Even conservative Indian investors can’t seem to resist the bitcoin price boom.
As the value of the cryptocurrency breached the $11,000 per bitcoin mark on Nov. 29—effectively doubling within a single month—virtual currency exchanges in the country say that the number of registrations to buy bitcoins has jumped. This, despite the murmurs that India’s central bank could potentially declare bitcoin and its ilk illegal in India.
“It took us about three years to gather one lakh (100,000) registered customers and in last one month itself we have seen about 2 lakh (200,000) customers registering with us,” said Sathvik Vishwanath, co-founder and CEO of Unocoin, a bitcoin exchange. The obvious trigger is the price: On Nov. 01, the price of a bitcoin in India was Rs459,047 ($7,124), which sharply moved up to Rs860,049 by Nov. 29.
It’s a similar story at other cryptocurrency exchanges in the country.
“The extent of interest in bitcoins is at unprecedented levels,” said Sandeep Goenka, co-founder of Zebpay, a bitcoin exchange. “Every time prices increase, investors who were sitting on the fence and were skeptical do enter the ecosystem. Zebpay says that lately it has been adding between 300,000 and 400,000 users every month on its exchange, compared to about 150,000 users in June and July.
“This time it almost feels like mainstream adoption, something I have never experienced before, because now we are seeing interest coming in from even the conservative investors,” Goenka added.
An inexperienced bitcoin investor typically starts by investing smaller amounts, between Rs500 and Rs1,000, say experts. In comparison, seasoned investors are betting between Rs2 lakh and Rs5 lakh in bitcoin. And these investors are not just limited to metros, but are also coming from smaller towns nationwide.
How long this boom will last is anybody’s guess. Considering the supply of bitcoin is limited, some experts expect this resurgence to continue. Others predict that a price correction is in the offing. In fact, on Wednesday (Nov. 29), the price of bitcoin corrected to below $9,500 but has been gradually rising subsequently.
This heightened interest for bitcoin in India comes at a time when the government and the banking regulator have expressed their discomfort with virtual currencies. Earlier, a finance ministry panel had also recommended banning virtual currencies, reportedly arguing that they can be used for money laundering and fraud.
Despite these concerns, virtual currency exchange operators are bullish. “If India had to ban virtual currencies then they would have done that by now. In the last three years, the RBI’s statement has been the same, that they are uncomfortable with it and people should invest at their own risk,” said Vivek Steve Francis, CEO of Coinome, a cryptocurrency trading exchange.
And some of these exchanges insist that they already have checks and balances in place to allay any concerns that the regulators may have. “No cash or cheque is accepted, all transactions are routed via online bank transfer to ensure that there is a money trail,” Francis added. “Moreover, we also follow the electronic know-your-customer procedure and also check the Aadhaar number to ensure that fraudulent transactions are avoided.”