It may be still early days for bitcoins to become the currency of choice, but if industry observers are to be believed, they seem to have seen a surge in India following the government's demonetisation drive.
It may be still early days for bitcoins to become the currency of choice, but if industry observers are to be believed, they seem to have seen a surge in India following the government’s demonetisation drive. Also, going by recent initiatives, the digital currency — which has otherwise had its fair share of ups and downs ever since it was ‘created’ in 2008 — seems to have gained ground in terms of interest and adoption.
The surge is being witnessed at a time when the prices of bitcoin are on a record high — it breached the $1,000 mark, hitting a more than three-year high, on January 2. Globally, bitcoin has been on a steady march for the past few months, driven by a number of factors such as the devaluation of the yuan, geopolitical uncertainty and an increase in professional investors taking interest in the asset class.
Coming back to India, Zebpay, a leading bitcoin exchange, recorded a turnover of over R100 crore and added 50,000 new users in November last year. Although its business has been growing exponentially even before demonetisation, interest in bitcoins has surged since November 8, 2016, says Sandeep Goenka, co-founder of the Singapore-registered company with offices in Mumbai and Ahmedabad.
Currently, Zebpay has more than 65% market share in India, as per reports.
“In 2016, bitcoin prices have increased from R25,000 in the beginning of the year to R65,000 at present. Digital currencies are the gateway to the dream of a cashless era. They solve a lot of problems like that of fake currency. It is a cheap and fast payment network. Also, since bitcoin is a public ledger, every transaction gets recorded forever,” says Goenka.
“Demonetisation has been a positive trigger for the use and spread of bitcoins and related technologies. The bitcoin and blockchain community are working hard to help India go cashless,” he adds.
Benson Samuel, founder and CTO of New Delhi-headquartered bitcoin exchange Coinsecure, too, feels there has been an increase in volumes since the announcement on demonetisation. We have seen over a 300% increase in turnover and over 250% increase in our user base,” he adds.
Bengaluru-based bitcoin company Unocoin, which recently tied up with payment gateway PayU India to enable its users to buy bitcoins using the PayUmoney wallet – hence giving them more alternatives to NEFT/IMPS/RTGS transfers – is already seeing about 4% of its trading volume happening through this alternative, which is expected to grow even further – up to 10% over this month. “This (the association) offers the ability to instantaneously purchase bitcoin using net banking, credit or debit cards instead of using NEFT and waiting for a couple of business hours for it to get processed. This should significantly help small traders,” says Sathvik Vishwanath, CEO and co-founder, Unocoin.
Online payment processor ePaisa – one of the pioneers in the space, having launched an initiative enabling its merchant outlets to accept bitcoin as a mode of payment way back in August 2015 – has seen about 20% higher transactions in the past couple of months. “With the government’s announcements and schemes to push digital payments, transactions in all digital payment forms are increasing on a daily basis. Bitcoins are a popular currency internationally and we have seen more tourists visiting India using them. This has been the case especially because of limits on the amount of money tourists can exchange in India. With the tourism season at its peak, we expect transactions to only grow further,” says Sidddharth Arora, co-founder of ePaisa.
So are bitcoins finally coming of age in India? “A year ago, we explicitly had to explain what is bitcoin before we introduce our company to someone. Now it has significantly changed. We can directly say that we are a bitcoin-trading platform and people are able to make sense out of it,” adds Vishwanath, whose company currently has about 1.25 lakh Indian customers, doing about R20 crore per month in trading volume. At present, Unocoin has about 1,500 merchants who have signed up to accept bitcoin as a mode of payment either through its website or its PoS app in their brick-and-motor stores.
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Samuel of Coinsecure, however, feels India is still grappling to a get a hold of the current digital payments, and bitcoin still has a long way to go. “But the ecosystem is growing in the right direction. The demonetisation drive is definitely fuelling the adoption further with every platform in this space registering an increase in volume and user base,” he says.
“If more merchants and businesses start accepting bitcoin as a method of payment, users will have places to spend them for their day–to–day use and that will definitely help drive adoption of bitcoin and make it more popular,” adds Samuel.