Cryptocurrencies will play an important role in the way we deal with money. In April 2017, the total market cap for all the cryptocurrencies was higher than $25 billion. It grew by 300% and touched $100 billion within 60 days. It is estimated that cryptocurrency will outpace all the other asset class in terms of relative growth. It is estimated that more than 3 million people are actively using cryptocurrencies like Bitcoin. Bitcoin is by far the most famous cryptocurrency and has enjoyed tremendous growth in the global financial markets. Countries with less developed financial structure and a high smart phone usage are the potential markets where cryptocurrencies can be leveraged.
Based on the data collected by The Cambridge Center of Alternative Finance, atleast 3 million people are actively using cryptocurrency today. Japan recently recognized Bitcoin as a legal method of payment. Although it is treated as an asset and not as a currency, Bitcoin has seen a surge in demand. Countries like Denmark, Sweden, Netherlands, South Korea, UK, US, Canada, Finland and Australia have been supportive of bitcoin and its currency.
India was a late entrant to the cryptocurrency market. Due to the various restrictions in the foreign currency remittances and the allowable overseas investment, Indians do not get to trade in International Financial Instruments. Indians missed the Bull Run and entered late in the race due to various factors. When bitcoin was picking up pace in China, India struggled to transfer money to the overseas bitcoin exchanges. However, after demonetization things changed by a large extent and Indian residents turned to Bitcoin.
One of the local exchanges started functioning in India and Bitcoin users got an option to purchase Bitcoin using local currency. Hence, the adoption of Bitcoin started increasing considerably. Due to the shortage of Bitcoin sellers in India, the Indian Bitcoin price ran at a premium of over $400 from the International market price. The Government has now agreed to regulate Bitcoin and The Reserve Bank of India is considering using the block chain technology in banking. The Ministry of Finance has constituted an inter disciplinary committee to examine the framework around cryptocurrencies. This committee will not only examine the present scenario but also suggest measures to deal with education, consumer protection and money laundering. The major market participants are buyers, the exchanges in India struggled to provide a liquid order book to the buyers. In spite of the shortcomings, the Indian crypto users kept increasing by a healthy pace.
Once favorable regulatory guidelines are framed for trading and investment of cryptocurrency, the growth of currency in India will be exponential. It might take time to reach a considerable market share in the global financial market. Even though none of the major Indian exchanges are offering other digital assets or cryptocurrencies, Indian investors have now started purchasing altcoins and ICO tokens from the international exchanges. This trend will continue if favorable guidelines for investment and trading are provided in India.