Skip to navigationSkip to content
PRIVATE KEY

Pay attention to India’s pivot to blockchain

Indian brokers watch a screen of prices
Reuters/Punit Paranjpe
And now for something completely different.
  • Nupur Anand
By Nupur Anand

Writer

Published Last updated This article is more than 2 years old.

Even as it cracks down on cryptocurrencies, the Indian government has made it clear that it backs blockchain.

Not surprisingly, embattled exchanges in the country are now pivoting to blockchain in order to survive. BTCXIndia wound up its exchange operations and transformed itself into a blockchain consultancy firm, Koinex announced a plan to build a blockchain division, and a few others, like Bitbns and Unocoin, are still deciding what to do.

Last year, India’s central bank came down hard on exchanges, forbidding banks from doing business with crypto bourses. This effectively crushed the industry. But several exchanges didn’t shut up shop, and instead looked to put their blockchain knowledge and infrastructure to use in other ways.

This is significant, because India has the second-largest number of blockchain developers in the world, after the US, according to Dappros, a London-based blockchain consulting firm. If a critical mass of firms in India successfully transform into pure blockchain businesses, it could inspire others to follow suit in countries where the rules are equally hostile towards cryptocurrencies.

At the moment, blockchain is most commonly used in India’s financial sector, but it is also employed in agriculture, pharma, education, and infrastructure. Nasscom, India’s main IT industry association, reckons that blockchain technology has the potential to add $5 billion to the Indian economy in the next three years.

Koinex, backed by venture capital firms Beenext of Singapore and Pantera Capital of San Francisco, believes that the shift from crypto to blockchain is a predictable evolution for exchanges.

“Crypto trading was a lucrative thing that the blockchain business saw and it also allowed an easy fundraising mechanism if there was a good use case,” Rahul Raj, founder of Koinex, told Quartz. “But slowly the realization came that the blockchain space is much bigger than just payments and cross-border settlements, and therefore it marks a natural shift for any exchange.”

Koinex has already built a development center in Bengaluru, India’s tech hub, and has been boosting its headcount focused on blockchain technology. It is guarded about its plans, but earlier the company mentioned that it would study issues of interest for global financial institutions like data fraud, lack of transparency, data tampering, high transaction fees, and interference from middlemen.

This shift is not unique to India, with global exchanges such as Coinbase, Gemini, and Binance also delving into the blockchain sector. South Korean exchanges, which like their Indian counterparts were blindsided by regulatory crackdowns, have also doubled-down on blockchain to keep their businesses going.

In India, exchanges are encouraged by the government reiterating its stance that it wants to develop the blockchain ecosystem, even though it is not keen on bitcoin and its ilk. Some industry representatives have tried to convey to ministers that blockchain and cryptocurrencies are inseparable, but the government’s stance on this—among many other things—remains unclear. —Nupur Anand

🔑 🔑 🔑

Chart interlude

Moving on up

Although cryptocurrencies defy most attempts at traditional financial analysis, that doesn’t stop people from trying. One measure that’s been getting attention recently is the ratio of a coin’s current price to its 200-day moving average. What does this tell you? That the supposedly bullish sign when ethereum broke above its long-term average in May didn’t pan out so well and, more broadly, that devising investment strategies based on chart patterns is a dangerous game.

🔑 🔑 🔑

De-jargonizer

Bug bounty

A bug bounty is a reward offered to a person who discovers and reports a software vulnerability. This acts as an incentive for users, researchers, and others members of the cryptocurrency community to help improve security systems, thereby preventing hacks, thefts, and other unwelcome issues.

Depending on the severity the bug, the associated bounty can range from a few hundred to thousands of dollars. For example, earlier this month, Coinbase awarded $30,000 to one user via HackerOne, a bug bounty-cybersecurity platform.

The exchange hasn’t disclosed the reported issue yet, but judging by the reward—which falls between Coinbase’s “high” and “critical” vulnerability tiers—the problem must have been pretty serious.

Please send news, tips, and bounties to privatekey@qz.com. Today’s Private Key was written by Nupur Anand and Matthew De Silva, and edited by Jason Karaian. Know what you own, and know why you own it.

📬 Kick off each morning with coffee and the Daily Brief (BYO coffee).

By providing your email, you agree to the Quartz Privacy Policy.