India may only be the 10th largest economy in the world, but it is the fourth-fastest-expanding, with a forecasted GDP growth of around 5.5% this year. As the country’s major cities are becoming financial powerhouses, it’s little wonder the world’s largest democracy is beginning to take to Bitcoin.
Coindesk, a digital currency news site, listed India as the fourth-most-likely nation in the world to see mass adoption of Bitcoin, behind Argentina, Venezuela and Zimbabwe. Some bricks-and-mortar stores have started to accept Bitcoins for payments. ePaisa, a mobile brand, began offering customers the chance to pay in Bitcoins last month. A QR code is scanned using the customer’s wallet app, transferring the currency on-the-spot.
Schools, too, have begun to consider Bitcoin. Dharwad International School in Karnataka began offering Bitcoins for this year’s annual fees. Considering the population of 1.25 billion, which is set to overtake China’s by 2022 – and that India’s remittance industry is calculated at a massive $50-70 billion – it’s no surprise many experts are touting South Asia’s giant as home of the next Bitcoin boom.
Indian banks scrimp on services, and payment platforms such as PayPal can be difficult due to their tendency to freeze transactions. A number of Bitcoin-related firms have emerged in the past few years, to fill that gap.
One of them, Unocoin, has seen usership rise by 35% per month. It now serves over 20,000 customers, and expects that number to double by the end of this year. “With such a large portion of India being unbanked, we believe that an open source, decentralized digital currency and payment protocol that is nearly free to use and instantaneous to transfer will have huge positive implications for the country,” says founder and president Sunny Ray.
Ray and others will have been buoyed by Reserve Bank of India (RBI) chief Shri R Gandhi’s comments about the cryptocurrency, made at a Mumbai banking expo on August 25th. “Digital currencies and crowdfunding have the potential to support criminal, anti-social activities like money laundering, terrorist funding and tax evasion,” he said.
“While we do not have any reported instances of crowdfunding in this respect, cryptocurrencies have been widely suspected to finance criminal activities,” added Gandhi. “We have to be carefully and critically watching these developments.”
His comments on corruption were well-founded. India, despite huge development since the economy was liberalized in 1991, remains one of the world’s most corrupt nations. It is placed 85th of 175 at Transparency International’s Corruption Perceptions Index. A 2014 Council on Foreign Relations article claimed that official wrongdoing could cost India $200 billion, or around 10% of its GDP, by 2017.
Even recently-elected prime minister Narendra Modi has become entangled in corruption cases. “The system isn’t subject to bribes,” Megha Mehta, a recent graduate from Rajasthan, says. “The system is bribes.”
Mupparaju Siva Kameswara Rao, founder of BTCXIndia, the county’s largest Bitcoin wallet, agrees that Bitcoins could answer some of India’s economic ills. However, he says, the RBI “have so far been fairly vague when it comes to any concrete directions for industry. I think what the community is struggling with the most is the lack of clear guidance on the regulatory side, and we hope to get a more detailed legal framework established soon.”
BTCXIndia requires all potential customers to complete a Know Your Customer (KYC) form upon sign-up, which comprises a number of personal and professional details. “By requiring this amount of verification we make it very hard for unscrupulous users to create accounts,” he says. “We also manually review the information provided in every KYC form before an account is approved for trading.”
News that some of India’s multinationals, such as Tata and Infosys, plan to adopt Bitcoin, is “a great thing,” adds Ray. “We have been working towards driving bitcoin adoption in India for nearly 3 years and the fact that these heavy weights are now chiming in is a validation of our message.”
“I think they are focused on Blockchain rather than Bitcoin,” says Sandeep Goenka, co-founder at Zebpay. “The zeitgeist that Blockchain, the network behind Bitcoin will be bigger than Bitcoin, the currency, is wrong. But in any case, when reputed companies like this enter the space, it helps to improve the perception of Bitcoin in India.”
Precise data on Bitcoin usage in India is hard to find, adds Goenka. But it is “a fraction of China.” Blockonomics, another Bitcoin startup, claims that it sees around $4-5 million moving in Bitcoins each month in India. The country en masse, also, is a traditional slow-adopter of new technology, and most experts agree the situation will be little different with Bitcoin.
But the banking needs are there: fewer than 35% of Indian households maintain bank accounts, and less than 20% owns a debit or credit card. Much of India’s population is still rural. Those of them who suffer from financial disinclusion may have an alternative with Bitcoin.
Monsoon season has just finished in India. Now that the rain has fallen, it seems an ideal time for Bitcoin to move in on an economic powerhouse. “I have a feeling that it will be an exciting journey from the currency from here,” says Rao.