While supporters of Bitcoin and other cryptocurrencies have claimed its superiority over traditional physical currencies time and again, the government of India has not clarified its stand on cryptocurrency until now. Earlier, it even planned to completely ban crypto trading in India. More recently, however, the government is looking at the possibilities of setting up of a new panel to decide on Cryptocurrency regulation. What’s interesting is that though cryptocurrencies operate in a regulatory vacuum in India, its transaction volumes continue to witness a massive surge.
In a recent chat with CXOToday, Kumar Gaurav, Founder & CEO of Cashaa, and an expert in the crypto market, says that the country has much untapped potential when it comes to cryptocurrencies. With the right crypto regulations, India can become a crypto hub, and lead a digital revolution.
India riding the crypto wave
On the global trends in the crypto space, Gaurav says, in the last few years, overall awareness of crypto investments has increased. People have started participating in the crypto economy and are naturally curious — as most people do not want to miss a big opportunity.
The Covid-19 pandemic has further accelerated the adoption of these digital currencies making it a phenomenon, as investors trust these currencies to not only offer greater autonomy, but these are also cheaper and more secure in the long run. According to a Statista research report, the global user base of cryptocurrencies increased by nearly 190% between 2018 and 2020.
The crypto landscape in India is also constantly unfolding, says Gaurav, the country being the second largest bitcoin holding company in the world, which makes it a healthy market for crypto startups. “This point has been identified by investors as well. Renowned foreign investors like Sequoia Capital, Tiger Global, Polychain Capital, etc., have already invested millions of dollars in Indian crypto startups,” he says.
Around 10 million investors who trade through various crypto trading platforms hold about $1.5 billion. Transparency or distributed ledger technology and growth in venture capital investments will continue to drive the growth of the cryptocurrency market, believes Gaurav.
According to him, “The government needs to understand that without the formation of a regulatory framework, black markets grow and impact the economy in a negative way. On the other hand, regulations enable legitimate tracking of money. Considering these facts, along with growing understanding of the value of blockchain technologies, we anticipate that things will move in the right direction.”
Speaking about the volatility of the market, Gaurav explains, “The cryptocurrency market is small when compared to, say, gold. In less liquid markets, even a little news or speculation can create extreme price volatility. So an investor should study the project, understand its purpose, legitimacy, history, etc. and then invest. Currently, people are just going by social media in order to become rich.”
While Gaurav agrees that crypto is at a nascent stage not only in India but globally too, yet, he believes there’s rapidly growing interest, especially amongst the younger generation who have acquired deep knowledge of the technology and are gaining in numbers.
Overcoming security challenges
Cryptocurrency has the potential of transforming and revolutionizing compliance-free peer-to-peer and remittance transactions; however, end users have to overcome certain challenges related to security, privacy, and control to benefit from cryptocurrency. Lack of regulation encourages fraud and is a major factor holding back the entire industry. Once regulations are put together, all this can be easily dealt with.
In fact, crypto malware(s) are on the rise and crypto miners made up 41% of all detected malware in 2020, according to NTT’s 2021 Global Threat Intelligence Report.
As cryptocurrency transactions are recorded in the distributed public ledger known as blockchain, hackers have a large attack surface to gain access to critical and sensitive information. If this public ledger is used to store confidential contract-related information or payment data, replicating the file could potentially make it easier for hackers to access it. If a key is compromised, it can be used to access the database in a distributed database.
However, Gaurav believes, scams have been with us since day one. So, despite crypto miner and cyber criminals changing their tactics, there’s no stopping the crypto growth globally and in India.
In fact, the next-generation innovation offers the highest level of security. he says, “In the financial ecosystem, we are witnessing a number of security breaches and glitches every day due to inferior technology or lack of innovation. Digital currencies back projects that aim to solve these problems.”
Over the past two-three weeks, however, volumes on Indian exchanges have tanked along with their global peers amid bearish mood in the crypto market. But Gaurav advises to look at the bigger picture and the long-term prospects.
Currently, less than 1.3% population of the world hold Cryptocurrency, making it a very exciting time for entrepreneurs to start leveraging blockchain and crypto technology. According to research, the cryptocurrency market size is expected to grow from USD 1.6 billion in 2021 to USD 2.2 billion by 2026, at a CAGR of 7.1%.
“As we gradually move towards a more efficient digital world, we need to ensure that we adopt the finest technologies. Blockchain is the finest technology we have today. Faster implementation of this technology can help us patch any gaps and ensure a secure infrastructure,” he concludes.