The future is still a mystery because no one knows what is going to happen. Nevertheless, have you ever wondered what the Crypto-world means for Indians and what the future of Cryptocurrency in India looks like? Go on and get some answers.
WHAT ARE CRYPTOCURRENCIES?
It's safe to say that cryptocurrencies are digital assets - investing in and making online purchases are both possible with cryptocurrencies. Using cryptography, it is almost impossible to counterfeit or double-spend.
Bitcoins don't exist in the real world, so you can't just pick one up and hold it in your hands. There is no central authority that maintains the value of a cryptocurrency, unlike the Indian rupee or any other currency. Instead, these tasks are distributed among a large number of cryptocurrency users.
Even more so, each cryptocurrency coin contains a distinct programming language. Since it cannot be replicated, this makes it easy to track and identify as they are traded.
EMERGENCE OF CRYPTOCURRENCY AS AN ASSET CLASS
The major asset classes are money, bonds, gold, oil, and stock. Investors appear to have lost faith in these asset classes following the 2008 recession. This was a trend that was quickly tapped into by the crypto community. It has established itself as a reliable asset class.
In addition, the crypto world has undergone a paradigm shift. Until recently, the "native digital currency" was only of interest to retail investors and crypto enthusiasts. Institutional investors who manage money on behalf of wealthy individuals have shown consideration for this.
HOW MANY PEOPLE OWN CRYPTOCURRENCY IN INDIA?
Indian cryptocurrency exchanges now have more than 1.5 million registered users, making it an eye-opener to see how big the market has become. The country is estimated to have approximately 10.07 crore cryptocurrency owners, putting it well ahead of the United States, despite the fact that it is estimated to outstrip India in terms of the total value of holdings.
In a report released in late 2021, the crypto research firm CREBACO claims that total investments in cryptocurrencies have increased to more than USD 10 billion from a little under USD 1 billion in April 2020.
ARE INDIANS READY TO TRUST (INVEST IN) CRYPTOCURRENCY?
Even though many Indians have bought into cryptocurrencies, there is no reliable framework in place to protect their investments. According to the findings of the study, 71% of participants have little or no faith in the same. Rather than legalizing cryptocurrencies in India, many Indians would prefer that the government tax them like digital assets held outside of the country.
On the other hand, the cryptocurrency boom is being fueled by the young, who are oblivious to the risks. More than half of the people who invest in popular cryptocurrency exchanges like Coin Switch and Kuber are under 35 years old. Young people are buying cryptocurrency, drawn in by the prospect of huge profits and the desire to find ways to escape the pandemic of boredom, and they're quickly becoming familiar with the ups and downs of the market as a result.
COMPANIES IN INDIA THAT ACCEPT BITCOIN AS PAYMENT
Even though India's cryptocurrency market is still unregulated, a number of businesses are already capitalizing on the growing user base. Others are debating whether or not to begin accepting payments.
This Indian e-commerce store accepts bitcoin payments and is expected to take the lead in India in the future. The company is rethinking its business strategy in light of the country's growing crypto ecosystem. Bitcoin Payment has made it easier for customers to buy products from HighKart.com, according to High Kart.
Customers in India can use Bitcoin to pay for their purchases on Sapna's website. Using the Uno coin crypto exchange, a user can make a crypto token payment in less than 30 seconds. There are both PDF and hardback books for sale.
THE RUG KINGDOM
The Delhi-based Rug Republic accepts the top 20 cryptocurrencies by market capitalization in addition to Bitcoin as payment for its products. Peer-to-peer crypto transfers between the Rug Republic and WazirX and Binance are now possible. In the future, it does plan to develop an internal cryptocurrency payment system.
IS THERE A POTENTIAL BAN ON THE HORIZON?
A major concern for the majority of governments is that unregulated digital currencies will undermine the ability of central governments to issue fiat currency and regulate monetary policy, even as they serve as a conduit for tax evasion and wealth transfer out of their respective jurisdictions.
