The Indian crypto ecosystem is now worth well over $70 billion, with more than 10 million investors actively participating in the market. In 2017, this number was in the range of $13 billion, which means that we have observed a growth of 500% in the last four years, and it is also reflecting on different metrics like daily trading volumes and number of transactions.
Even though the awareness about cryptocurrency and real-utility is at a large scale now, the Indian exchanges back then in 2017 were still performing at a very high level, and new blockchain initiatives were always on the rise.
Several states released many initiatives relating to supply chain and land acquisition, which were to be done using blockchain technology. Food distribution to the poor was also possible in the State of Telangana, where they used trailing blockchain applications. Such initiatives aided the crypto community as it was rapidly expanding, and many people saw it as the next big thing similar to the Internet.
So what actually happened in that period? How did we get here even going through a blanket ban from the RBI? In this article, we shall break down everything that facilitated this current bitcoin run and understand how Indian exchanges evolved over this period of time.
The Indian crypto trading volume was expected to overtake China’s, as we saw people using the tokenized form of money to avoid hefty bank charges. This happened right after PM Modi’s ban on 86% of the country’s currency, leaving people in a state of fear and confusion. The digital asset seemed like a hedge against uncertainty raised by the surroundings at that point in time.
The price of bitcoin was around $5 at the start of 2012 and reached almost $1000 by the end of 2017. This massive growth in the Indian crypto ecosystem was never seen before and, the main reason being the emergence of cryptocurrency platforms like Zebpay, Unocoin, and Koinex. Some of these exchanges had done hundreds of millions of dollars in trading volume in a single day when bitcoin was rallying to $20k in the month of December.
While exchanges were adding thousands of users daily and bitcoin was hitting new all-time highs, the RBI had a statement to warn customers about virtual currencies. In less than five months, they issued a circular banning all dealings with Crypto leaving Indian exchanges crippled overnight.
The trading volumes fell by almost 99%, and by August 2018, about 95% of jobs vanished. Almost every major exchange announced they were shutting down, and no one was ready to back then take the issue to the supreme court.
But it all changed when several new exchanges like WazirX and CoinDCX formed a committee and filed a writ petition in the supreme court. After two years of fighting with the official banking channels, Indian exchanges convinced the Supreme Court to strike down RBI’s banking ban on Crypto.
This hugely impacted the market, as we saw the price of bitcoin surge more than 700% in the last 12 months. Companies like Coinswitch started getting huge support from big investors, as we currently see the company being valued at $500 million.
According to Arcane Research, India surpassed China in weekly P2P volume, which is estimated to be an increase of 87% after overturning the blanket ban. The Covid-19 pandemic is also a huge contributor to this rise in popularity of cryptocurrencies like bitcoin. That is when people noticed the inconsistencies in traditional investment options and were looking to trade their money for a better performing asset like bitcoin.
Even one of the well-known research directors at IDC Financial Insights, Ganesh Vasudevan, also mentions that during times of uncertainty, people started to trust the underlying blockchain technology. That is why large institutional investors began allocating funds to invest in bitcoin and other cryptocurrencies.
Up until last year, we thought the Indian crypto ecosystem was full of millennials trying to explore this new wave of technology, but that has changed largely in the last few months. According to WazirX, there has been an increase of 337% in sign-ups by users over 45, so investing in crypto is now beyond millennials.
The same can be said about crypto exchange Zebpay, as they also observed an increase of 705% in the number of investors above 45. “The elderly, too, are becoming more and more tech-savvy and see nothing strange in allocating their savings to assets via swipes on their phones in a bid to diversify their investment bouquet,” said Ashish Singhal, CEO and founder of CoinSwitch Kuber. He also mentions that the activity of older investors matched with that of young folks.
The growth in technology and digital exchange of money shows how far we have come in this wild crypto space. In 2017, we used to see 750 bitcoins traded daily and now that number is well over 1000. The average trading volume of five exchanges combined is $47 million, so there is no doubt we are going in the right direction.
The only roadblock we see ahead is government regulation. We have to wait and watch how the exchanges will be regulated to ensure that no one is using virtual currencies for illicit activities. This significant jump we made in the last couple of years is absolutely fantastic. However, we still have to see many improvements made in the Indian ecosystem to achieve mass adoption.
Born and brought up in India, Karthikeya Gutta is a crypto journalist and freelance contributor for ItsBlockchain. He covers various aspects of the industry with in-depth analysis and research. His passion towards blockchain and crypto ecosystem is mainly because he believes it can really change the world and help millions of people.
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