Thriving ecosystem helped cryptocurrencies overcome uncertainties in India
In 2008-09, as the world was in the throes of a financial crisis, an anonymous online entity named Satoshi Nakamoto developed Bitcoin, an unregulated peer-to-peer alternative to the regulated but crumbling banking system.
Over a decade since then, the cryptocurrency ecosystem has grown by leaps and bounds around the world. In India, it remains an unregulated asset, but that has not deterred Indians from investing heavily in it. According to a recent report from the BrokerChooser trading website, India had 10.07 crore of cryptocurrency owners, more than any other country in the world. The United States has 2.74 crore and Russia 1.74 crore.
The popularity of crypto in India exploded in March 2020, just after the Supreme Court lifted the Reserve Bank of India’s ban on cryptocurrencies. The price of Bitcoin has risen from $ 6,484 to over $ 47,000 now, according to research platform Statista. Earlier this year, prices hit a record high of $ 61,000. The surge in prices has sparked the interest of millennials, experts say.
But there are many pioneers in India who were the early adopters of cryptocurrency. They saw a bright future in crypto long before anyone else. Some of them started investing several years ago; some even went full blast.
Harshad Gawde from Mumbai is one such pioneer. An application and website developer, Gawde is both an investor and a crypto miner. Mining is essentially a process of minting new crypto coins. He has been a minor since 2014.
âWhen I first heard about Bitcoin, it opened up so many ideas,â Gawde said. “A lot of people were asking questions as I was learning [more about the market]. That’s when I started blogging. I also ran a website for a few years.
According to Gawde, Bitcoin can function as a complete banking system. âOutside of mining and trading, I’m now working on a project – kind of an e-commerce website, where you can trade things through cryptos,â he said.
Gawde bought his first Bitcoin for $ 200. According to the global price tracking website CoinMarketCap, Bitcoin was trading at $ 48,755 on December 21, 2021. Gawde did not disclose his exact crypto wealth, but said he held double-digit Bitcoin, two-digit Ether. high digits and four digit XRB. He also started buying Solana, one of the fastest growing crypto ecosystems in the world.
When he started spending hours studying the market and then mining Bitcoin, Gawde had struggled to convince his family of the value of crypto. âI have always loved computers and games,â he said. âThen, for almost a year and a half, I was totally into crypto research. My dad used to tell me he didn’t like sitting at the computer for 6-8 hours and calling him work. But soon I was able to convince him that I was earning thousands of rupees a week.
Impressed, his father introduced him to friends who wanted to enter the market. It was then that Gawde started his blog. Today, he runs the Getbitcoinready.com website, which offers non-professional investors a crash course in crypto. It also plans to create a blog in a regional language to expand its reach. Unlike in the early days, when using his own machine for mining, Gawde now relies on data centers and cloud computing. The reason: the computing power for mining Bitcoins has increased dramatically over the years.
Akshay Haldipur, who has a background in web security and is an expert in digital marketing, entered the market around the same time Gawde did. âBitcoin was barely trading between $ 40 and $ 50 in 2012,â he said. “This time it was just about buying and holding crypto.” Ensuring feedback was not really a priority for early enthusiasts like him.
In 2017, Haldipur had 77 Bitcoins and stakes in a few other cryptocurrencies. He said he currently holds a “good amount” of Bitcoin, Ether, stablecoins (a type of crypto whose value is tied to external assets like dollars and gold) and NFTs (non-fungible tokens, which can be sold or traded).
âThere are three types of traders: scalpers, swing traders and long term holders,â said Haldipur. âI do scalping, which basically means I come in with really big positions and get out in 15-20 minutes. What I would have done in a month, I do in 10-15 minutes. This is my strategy.
Naimish Sanghvi, who founded crypto platform CoinCrunch, focuses on long-term gains. He discovered the market while working for a global consulting firm that was conducting a study on blockchain technology. In 2017, he started investing in crypto.
âMy experience at the start was really bad,â Sanghvi said. âBefore, I was trading for only 1 to 2% profit. I would win money and then suddenly I would lose. It took a while to figure out that it’s a better investment as a long-term asset.
