4 reasons why India is still behind in the blockchain sector
While blockchain and cryptocurrency have introduced rays of revolution around the world, India seems to lag behind in this race. While USA, South Korea, Japan, Hong Kong, etc already have a large number of crypto users and crypto start-ups, India is still slugging behind. Some of the reasons why India is still behind in the race are:
Lack of Awareness
There is considerable lack of awareness about Blockchain and cryptocurrency in India. This is the major reason why it still lags behind USA, Hong Kong, Japan, etc. in blockchain technology adoption.
Despite the fact that India is the land of engineers, technology is still not widespread in the country. Usually, when a new technology is introduced in the world, it usually begins in the west and other developed countries. Then moves onto to lesser developed countries like India. “India is already three years behind USA, Japan, and Hong Kong when it comes to cryptocurrency adoption,” Goenka.
This is just like the introduction of the internet. While the internet has already revolutionized west, it took years for the technology to come in India. And when it did, it took even longer to make the internet widespread.
Currently, most crypto users in India are young engineers living in the metropolitan. The awareness about blockchain technology is lacking.
The cryptocurrency market is a volatile, unpredictable and risky business. And Indians do not like risks very much. Indians like to save more, spend less and invest in the sure thing. Since people are very reluctant to experiment with this new technology, adapting blockchain technology is too difficult for Indians.
India’s risk-averse nature comes from their deeply embedded state economy-system psychology. Traditionally, India has been more of a state-oriented economy while countries like USA, Japan, South Korea, etc are market-oriented economies. So while people in the market economy are prone to taking risks and innovating, people in state economies prefer the sure thing which makes them risk-averse.
Hence, Indians are not really comfortable using a currency which is not authorized by the state, has no government links and works completely on the market system. In case something goes wrong, blockchain is not answerable to legislative or regulatory intervention. In fact, the state has been discouraging cryptocurrency continuously. So while people in USA, Japan, etc are using blockchain liberally, they are approaching it with fear and suspicion in India. It is hard to adopt such technology when their psychology is deeply tied to the identity of their nation-state.
The fear created by RBI
RBI has been discouraging investment in Bitcoin and other cryptocurrencies, which has created fear among people to invest in risky internet coins. Though their warnings come out of pure concern regarding an unknown technology, it is still bad for blockchain.
RBI has been closely monitoring the crypto market since 2016. It even collaborated with other banks to produce a whitepaper detailing the technology, concerns and possible areas of adoption. The paper also highlighted many advantages of technology to the bank, such as cost savings, efficiency, and transparency. However, RBI’s warnings regarding crypto-investment last year has put blockchain in an ambiguous position.
The current concerns by the RBI only accelerate the need to generate awareness about blockchain, which powers the use of Bitcoin and other cryptocurrencies.
Risk-free start-up atmosphere
While start-ups have recently become popular in India, symbolizing that India is finally ready to take risk, start and innovate, but the truth is not so. Indian start-up stories usually revolve around products that have been already globally experimented. So their success rate is already measurable and the risks attached to them is less. Some of these start-ups include cab apps, holidays, life insurance, housing, etc.
In India, it is especially very difficult to find investors. Even if young start-ups come up with innovative breakthroughs, the chances that any investor would be ready to invest in their project is very low. Blockchain technology is not just creating a product, but its financing, monetizing and scaling are crucial as well. And in India where investors like the simple things, blockchain is another day’s story.
Even though blockchain faces many resistive forces in India, there are many opportunities here as well.
Firstly, while it is difficult to find a crypto-project investor here, blockchain has come up with the innovative solution of Initial Coin Offerings (ICOs) to raise investment for the project. So start-ups do not have to rely on investors or IPOs to start a project. Though in a country where crypto awareness is very low, raising money via ICOs is a difficult task. But since Indians are moving their ICOs abroad to raise money, it is no problem as well.
Secondly, India has demographic advantages. It has a lot of skilled youths to exploit this technology. The country has a large technical pool of young engineers to build on the blockchain. Moreover, a new generation of crypto entrepreneurs is rising. Not only does it provide a massive opportunity for crypto start-ups, but the technical and innovative skills required to build a blockchain network is already present in the country.
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