Rich rewards often lead to great risks, and the same goes for the highly volatile cryptocurrency market. Uncertainty in 2020 worldwide has led to increased interest from the masses and large institutional investors in trading in cryptocurrencies, a class of assets of the new era. Increasing digitalisation, a flexible regulatory framework and lifting the Supreme Court’s ban on banks operating crypto-based companies have halted investment by more than 10 million Indians in the past year. Several major global cryptocurrency exchanges are actively exploring the Indian cryptocurrency market, which has shown continued growth in daily trading volume over the past year amid a sharp drop in prices as many investors looked to buy value. As the craze for cryptocurrencies continues, many new cryptocurrency exchanges have emerged in the country that allow buying, selling and trading, offering functionality through user-friendly applications. WazirX, India’s largest cryptocurrency trading platform, doubled its users from one million to two million between January and March 2021.
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What drives the world’s largest crypto exchanges to the Indian market?
In 2019, the world’s largest cryptocurrency exchange in terms of trading volume, Binance acquired the Indian trading platform WazirX. Another cryptocurrency launch, Coin DCX, secured an investment from Seychelles-based BitMEX and San Francisco-based giant Coinbase. India’s crypto and blockchain start-ups have attracted $ 99.7 million in investment by June 15, 2021, to about $ 95.4 million in 2020. Over the past five years, global investment in the Indian crypto market has increased with an incredible 1487%.
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Despite India’s vague policies, global investors are betting heavily on the country’s digital coin ecosystem due to various factors such as
• Technically understandable Indian population
The predominant population of 1.39 billion is young (average age between 28 and 29) and technology-savvy. While the older generation still prefers to invest in gold, real estate, patents or stocks, the newer ones accept high-risk cryptocurrency exchanges because they are more adaptable to them. India ranks 11th on the list of the Chainalysis 2020 report on global acceptance of cryptocurrencies, which shows the excitement of cryptocurrency among the Indian population. Nor can the government’s friendly attitude to cryptocurrency or the rumors surrounding cryptography shake young people’s confidence in the digital coin market.
India offers the cheapest internet in the world, where one gigabyte of mobile data costs around $ 0.26, while the global average is $ 8.53. Thus, almost half a billion users benefit from affordable Internet access, which increases India’s potential to become one of the world’s largest cryptocurrencies. According to SimilarWeb, the country is the second largest source of web traffic to the peer-to-peer bitcoin trading platform, Paxful. While the mainstream economy is still struggling with the “pandemic effect”, cryptocurrency is gaining momentum in the country as it provides the younger generation with a new and fast way to make money.
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It is safe to say that cryptocurrency can become Indian millennials what gold is for their parents!
• Rise of fintech startups
The craze for cryptocurrencies has led to the emergence of many trading platforms such as WazirX, CoinSwitch, CoinDCX, ZebPay, Unocoin and many others. These cryptocurrency exchange platforms are highly secure, multi-platform and allow instant transactions, providing a user-friendly interface for crypto enthusiasts to buy, sell or trade unlimited digital assets. Many of these platforms accept INR for purchases and trading fees of only 0.1%, so simple, fast and secure platforms are a lucrative opportunity for both first-time investors and local retailers.
WazirX is one of the leading cryptocurrency exchange platforms with over 900,000 users, providing customers with opportunities for transactions with peers. CoinSwitch Kuber provides the best cryptocurrency exchange platform for Indians and is ideal for both beginners and casuals. Unocoin is one of the oldest cryptocurrency exchange platforms in India, representing over a million merchants through mobile applications. CoinDCX provides users with over 100 cryptocurrencies as an exchange option and even provides investors with insurance to cover losses in the event of a security breach. So global investors are looking at the many cryptocurrency exchange platforms in India to take advantage of the emerging market.
• Mixed government response
A bill banning virtual currency that would criminalize anyone involved in owning, issuing, digging, trading and transferring cryptocurrencies could be passed. However, Finance and Corporate Affairs Minister Nirmala Sitaraman allayed concerns among some investors, saying the government had no plans to ban the use of cryptocurrency altogether. In a statement to a leading British newspaper, the Deccan Herald, the finance minister said: “We are very clear that we are not closing all options. We will allow certain windows for people to experiment with blockchain, bitcoins or cryptocurrencies. “Obviously, the government is still researching the national security risks posed by cryptocurrencies before deciding on a total ban.
