The rapidly rising use of Bitcoin in India, with thousands of users adding it to their wallets with each passing day, seems to defy the growing scepticism over the leading cryptocurrency elsewhere. The Reserve Bank of India’s concerns over cryptocurrencies got a solid reinforcement from one of the world’s top bankers, as JP Morgan CEO Jamie Dimon called Bitcoin a “fraud”, which will eventually blow up.
On the other hand, in India, Bitcoin has started gaining popularity post demonetisation. Despite the Reserve Bank of India expressing caution against its use, Bitcoin now has a presence over five lakh Android devices and is adding more than 2,500 users every day. Bitcoin waded into the Indian market on a large scale post demonetisation on November 8 last year, in which Rs 500 and Rs 1,000 notes were scrapped, and the country reeled under shortage of cash in circulation.
In just 18 days of demonetisation, Bitcoin added over 1.3 lakh users, and its value surged from Rs 51,000 to Rs 69,500 per Bitcoin. Major e-commerce players such as Flipkart, MakeMyTrip and Amazon allow customers who use Bitcoin the access to voucher programmes, effectively making it an option for making payments for purchases.
People in India are using the cryptocurrency majorly for investment purpose, like gold. This has opened a gateway for start-up companies such as Zebpay, Coinsecure and Unocoin. Recently, global digital currency software developer Blockchain.info announced a partnership with Unocoin to enter the Indian market, hoping to exploit the digital cash potential in coming days.
However, the rapidly surging price of Bitcoin, without any underlying asset or value-base, seems to have irked the top banker Jamie Dimon. “Bitcoin is a fraud and will blow up,” Jamie Dimon said at an event in New York, adding, “The currency isn’t going to work.” He pointed out to the absence of an underlying monetary base to support its value. “You can’t have a business where people can invent a currency out of thin air and think that people who are buying it are really smart,” Jamie Dimon said.
His observation about the virtual currency as “dangerous” is in sync with the Indian government, which has been holding several meetings to formulate a policy to regulate Bitcoin and similar currencies. Reserve Bank of India’s Executive Director Sudarshan Sen has said today that the central bank is not comfortable with non-fiat cryptocurrencies. Elaborating on what is a non-fiat cryptocurrency, Sudarshan Sen said, “Bitcoins for example. That’s a private cryptocurrency.”
While corporations and people are excited about the potential of Bitcoin, it is not thought to be secure against cyber-attacks. In June, after a ransomware attack on nuclear power stations and oil companies across Europe, America and Asia, including the Jawaharlal Nehru Port Trust, extortionists demanded ransom in Bitcoins to restore the operations.
Bitcoin, which is not regulated by any bank or central agencies, and with nobody knowing how it can be taxed, remains a risky deal in India.