Back in the year 2021, the Indian government was reported to be considering a ban, but by the year 2022, the government has only the intention of regulating it. Cryptocurrency has taken a significant lead, and it does not appear to be possible to outright ban it at this time.
HOW DOES CRYPTO MAKE IT AN INTERESTING ASSET CLASS?
Many Indians see a bright future for it, and therefore there is a chance for profit. Plus, it comes with features that a normal banking system does not offer to the public.
- Payment for trading facilities is required in order to conduct financial transactions. It's much cheaper to trade cryptocurrencies because the commissions are so much lower. In addition, currency options are available. The cryptocurrency with the lowest fee can be chosen here for trading purposes.
- Trade in the modern era necessitates increased speed. People used to be able to afford the luxury of completing a trade in their hands. Those days are long gone. Millions of transactions take place in a matter of minutes in the modern era. The money must be credited to accounts in seconds or minutes, not hours or days, especially when the sum is large. Instant transfers are not available in traditional banking. This is a possibility with cryptocurrency. Lightning-fast transfers are the norm here. The resulting economic boom is a direct result of this acceleration.
- Cryptocurrencies do not appear to be directly linked to inflation, but a closer examination of the system shows that this is the case. The price of cryptocurrencies rises in response to rising demand. Even if more were created, the demand would still be too great. It is impossible to add a new cryptocurrency to the system until a new block has been created. In order to create a block, all the minors involved must give their permission, which is extremely difficult in the case of shady activities.
- Apart from that, the central bank banking system steps in to help with any problems that a normal banking system may encounter and supplies the necessary funds. In the end, it is the central banking system that must cope with the challenges. As a result, the inflation rate may rise. Because of this new, technologically based environment, there are many more job opportunities in India for the next generation.
To put out a generation wise statistical note in general, millennials are significantly more likely than previous generations to use mobile financial applications to handle their wealth. This is crucial since they are constantly managing their funds and visiting their financial institutions every month - an average of 8.5 times. Although Gen X and Boomers are increasingly embracing banking apps as an asset, they do not find it a crucial resource, and they merely connect with their accounts 3.1 times per month on aggregate. Thereby, how quickly technology is immersing as an industry trend is an exciting lookout for personalities with financial interests. The market for robo advisory in India is currently in the development stage, but its potential can make it exclusively successful in the near future.
EXPECTED FUTURE IN 2022
Cryptocurrency is likely to be treated as an asset class rather than a currency by the federal government. For the government, this means that it will be able to collect taxes on crypto assets.
More decentralized blockchain solutions are expected to emerge in 2022, making them more affordable, faster, scalable, and long-lasting. As interest in the area grows, we can expect to see the regulatory clarity we've been waiting for. Increasing institutional adoption should follow, and it has in the West already reached extremely high levels in the industry lifetime so far. It is expected that Indian institutions will follow suit.
By announcing in her Budget speech that the Reserve Bank of India (RBI) will issue its own digital currency this year, Union Finance Minister Nirmala Sitharaman dispelled any uncertainty or doubt about the country's future in cryptocurrencies.
Virtual assets will also be taxed at 30 percent when sold. As a result of this, many crypto investors who were worried about the future of digital currency in India have been saved. Blockchain currencies are now being launched in a handful of countries around the world. India's pre-eminence in digitized finance is underscored by this development. Even the United States hasn't gotten around to launching its CBC yet.
Faster settlements and lower operating expenses are two immediate benefits that come with the CBC. There is now a clear definition of virtual asset taxation, however. Many stakeholders, including investors and industry players, expected the introduction of a tax policy framework in the Union Budget 2022, so the union government was eager to bring crypto under its purview.
Crypto is now officially recognized, and investors will be required to pay taxes on the income derived from the sale of digital assets, with a tax rate of 30%, similar to that of winnings from lotteries and gambling. Virtual currencies are currently ungoverned by law. Millions of Indians have already invested tens of thousands of rupees in digital currency, despite the current uncertainty.