Bitcoin emerged more than a decade ago, but the legal status of this cryptocurrency in India has remained uncertain until recently. And while some states now allow bitcoin use and trading, others still impose a ban in 2020. Contrary to this unevenness, we see one clear and undeniable fact: the number of Bitcoin enthusiasts is growing steadily.
As a consequence of the pandemic, 2020 was the year of the big economic downturn. However, this has not stopped humanity from continuing/starting to transact in Bitcoin. According to analytics company Glassnode, the number of active Bitcoin addresses worldwide has increased by 61%. On January 4, 2020, the number of active Bitcoin addresses approached the 615,785 mark, rising to 995,793 already in August. This is striking, but the number of active users is approaching the record level of December 2017.
Keep in mind that Bitcoin’s popularity and usage around the world is uneven. According to a chart from Cryptodiffer reflecting interest in Bitcoin in terms of geographical location, the percentage of Bitcoin users in Russia is significantly higher than in most regions. However, India has also attracted some attention, ranking 8th on the list published in May. It accounts for almost 3% of the total volume on LocalBitcoins.
In this article, we take a closer look at bitcoin usage in India and talk a bit about Indian bitcoin enthusiasts.
Bitcoin use in India
Many organisations, from hairdressers to fine dining restaurants, are now using bitcoin as a payment method. Currently, there are 19811 outlets around the world that accept cryptocurrency as a payment method or where a cryptocurrency ATM is provided for payment.
Currently, things look a little different in India. Although India is among the top countries in terms of interest in bitcoin, there are only a handful of organisations in the country that accept bitcoin as a payment method, and even fewer cryptocurrency ATMs. However, a recent Coinpaprika report strongly suggests that India’s share of the global Bitcoin industry (as well as that of other cryptocurrencies) will increase dramatically between 2020 and 2022.
So what changes are taking place in India?
Something truly remarkable happened in March 2020. The Supreme Court of India ordered a ban on cryptocurrency banking for the Reserve Bank of India (RBI). And this triggered a boom in bitcoin trading in India. LocalBitcoins trading volume increased by 53% between March 2020 and August 2020.
Cryptocurrency exchanges in India have also seen a surge in new registrations and trading volumes during the pandemic, according to a study conducted by Bit2buzz.
How exactly are Indians using bitcoin?
Compared to places like San Francisco, Vancouver or Florida, India still has a lot of work to do to make bitcoin and other cryptocurrencies recognised as a payment method. However, more and more Indians are starting to transact in bitcoin, following other targets. We spoke to some Indian bitcoin enthusiasts to find out more about the topic. And here are the results of our research:
Bitcoin as a remittance medium
India is one of the largest remittance markets in the world. In 2019, India received $554 billion through remittances. Many Indians working abroad transfer huge amounts of money back home every month for their families and relatives. In addition, Indians working as freelancers with international clients get paid for their services through remittances.
The most common problem that arises with remittances is the high cost of transfer, which can be as high as 5.8% of the transaction amount. By using bitcoin as a means of international transfers, Indians can save significantly on transaction costs.
User experience using remittances
Name: Deepika
Location: India
Platform used: LocalBitcoins
“I work as a freelancer with clients all over the world. Over the years, I have tested several money transfer channels like SWIFT, Western Union and Paypal to receive payments. However, unfortunately, I have never been satisfied. Getting money through SWIFT was a cumbersome process, with Western Union everything proved very cumbersome and Paypal charged huge fees. After the RBI ban was lifted, a friend recommended LocalBitcoins to accept payment from international customers in bitcoins. I tried it and was impressed that it turned out to be very fast. I also paid a fee of just 0.02% for an instant transfer to my bank account when I sold the bitcoins.”
Demonetisation protection
After the RBI ban was lifted, there was a sudden surge in demand for bitcoins. Many believe that this surge may be a consequence of the demonetisation in 2016, when the Indian government withdrew a huge percentage of paper bills. This led to great chaos as many Indians found themselves holding lots of paper notes, which suddenly depreciated.
This event paved the way for a significant increase in bitcoin trading and rising prices on Indian exchanges. This is a clear indicator that Indians have realised that bitcoin is a safer option than paper notes. After experiencing first-hand how unreliable fiat currency can be, bitcoin, a global asset with high liquidity, became their natural choice.
Savings vehicle. User experience
Name: Anita Jaggi
Location: India
Platform used: LocalBitcoins
“After surviving the chaos of demonetisation in 2016, I started investing some of my savings in Bitcoin in 2016. I realised that gold and fiat currency were largely controlled by the government and were no longer reliable. During the RBI ban, I needed liquidity and was planning to sell my bitcoin holdings. Using LocalBitcoins, I sold my holding to a user in China and got payment in Indian rupees into my bank account. It was quite easy.”
Using bitcoin as a medium of exchange
There is a growing demand for dollars among Indian banks and importers, which strengthens the US dollar and reduces the value of the Indian rupee. Especially during the pandemic, the exchange rate increased significantly because the Indian rupee continued to depreciate. For Indians involved in global trade, this depreciation leads to large losses in business. In addition, converting the rupee into US dollars is a difficult task.
Many Indians are now using bitcoin as a “bridge” between Indian rupees and US dollars. The conversion rate can be more advantageous compared to FOREX markets, and the whole process is usually quicker and easier. Many Indians use P2P trading platforms to convert rupees into bitcoins and then exchange bitcoins for US dollars.
Bitcoin as a medium of exchange. Users’ experiences
Name: Manish Garg
Location: India
Platform used: LocalBitcoins
“My hobby is trading. I trade stocks, foreign currencies or cryptocurrencies most of the day. Over the years, I have tested many ways to convert Indian rupees into US dollars and vice versa. However, pulling off such a transaction using bitcoin on LocalBitcoins proved to be a completely new experience for me. Not only is it fast, but it is also very profitable as the platform offers better rates than fiat exchangers.”
Banking services for those without a bank account
According to the latest data, India is one of the top 10 largest economies in the world. Its GDP is approaching $2.94 trillion, yet nearly 190 million adults in India have no access to banking services. These 190 million Indians are deprived of banking services, either because of infrastructure problems or because they do not have the proper documentation required to open a bank account.
However, most of them have a smartphone and access to the internet. These people can easily use Bitcoin as a financial system and payment method, provided they are provided with the necessary instructions. Thus, this segment could eventually lead to a surge in the popularity of Bitcoin in India.
In conclusion…
Over the past 12 months, the number of searches on Bitcoin in the Indian subcontinent has increased. According to Google Trend, when the pandemic hit the world in 2020, interest in Bitcoin was at its peak.
Interest in bitcoins in the Indian subcontinent is definitely on the rise and growing. Talking to Indian bitcoin enthusiasts, it’s easy to see how people in India may have an opportunity to make the most of the increased use and distribution of bitcoins. LocalBitcoins is a great option for anyone who needs an affordable, quick and safe way to get to know and access all the tools they need to send and receive bitcoin transactions and buy and sell bitcoin. LocalBitcoins is also an opportunity to participate in change for the benefit of the future.