Cryptocurrencies finally seem to have taken off with the price of Bitcoin surging. Case in point: On Monday, it was reported that Bitcoin value rose to $28,207 (13:22 pm, Indian Standard Time), according to CoinMarketCap. This means that there is still light at the end of the tunnel. In a conversation with FE Blockchain Poulami Saha, Sathvik Vishwanath, co-founder and CEO, Unocoin, a cryptocurrency exchange, talks about the current market scenario and why it may still stand out against all odds. (Edited Excerpts)
Why has crypto gained a wide audience despite its reportedly unpredictable rate of growth?
I believe the crypto industry has gone way ahead. The financing of crypto works in a decentralised manner, where there is no central government or central person providing guarantees. Then we see decentralised exchanges, where people can swap from one digital asset to another digital asset. Talking about decentralised autonomous organisations (DAO), the holders of these tokens can vote from anywhere in the world and based upon that, organisations will be able to make decisions. So, whenever there’s voting required, they can use this kind of core infrastructure available for taking the words from various stakeholders of the company.
Also, smart contracts are there, where payments happen using the logic programming that is already on the blockchain. Non-fungible tokens (NFTs) help with the digital rights of a specific item from one person to another person, so no one can fake it. I think eventually all of these features combined are creating hope.
Has the user for cryptocurrencies evolved in the last few years?
I think crypto itself has become one of the asset classes. The target audience can’t be specified. People have diversified their portfolios exposing themselves to three-five percent or up to 10% of the investment. Then nature of the risks undertaken by them are experimentative in nature. People who are willing to take such risks and expose themselves will always prefer crypto over other currencies.
Do you think digital currencies can affect the traditional global trading system?
Yes, digital currencies can affect the traditional global trading system as the world is moving towards digitalisation. Today we are exchanging messages, value, buying things, transferring money from one person to another and all such businesses through digital platforms. Eventually, this will result in people moving to crypto because the crypto industry is digital. So, there is a possibility of growth.
The use of digital currencies may lead to the involvement of Foreign Direct Investment (FDI). What are your thoughts about it?
So, the use of digital currencies is like any other business. Crypto does not need to be specifically included under Foreign Direct Investments (FDIs). The businesses using crypto may come under it. So, if you consider a fintech company using digital currency, or using these kinds of services. Then they’re somewhat depending on foreign investments or ordering it, that’s like any other industry or any other business.