Among the world’s biggest resource of precious metals, cryptocurrency pundits believe Bitcoin is equivalent to “digital gold” in India. According to Chainalysis, investments in crypto in India increased from about $200 million to nearly $40 billion during the past year, where households own more than 25,000 tonnes in gold. A trading veto has been proposed despite the central bank’s outright hostility toward the asset class. In addition, some argue that investing in gold and real estate properties is less transparent and crypto may create greater returns more quickly. In India, more than 15 million people are buying and selling digital coins. Those numbers are at par with the 23 million traders of these assets in the US and are nearly double the 2.3 million traders in the UK.
The co-founder of India’s first cryptocurrency exchange, UnoCoin, told the Economic Times that the 18-35 years age group is driving growth in India. The publication reported that according to the World Gold Council, Indian adults under the age of 34 are less inclined to purchase gold than older consumers. Several Indian investors have also taken advantage of the hype around cryptocurrencies, notably Bitcoin and Dogecoin. In the meantime, gold has been moving sideways. Crypto market watchers say that Bitcoin has gained acceptance as a “store-of-value” investment because, like gold, it tends to be a hedge against currency devaluation and volatility. Ten years ago, only technologists and millennials got excited about crypto, but thanks to corporate investors like Elon Musk, the market has evolved.
CapitalVia Global Research’s Kshitij Purohit, who is the lead commodity analyst, said that gold was a natural choice for Indian investors due to its long history as an investment avenue and use as jewellery, while cryptocurrency was new and there wasn’t any clarity about rules and regulations. “It is still not accepted widely in India,” he said.
Sandeep Goenka, the co-founder of ZebPay, who has spent years representing the financial industry in government discussions about regulation, told the Economic Times that people find crypto far more convenient now than gold because the process is so simple. “You go online, you can buy crypto, you don’t have to verify it, unlike gold.” The users of virtual currencies continue to back them strongly. As blockchain technology becomes more mainstream, they find economic value in it. Due to the coin’s scarcity, some refer to Bitcoin as digital gold.
Over the past half-century, gold prices have risen dramatically, accompanied by inflation and reflecting deeper mines, which also increase production costs, whereas Bitcoin took less than a decade to reach a value of nearly $60,000. Yet, this cryptocurrency has experienced equally steep corrections and there remains the possibility of further sharp swings.
Cryptocurrencies have indeed been recommended as a good hedge by other experts. However, abrupt volatility, a lack of solid fundamentals, and anonymity are factors that contribute to higher levels of speculation, making bitcoin less secure than gold. The regulatory uncertainty is a major barrier to wider adoption. A rule banning crypto trading by banks was quashed by the Supreme Court last year, causing a surge in trading activity.
Cryptocurrencies are not being embraced by authorities. It is reported that the Indian central bank has “major concerns” over the asset class. The government of India proposed a six-month ban on trading in digital currencies but has been silent since.
Among bigger investors, official hostility results in a reticence to speak openly about holdings. Bloomberg spoke to a banker who invested more than $1 million into crypto assets and was worried about potential tax raids if he was publicly known to be a big-ticket crypto investor. A ban would not stop him from trading, since he is already prepared to move to an offshore bank account in Singapore. Although its digital asset market represents a fraction of the gold market, the value of Indian digital assets remains substantial. Despite this, the industry is booming.
According to CoinGecko, daily trading rose from $10.6 million to $102 million for the four largest crypto exchanges a year ago. The country’s $40 billion market lags far behind China’s $161 billion. According to the current data, the uptake is another indication of Indians’ willingness to accept risk within a consumer finance sector marred by many examples of regulatory failures.
As of June 28, Money Control reported that the cryptocurrency market is showing signs of good fortune. A 3.46 percent increase in market capitalisation over the previous day contributed to the $1.37 trillion market cap. Over the last 24 hours, the total crypto market volume was $74.43 billion, a decrease of 13.33 percent. At present, the total market capitalisation of all stable coins has reached $58.69 billion, which equates to 78.85 percent of the total 24-hour cryptocurrency volume. Currently, the price of Bitcoin is $34,351.88 and its dominance is 47.06 percent, which represents an increase of 0.34 percent over a day. Binance, which operates a cryptocurrency exchange, was ordered to cease all regulated activities by Britain’s Financial Conduct Authority, which said that the firm was not authorised to conduct such business in the country.