Bits with benefits: Bitcoin gains traction in post-demonetisation India as cryptocurrency appeals to those feeling the cash crunch
While most stand for hours in ATM queues and jostle for cash, the virtual currency bitcoin has quietly gained substantial traction in India.
The price of bitcoins has surpassed the $1,000 mark, hitting its highest level since 2013 with a hike of nearly 30 per cent in its value since the Prime Minister announced the demonetisation scheme on November 8.
Experts say the cryptocurrency appeals to those worried about a lack of supply of cash but part of this price buoyancy can also be attributed to the market-making initiatives of Indian exchanges.
Leading bitcoin trading exchanges say they have witnessed a rise in the Indian user base by 250 per cent but add that the amount of transaction India does in the digital currency is still relatively low.
It seems people in India are only interested in buying bitcoins at the moment, and not in selling them, which has also led to increased valuation.
Experts also say there was a rush following the demonetisation announcement as many traders exchanged their black money into bitcoins.
‘Like gold was exchanged with black money paying a premium, a similar thing happened with bitcoin,’ said a senior central agency officer.
The demand of the largest and oldest among cryptocurrencies is high as it is untraceable by security agencies and does not require physical storage spaces that can be raided by authorities.
Bitcoin is a digital token that is computer generated and not printed or minted physically like a country’s currency.
It is created and held electronically in a decentralised system, so no single person, bank, authority has control over it.
Bitcoin works like conventional currency and is traded globally.
‘Rates of bitcoins have been increasing since we have started dealing into it, but yes, post-demonetisation demand from India has also increased manifold,’ said Sathvik Vishwanath, CEO of popular bitcoin wallet Unocoin.
On Indian exchanges, the bitcoin prices are being quoted at 25-30 per cent higher than cost.
The cryptocurrency has been denied legal status so far by the RBI.
The exchanges believe this might change now with the government pushing for digital transactions.
Sandeep Goenka, CEO of Zebpay, one of the largest bitcoin exchanges in the country, said, ‘Indians are enquiring about bitcoins as an alternative and safe investment option.
‘They are downloading Zebpay as they want to experiment with digital currencies. There has been a 50% increase in Zebpay downloads.’