In March 2020, the Supreme Court overturned a central bank decision to ban financial institutions from trading cryptocurrencies, prompting investors to accumulate in the cryptocurrency market. Despite the continuing fear of a ban, transaction volumes continued to grow, and user registration and cash flows in the local cryptocurrency exchange were 30 times higher than a year ago. One of the oldest exchanges in India, Unocoin added 20,000 users in January and February 2021. The total volume of Zebpay on the day of February 2021 became equivalent to the volume generated throughout the month of February 2020. Responding to the cryptocurrency scenario in India, the Minister of Finance said in an interview with CNBC-TV18: “I can only give you a clue that we are not closing our minds, we are looking for ways in which experiments in the digital world and cryptocurrency can take place.”
Instead of standing aside, investors and stakeholders want to do their best to spread the digital coin ecosystem until the government introduces a ban on “private” cryptocurrency and declares a sovereign digital currency.
Is India moving towards financial inclusion with cryptocurrency?
Formerly considered a “boys’ club” due to the predominant involvement of the male population in the cryptocurrency market, the ever-increasing number of women investors and traders has led to more gender neutrality in the new and digital form of investment methods. Women used to stick to traditional investments, but now they are taking risks and entering India’s crypto space. After the Supreme Court clarified the legality of the “virtual currency”, India’s cryptocurrency platform, CoinSwitch witnessed an exponential 1000% increase in its female users. Although female investors still make up a small percentage of the crypto community, they create fierce competition in the Indian market. Women tend to save much more than their male counterparts, and more savings mean more investment diversity, such as high-return assets such as cryptocurrencies. In addition, women are more analytical and better at assessing risks before making the right investment choices, so they are more successful investors.
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Increasing the mass institutional acceptance of cryptocurrencies
The uncertainty and panic caused by SARS-Covid 19 led to a liquidity crisis even before the economic crisis began. Many investors have turned their assets into money to protect their finances, leading to a collapse in bitcoin and altcoin prices. But despite cryptocurrencies crashing, it still managed to be the best-performing asset class for 2020. With the system’s increased vulnerability and loss of confidence in central bank policies and money in its current design, people have an increased appetite to digital currencies, which led to the recovery of cryptocurrency. Due to the stellar performance of the cryptocurrency in the midst of the global financial crisis, the upward trend has intensified interest in the virtual currency market in Asia and the rest of the world.
In addition, to fuel public demand for convenient and reliable transaction solutions, digital payment gateways such as PayPal have also shown support for cryptocurrencies that can enable consumers to hold, buy or sell virtual assets. Tesla CEO Elon Musk recently announced a $ 1.5 billion investment in the cryptocurrency market and that the power company will accept bitcoins from buyers, leading to an international jump in the price of bitcoin from $ 40,000 to $ 48,000 within every two days. Two of the world’s largest payment platforms, Visa and Mastercard, also support cryptocurrencies by introducing them as a means of making transactions. While Visa has already announced that it allows stable coin transactions in the Ethereum blockchain, Mastercard will start crypto transactions sometime in 2021.
What does the future hold for the cryptocurrency market in India?
The Indian cryptocurrency market is not immune to the terrible cryptocurrencies. Despite huge investments from global partners, local investors are still keeping their distance from crypto investments due to uncertainty about the legality of India’s digital coin ecosystem and high market volatility. Although the cryptocurrency market has been booming since last year, Indians own less than 1% of the world’s bitcoin, creating a strategic disadvantage for the Indian economy. The Indian government plans to appoint a new committee to study the possibility of regulating digital currencies in the country, as well as to focus on blockchain technology and propose it for technological improvements.
The ability of blockchain technology to provide a secure and unchanging infrastructure has been realized by various industries to instill transparency in transactions. For a country with more than 15 million cryptocurrency users, the commission’s new recommendation could be of great value in determining the future of cryptocurrency in India. However, stakeholders believe that technical and economic strength will make India a key player in the crypto and blockchain market. Gradually, cryptocurrency is gaining mass acceptance, which may lead to greater adoption of the digital currency.
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According to another TechSci Research Report on “Cryptocurrency Market in India By supply (hardware and software), by process (extraction and transactions), by type (Bitcoin, Etgereum, Bitcoin Cash, Ripple, Dashcoin, Litecoin, others), by end user (banking, real estate, stock market and virtual currency) , By Region, Forecast and Opportunity, 2026 “, India’s cryptocurrency is expected to grow significantly by CAGR due to growing transparency requirements and reduced transaction costs. in India.