BENGALURU: For bitcoin startups in India, the festival season began in November with Prime Minister Narendra Modi and US President-elect Donald Trump bearing early Christmas gifts.
In the past month, the country’s three funded bitcoin trading platforms — Zebpay, Unocoin and Coinsecure — have registered a surge in new users willing to experiment with the cryptocurrency as an alternative asset class. A majority of the users are millennials, of ages 18 to 35.
This new fondness for bitcoins traces a cascade of global uncertainties that began with the British referendum in June to exit the European Union and leading to a weak Chinese yuan, Trump’s win and Modi’s crackdown on untaxed money.
All that and the precariousness of the local gold and real estate markets in the wake of India’s demonetisation drive have made bitcoins seem a surer bet to investors, even those with a somewhat delicate appetite for risk.
“Our trade volume in November touched .Rs 120 crore, up by 25% compared to October, and our revenue grew 25% as well,” said Saurabh Agarwal, cofounder of Zebpay. The Ahmedabad based bitcoin wallet and exchange, which has raised seed funding from a few individual investors, added 50,000 new users in November, higher than its typical monthly average of 20,000 new users. Overall, Zebpay has about 250,000 users.
A bitcoin is essentially a digital token or code mimicking a virtual currency. In India, only a few companies, mostly large ecommerce firms, accept bitcoin payments, and that too as indirect transactions made through the exchanges.
So for most users, a bitcoin is an investment vehicle similar to gold. Since only a few million bitcoins are available globally, the price is high. On Tuesday, Reuters reported that bitcoin value hit a two-year high of $788.49 (about .Rs 53,210 per bitcoin) due to volatility in the Chinese stock market.
In India, the buying price is slightly higher, at Rs 55,000-57,000 per bitcoin. A couple of weeks after the demonetisation announcement on November 8, the price had surged above Rs 68,000 a unit. India has about 20 bitcoin startups, of which merely three have secured funding — ZebPay ($1 million), Unocoin ($1.5 million), and Coinsecure ($1.5 million).
Unocoin, which recently secured funding from Blume Ventures and US-based trading firm Digital Currency Group, among others, has registered a threefold spike in users in the past month, to 120,000. Trading volumes have doubled to about 300 bitcoins a day.
“There has been a tremendous increase in awareness about bitcoins this year,” Chief Executive Sathvik Vishwanath said. “Till last year, we had to explain to people what bitcoin was.”
Coinsecure founder Benson Samuel said the company registered a 300% increase in sign-ups in November and now has 90,000 users.
Twenty-nine-year-old Pramod Lawate is a recent convert. The Mumbai-based software engineer began hearing more about bitcoins and its surging value on his company’s internal social network in the weeks since the demonetisation announcement.
That spurred him to make his first investment in the cryptocurrency, through Zebpay. “This is my first investment. I decided to go with bitcoin since I thought it was the right time as the value is increasing,” said Lawate, who has invested a few thousand rupees in bitcoins.
Businessman Ashwin Umarji, 42, made a killing trading in bitcoins last month. “I bought some bitcoins in the range of Rs 49,000-51,000 (last year) and sold them when they peaked to Rs 68,000-69,000 in November,” he said. “I invest in equity and debt funds and over the years these investments have given me a CAGR of 25-30%, while with bitcoins I expect to see growth of 25% in a month. I am looking at this as a serious investment.”
Not just as an investment, Umarji and Lawate will potentially be able to use the virtual currency for payments as well as more merchants embrace bitcoins. Ajay Mallareddy, the owner of restaurant chain Flying Spaghetti Monster and a bitcoin investor himself, said he will start accepting bitcoin payments at his Bengaluru eatery and later at his Hyderabad and Visakhapatnam restaurants as well.
“This is the right time to start accepting bitcoin payments since we are seeing increasing use of the digital currency. We also have a lot of foreigners coming in, and this is a universal currency,” said Mallareddy. “I have picked up a little bit more (bitcoins) because of the volatile market.”
