He loves the ease with which it can be moved around. Bitcoins can be bought and sold online and remitted abroad with a single click on a smartphone.And there’s no need to pay any fees to a bank or other over-charging financial intermediaries. “I have family in New Zealand and I can send money immediately to them using my bitcoin wallet, which they can encash there, making the transaction hassle free,” he said. With market estimates of 30,000 users in India and transactions of about Rs 200 crore a year, the digital currency is being used for purchases and long–term investments.
The digital currency came into existence in 2009, having been created by a developer (or developers) going by the name of Satoshi Nakamoto. It gained in value steadily, peaking at about $1,100 per bitcoin in November 2013, then sliding – to about $227 now. A virtual currency, there are no transaction fees and it’s not regulated by any government.
Bitcoins are created by ‘mining,’ or churning data through computers to verify transactions. In countries that are going through financial turmoil, such as Greece, bitcoin offers a stable alternative, say its backers. Drawn by zero transaction charges and mobile platforms offering easy buy and sell options, price updates and high levels of wallet security, users are parking big sums of money with online bitcoin stores.
“I find it (bitcoin app) extremely useful because I can buy online discount coupons and gift vouchers in exchange for my bitcoins,” said Harin Pandya, a bitcoin enthusiast who works with an event management company based in Ahmedabad. “I can redeem these from Amazon, Ola and a host of other e-commerce websites.” Bitcoin transactions are not illegal in any part of the world.
However, RBI governor Raghuram Rajan recently raised a red flag on currencies such as bitcoin and money -raising methods such as crowd funding, which are outside the purview of regulated environments.
Earlier this week, RBI deputy governor R Gandhi went further in his warning about “crypto currencies,” saying “these can be involved in money laundering, tax evasion and terror funding.”
However, bitcoin is increasingly going mainstream. Goldman Sachs has invested in a company that’s working on the technology that forms the basis of bitcoin. Closer home, Infosys is looking at ways in which it can work on the block chain database used by bitcoin.
Though the value of bitcoins has declined sharply, investors believe that with India becoming increasingly digital and society moving toward cashless transactions, this is bound to climb back up.
“Though it has depreciated significantly, the value of bitcoins are bound to climb up by next January, because virtual currency is the future and the world will only get more digitised from now on,” said Pandya. I am expecting to get almost 100% return on my investment in bitcoins by this year end.”
Sisodia is also betting on the currency. “I have around Rs 7-8 lakh invested in bitcoins and I expect them to give me double the return within one year,” he said.
Zebpay co-founder Sandeep Goenka said that since the maximum possible number of bitcoins is set at 21 million, their value is bound to skyrocket with greater awareness and demand. Zebpay is one of the largest online bitcoin trading platforms in India. “China does approximately Rs 1,000 crore of bitcoin trades a day,” he said.
“In India presently, bitcoin companies must be doing a fraction of this volume in a year.” This is due to cultural traits — Indians don’t feel confident about money unless they’re holding cash in hand. “But this perception will also slowly change just like plastic money is slowly replacing paper money,” Goenka said.
ePaisa, which offers a multilingual, mobile–based application for card and cash payments, recently started enabling its partner merchants to start accepting bitcoins as payment. “As enablers, we are creatively connecting the buyer and seller (at the point of sale),” said Siddharth Arora, CEO, ePaisa. “Bitcoins will definitely improve financial inclusiveness as it will help the unbanked population, provide instantaneous and low-cost remittances, automated VAT (value -added tax) and service-tax payments to government.”