So far, Indian investors may have flocked to cryptocurrencies in the hope of windfall returns or out of curiosity. But soon, they may be in for some real economic benefits from these bets, especially given the country’s economic environment.
Investment in bitcoin, the most popular cryptocurrency, can work as a hedge against inflation, according to many fans of the digital coin. The argument, which was first made by bitcoin’s anonymous creator Satoshi Nakamoto in 2008, has been widely debated over the years. And while there is no definite proof of the hypothesis yet, there’s a reason why Indians may be curious about it right now.
Consumer price inflation in the country has remained higher than the Reserve Bank of India’s (RBI) target of 4% for most of last year. With global crude oil prices on the rise, there are concerns that inflation is likely to rise further in the near term. In addition, given the fact that the Indian central bank has been preoccupied with reviving growth in the Covid-hit economy, it like that managing inflation may not be its priority for a while.