Several new developments are pointing to India as being the next point of interest for the key digital currency Bitcoin. They are building on the untapped opportunities available to the country’s billion people.
Surge in Internet use
India has overtaken the United States to become the world’s second largest Internet market, with 333 million users, behind China’s 721 million.
Even though this is a positive development, the new report by the UN Broadband Commission for Sustainable Development also confirms that just six nations – including China and India – together account for 55% of the total global population still offline, because of the sheer size of their populations. In other words, there are still more people to be connected in countries like India.
What could become of the Indian market soon is slightly reflected in the Chinese involvement in Bitcoin trading and exchanges, particularly when there is a sharp drop in the Yuan’s value.
Bitcoin is already big in India
Kumar Gaurav, the CEO of the Blockchain remittance company Cashaa, says that India is certainly one of the emerging markets for Bitcoin and related cryptocurrencies due to such obvious reasons like having a young population, an increase in smartphone and Internet penetration, and the mass market which makes it very attractive market for both investors and entrepreneurs.
He says to Cointelegraph:
“India also has the largest population of engineers which gives us a huge market which can adopt technical products at a faster rate. Bitcoin is one such product. But I also see there are a few challenges in India such as an already well-developed central banking system which is cheaper and automated. To make way for cryptocurrency in India, entrepreneurs need to sell the products based on the advantages of cryptocurrency, rather than the cryptcurrency itself.”
Looking beyond the optimism that lies ahead of this key digital currency in the world’s second most populated country, Mohit Kalra, CEO of Coinsecure, says to Cointelegraph that Bitcoin is already big in India.
He notes:
"I think India already is a huge market. In the past all Bitcoin trades have been offline, mainly through personal connections or by finding people on forums, which was a tricky situation, as no one actually knew each other and it started becoming a risky thing to do. It's just very recently that all trades are moving online so the buyer and seller do not have to worry about who they are trading with as exchanges like ours will take care of the due diligence. With the pace it's moving at, soon India will be able to reach the level of China. I think India still needs more miners though for generating supply. This will then help India not rely upon other countries for liquidity."
Reigning world remittance champion
The increased Internet use will soon reflect on the remittance structures available to Indians both within and outside of the country. As at this year’s released figures, India was the world's largest remittance recipient in 2015 despite experiencing a $1 billion drop from the previous year, says the World Bank.
Despite the drop, which is as a result of a global contraction in remittances by 1.7 per cent to $581.6 billion in 2015, from $592 billion in 2014, the World Bank said India attracted about $69 billion in remittances last year followed by China with $64 billion, the Philippines ($28 billion), Mexico ($25 billion) and Nigeria ($21 billion).
Wide disparity between remittances to India and China
Despite the larger size, more Internet users, more income and so on, India has been beating China on the remittance scale partly due to statistical, historical and cultural reasons, but mostly economic, says Dilip Ratha the Head of the World Bank’s migration project, called the Knowledge Partnership on Migration and Development.
Though India and China together receive more remittances than the next five countries combined, and they both have huge armies of overseas workers, Indians consistently transfer more money home because their relatives need it, unlike Chinese families who don’t necessarily need remittance money to survive, Mr. Ratha told WSJ.
Rather, they are more likely to send money home to invest in a business. This leads to another reason: “remittance decay” - the amount of money any given migrant worker sends home tends to shrink the longer he or she is away as their links with the home country weaken.
Ratha says this tends to affect the Chinese abroad but not the Indians as they appear to maintain tighter ties with their homeland longer. Indians also have variety of overseas employees. They constitute the richest migrant group in the wealthiest country in the world – the United States – and India is still a very poor country, so there is huge need to be met through remittances sent home, says Ratha.
This wide disparity between these two sets of people will soon play out as the use of Bitcoin becomes more acceptable on a larger scale in India.
Growing concerns over using traditional remittance channels
Several informal channels of transferring funds have been flourishing primarily due to the high cost of formal avenues as well as the low penetration of banks and money transfer agents in India’s interiors.
There are indications that, as the Prime Minister Narendra Modi said at the G20 summit, India is now championing the cause for reducing remittance costs.
Ratha said the technology to provide affordable remittance services is already there but regulations are still standing in the way of new players who are able to introduce efficient technology to the market.
Surge in Bitcoin related use in the Middle East
The Gulf Cooperation Council countries are India’s largest source of remittances because of the large number of Indian expats working in the region.
There have been more Bitcoin-related developments in the region of late. The Dubai-based, but Jordanian-founded start-up, BitOasis now has its wallet service available across the Middle East, North Africa and Asia, and users in the UAE, Qatar, Kuwait, Bahrain and Saudi Arabia can also use it. The world’s first Bitcoin-based oil market has launched, and Bitcoin is looking good for fintech in the region.
Though remittances to India from the GCC were reported to have declined by 2.2 per cent to US$35.9 billion in the 12 months to March 2016, compared with the same period a year earlier, according to the report by Crisil, the Mumbai ratings and research company which is part of S&P Global. Its figures show that the UAE is the biggest source of GCC remittances into India, accounting for 38.7%, followed by Saudi Arabia with a 28.2% share.
With a little more push Bitcoin use is getting bigger in India with several initiatives which weren’t available in the past year.
Amazon is pushing to be one of India’s e-commerce leaders, and Purse.io, which allows discounts on Amazon with Bitcoin, is helping in that drive with discounts of up to 22% using Purse’s “Name Your Discount” program. This is in addition to users who are already using Unocoin, an India-based exchange, to purchase Bitcoin. They are already set to receive discounts on food, clothes and electronics.
Also, the Bitcoin company Coinsecure recently announced a partnership with OKLink to offer Blockchain technology-powered remittance services in India. With India being the largest inward remittance receiving country in the world, this partnership is expected to mark a huge milestone for Bitcoin and Blockchain technology.
The mobile Bitcoin exchange, Zebpay, says its app has been downloaded more than 100,000 times from iOS and Android app stores as of this August.