than 1% of the world’s bitcoin, which creates a strategic disadvantage for the Indian economy. The Indian government plans to appoint a new board to look into the possibility of regulating digital currencies in the country and also to focus on blockchain technology and propose technological improvements.
Blockchain technology’s ability to provide a secure and immutable infrastructure has been implemented by various industries to inject transparency into transactions. For a country with more than 15 million crypto users, the committee’s new recommendation could go a long way in determining the future of Indian cryptocurrencies. However, stakeholders believe that the technical and economic power will make India a key player in the crypto and blockchain market. Gradually, cryptocurrency is gaining acceptance, which may lead to greater adoption of digital currency.
According to another TechSci Research report “Cryptocurrency Market in India By Offering (Hardware & Software), By Process (Mining & Transaction), By Type (Bitcoin, Etgereum, Bitcoin Cash, Ripple, Dashcoin, Litecoin, Others), By End User (Banking, Real Estate, Stock Market & Virtual Currency), Regions, Forecasts and Opportunities, 2026″, Cryptocurrency in India is expected to grow at a high CAGR, driven by the growing demand for transparency and reduced transaction costs. Also, growing adoption of digital currency and growing blockchain technology will drive crypto in India – they are feeding the currency market.