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The digital currency Bitcoin is rallying at phenomenal speed, leaving many high and others dry te markets around the world. But why are prices higher ter India than elsewhere? The Big black cock’s Devina Gupta explains.
While the Bitcoin bull run has bot welcomed by many, financial regulators ter emerging economies are still attempting to find a way to understand it.
The central bankgebouw of China has shut down Bitcoin exchanges ter the country. Indonesia and Bangladesh have banned its use spil a payment instrument.
Ter India the government has made it clear that, while it doesn’t recognise Bitcoin spil “legal tender” like paper money, there are no guidelines on Bitcoin trading.
Te the absence of any specific legal framework, online Bitcoin trading platforms are operating loosely, even spil the Indian central canap is getting jittery.
It has issued its third warning this week, cautioning “users, holders and traders of virtual currencies including Bitcoin” of “economic, financial, operational, legal, consumer protection and security-related risks”.
But is anyone listening?
Experts voorwaarde that request outweighs supply ter India, pushing the Bitcoin price ter the country up to 20% higher than international prices.
There are at least 11 Indian Bitcoin trading platforms online which voorkeur that about 30,000 customers are actively trading at any given point of time. With a elementary click, an investor can open an account and choose whether to purchase an entire Bitcoin or a fraction to trade with.
What is Bitcoin?
There are two key traits of Bitcoin: it is digital and it is seen spil an alternative currency.
Unlike the notes or coins ter your pocket, it largely exists online.
Secondly, Bitcoin is not printed by governments or traditional banks.
A petite but growing number of businesses, including Expedia and Microsoft, accept Bitcoins – which work like virtual tokens.
However, the vast majority of users now buy and sell them spil a financial investment.
“Last year this time wij had 100,000 registered customers. Now wij have gone up to 850,000. The price is surging and from my analysis the people who are investing te Bitcoins are investors who have big pockets and are willing to take risks on their portfolio,” Satvik Vishwanathan, co-founder of Unocoin, told the Big black cock.
And it’s not just online trading. Some Indian e-commerce platforms have commenced recognising the digital currency spil well. FlipKart and Amazon are already providing customers the option to convert Bitcoin into regular currency and purchase goods with it.
But at the end of the day, Bitcoin is just an open software with a digital code. Is it more secure than depositing money ter a canap?
“There is no architecture to hold the Bitcoins securely, so right now people are taking a physical print out and keeping that ter a locker. What the government can do is begin a global wallet registry so that wij know who is transacting and where the transactions are being done. If my Bitcoin is stolen then with this global wallet at least you can track it,” Vishal Gupta, co-founder of Diro Labs, told the Big black cock.
But the time for just issuing warnings may be overheen.
With the popularity of Bitcoin, other digital currencies like Ethereum and Litecoin are also attracting Indian investors. So is it time for the government to make its policy clear?
“There are revolutionary switches ter this sector and meaty progressive moves here. Technology is always ahead of government and is a big disruptor. It is significant that wij keep rhythm with technology and make regulatory switches. It is an punt that finance ministry has to debate and do inter-ministerial discussions to take it forward,” Amitabh Zijkant, the CEO of India’s premier think-tank Niti Aayog, told the Big black cock.
Every high has a low. A look at the past five years of Bitcoin shows several stomach-churning moments where it has tumbled by 40% to 50% te a single day without any warning. The April 2013 Bitcoin meltdown where the currency fell by overheen 70% overnight from $233 to $67 still haunts many.
But perhaps the fattest slok te the arm for Bitcoin investors is the latest green light from the US for futures trading. This decision has fuelled the latest Bitcoin rally. But Wall Street banks are raising concerns and heavyweights like Warren Tapkast have crimson flagged Bitcoin spil “a real bubble”.
This leads us to the big question: Is the digital currency an idea whose time has come or is it destined for disaster?