India’s volumes of crypto-trade have increased after India’s Supreme Court relaxed exchange banking restrictions in March.
According to the Paxful and LocalBitcoins volume data from Coin Dance, India’s peer-to-peer rate of bitcoin trading reached an all-time high in July.
Siddhartha Dutta, CEO of Marlin, a Bangalore-based tech company, said the recent increase in demand for bitcoin parallels the reaction of Indians to the 2016 demonetization. Back then some citizens discovered the importance of keeping bitcoin, whose issuance is not regulated by any government when a large percentage of paper currency was recalled by the Indian government.
Due to a government order, the old bills immediately lost interest. The fact that the value of bitcoin is founded on business values, has made it especially appealing instead of fickle government policies.
In 18 days after demonetization, the price of bitcoin on Zebpay, an Indian crypto exchange, had risen from $757 to $1,020, although the price of bitcoin in the US remained fairly stagnant. Investing in bitcoin has become a secure choice for some Indian investors to store their wealth and reduce the uncertainty created by demonetization and a potential ban on gold.
Now the removal of banking restrictions appears to have unleashed cryptocurrency pent-up demand, which no government will consider worthless. Bitcoin operation these days ramps up across India on peer-to-peer exchanges like Paxful and LocalBitcoins.
As seen in the chart below, volumes of peer-to-peer bitcoin transactions in India have doubled in the last five months.
India is now among the five fastest-growing Bitcoin consumer groups in the world, according to a spokeswoman for Paxful, one of the leading peer-to – peer trading sites. The Indian volumes of Paxful rose from around $576,000 in May 2019 to $8.97 million in July 2020 and the overall Indian peer-to – peer volumes on Paxful and LocalBitcoins crossed $13.7 million. Smaller exchanges serving the Indian market, such as Delta Exchange, also see rapid growth (though Delta is an exchange of derivatives, not a spot market). Pankaj Balani, CEO of Delta Exchange, said new signups are rising month-over-month at 100 per cent.
Dutta believes that crypto has also gradually gained traction in rural areas thanks to mesh networks that help provide connectivity and fast streaming. This might mark the beginning of an even bigger period of adoption.
“Indians are becoming internet-exposed, mobile first,” Dutta said. However, he added, the “mainstream” adoption should not mistake the development.
The bull market, combined with travel restrictions on coronavirus, could energize the startup scene in India.
Prashanth Balasubramanian, a Bangalore based entrepreneur, is the co-founder of Lightning wallet startup Lastbit. To represent Europe and ultimately North America, Lastbit plans to expand beyond the Indian market. But as 2020 is going to be a year of relative quarantine, Balasubramanian thinks it is a good time to build at home.
“Silicon Valley is a great place for companies, but by using our Indian roots as a young company we can work more efficiently and keep things lean with a 10x difference in runway,” he said.
Dutta said during the coronavirus recession, he expects crypto-currency projects to continue to proliferate across India’s tech industry.
“There is certainly potential to grow much more,” Dutta said.