Business
Crypto Currency in Global Landscape
As of March 2019 , there were 1500+ cryptocurrencies in available and were being traded in
about ~10000 exchanges. As of 9th march 2020, With the Global Market capitalisation of
231B USD , Cryptocurrency is being traded across in 20830 markets with 24 hrs trading
volume of 153B USD. Though Bitcoin assumes more than 60 percent market dominance
there are other crypto-currencies (often called as Alt-coins) also available in the market. As
per the last estimate there are 44.7m Blockchain users worldwide.
Cryptocurrency in India
With its over 1.3 billion population India has long been recognised as the fastest growing
economy in the world. With over 560 million internet users, India is expecting to reach over
600 million internet users by 2021.With its 4G services India is one of the economies
providing data and telecon services at cheapest cost. Bitcoins and other cryptocurrencies have
been operating within the country for a number of years now. The post demonetisation period
has saw a great soar in the investment in cryptocurrencies. Currently bitcoins in India are
used to make online purchases by means of mobile apps and gift vouchers.
This rise of investment in bitcoins has given rise to a number of cryptocurrency exchanges in
India. Though some of these players have created mobile wallets facilitating cryptocurrency
transaction by means of exchanging with fiat currency. While others are operating in peer to
peer model where the exchange matches the person who wants to sell his/her cryptocurrency
with another party who wants to buy the crypto currency. When a suitable match is found the
transaction is facilitated.
One such exchange facilitating transaction in bitcoins using fiat currency was Zeb
pay.However, this model of business facilitating exchange of fiat currency with crypto-
currency bought in the skeptism of the regulators. And Reserve bank of India in 2018 issued
a circular which prohibited all commercial banks and cooperative banks / payments banks
/small finance banks /NBFCs/Payment system providers on dealing with cryptocurrencies.
The very concept of this prohibition was concerns around de-centralised nature of the bit coin
and risk surrounding its valuations.
In a short span of 9 years many crypto-currency exchanges have begun to spring up within
the country. Pioneers like BtexIndia Unocoin and Coinsecure began offering cryptocurrency
exchange and trading services in India. Overtime others like zebpay added to this list. Apart
from these exchanges, we also have crypto shops i.e. over the counter shops in the country.
Adding to this we have Bitcoin ATMs in many of the cities.
Crypto currency facilitates trading activities by completing financial transactions for users.
They provide a great way to accumulate, earn, exchange and spend currencies in a more
efficient ,easier and safer way. They can also be used to buy digital and physical goods.
There are many types of crypto currencies implemented across various platforms including
cryptocurrency in games, social networks (facebook is about to come out with one), loyalty
points and in peer to peer networks.
Crypto currency platforms can be classified into two main categories : Centralised
cryptocurrency platforms and decentralised platforms. Centralised being ones having
centralised repository like that of centralised banks for paper currency and its administrator
having full control over transferring the cryptocurrency value between transacting persons
and locations. Whereas decentralised crypto currency is obtained by computing or
manufacturing effort having no single repository or administrator.
Various business activities around Cryptocurrencies include:
Obtaining and Generating Crypto-currency
Pay for cryptocurrency using real money or its equivalent in the real monetary system.
Model similar to that of Zeb Pay. Each platform has its own pricing and exchange rate
and purchased virtual currency is stored in online wallet/ account of user.
it was this type of transactions that were affected the most by the RBI circular As they
were prohibited using existinhg financial institutions for their transactions.
By means of completing offers: Users need to complete the promotional activity
online to fund their accounts across various platforms such as games and other
subscriptions.
Loyalty programmes: many of the commercial companies and games operators
rewards their customers with loyalty points in terms of cryptocurrencies that are
redeemable through means of future purchases across various platforms.
Self-effort based methods or Crypto-currency mining techniques: this model of
generating crypto currency is used across in decentralised cryptocurrency
platforms.The network users run specialised softwares on their computers to solve
complex mathematimatical equations and puzzles thus producing VCs against their
computational power consumed.
Spending and exchanging Cryptocurrency
Cryptocurrency can be used across various online and offline platforms for
exchanging cryptocurrency for various virtual and read goods and services including
converting cryptocurrency into real money.
Impact of this prohibition on VCs market
As we observe that the use of virtual currency in different systems is increasing day
by day with more and more number of peoples joining varous online exchanges and
platforms. There is a huge potential and future in this sector.And with many of the
govermnents across the world moving onto crypto platform in one form or other
would move down the domestic (india) transactions underground thus causing a huge
loss.
According to a report by Incrypt India’s blockchain sector has received more than
USD 5.3 million in venture capital funding.
And World Economic Forum has estimated that 10% of global GDP in 2027 will be
in form of crypto-currency. India currently employs more than 20k youths in the
blockchain startups.
Thus, prohibiting cryptocurrency will have a direct impact on the Blockchain Startups
industry in the country, rendering many youths jobless and will drive out Venture capitalists
who are funding the growth and development in this industry.
Virtual currency also sees great prospects in terms of revolutionising banking industry not
only in the country but worldwide driving down transaction costs and quicker across boundry
fund transfers. It would also drive down the investments made by people who use
cryptocurrency as an asset to make their investment on.