Sanghvi’s main investments are in Bitcoin and Ether. He started trading when Bitcoin was around $ 2,500. By the time he started to seriously invest in it, it was over $ 10,000. He said he has less than 10 crypto coins now, but is ready to buy more when prices drop.
The cryptocurrency market in India has grown rapidly. Today, there are over half a dozen exchanges that serve ads to attract new investors. Experts, however, pointed to the market risks.
First, cryptocurrencies are extremely volatile; prices can go up and down sharply in a matter of minutes. For example, when news broke in November that the government was considering a crypto ban, the prices of major cryptocurrencies fell 15%. In early December, cryptocurrencies lost another 15%.
Prices can also increase just as quickly. When Tesla chief Elon Musk announced that the electric carmaker would accept Dogecoin as payment for goods on an experimental basis, the price of that crypto jumped 15% in a single day.
âCrypto is extremely volatile,â said Haldipur. âIn a stock market, you can sit and wait for a 5% movement for a whole week; but in the crypto market, a 25-100% surge occurs within minutes.
Second, there are risks of exchanges being hacked and fraudsters peddling Ponzi schemes. âI have been scammed a number of times,â Gawde said. âA lot of cloud companies and exchanges just went out of business one day and ran away with the money. So, I’m doing my own research now. I try it, test it, and if it’s good, put it on my website for people to use.
So how do these crypto pioneers protect their investments? âYou keep money on the exchanges if it’s a small quantum – verified exchanges, which are backed by US regulations and so on,â Haldipur said. âThese exchanges, even if they are hacked, will give you money back if you file a claim. A lot of people use hard ledgers, where you have your keys to yourself. There are other things like wallets; so even if the exchange is hacked, you have the crypto in that wallet.
Doing thorough research and technical analysis before investing is crucial, given that there are currently over 12,000 active cryptocurrencies. âIf you’re here for the long haul, just invest in coins that have good fundamentals, like Ether, Bitcoin, or Solanos,â Haldipur said. âHold them without waiting. Think of it like a mutual fund.
Exchanges like CoinDCX are trying to market the crypto market so that investors can make better decisions. âYou shouldn’t look at cryptos from a get-rich-quick perspective,â said Sumit Gupta, co-founder and CEO of CoinDCX. âThe right mindset is to familiarize yourself with the topic and then take a long-term approach. “
Gupta had a high paying job at a multinational in Japan before returning to India and buying into the cryptocurrency ecosystem. He was introduced to cryptocurrencies and the distributed ledger system in 2014, when Bitcoin started to gain momentum. He started focusing on crypto in 2016 and co-founded CoinDCX with his college mate Neeraj Khandelwal in 2018. CoinDCX became a unicorn this year. He raised $ 90 million for a valuation of $ 1.1 billion.
âThere is massive interest among young Indians to enter this emerging asset class and technology,â Gupta said. âBut in terms of advances across the space, India has a lot to catch up with. We felt that an ecosystem, or some sort of, needs to be built. The exchange is a gateway for Indian users to access [the market], not just buying and selling crypto.
One could buy hundreds of cryptocurrencies through exchanges. But Gupta believes investors should stick only to crypto tokens that have a high market cap, a practice he himself follows.
The prevailing regulatory uncertainties do not really deter investors. All eyes are now on the cryptocurrency bill that will be tabled in Parliament after securing cabinet approval. Crypto supporters say it will be very difficult for the government to ban cryptocurrencies altogether.
On the one hand, the crypto market is global and operates 24/7. If cryptocurrencies are banned here, investors would simply move their operations to exchanges that are registered and operating overseas. Many investors are already investing through such exchanges. âCryptos are not under government control,â Gawde said. “To ban it, they will have to shut down the Internet, which is impossible.”
So, as a first regulatory step, investors want cryptocurrencies to be recognized as an asset class just like stocks, mutual funds, or gold. Gupta said sound regulation will boost investor confidence, lead to market development in an orderly fashion, and boost the crypto startup ecosystem. “There are,” Gupta said, “thousands of entrepreneurs sitting on the fence.”