Bitcoin price has already surpassed $3,000 mark on Indian exchanges
The rate in India is much higher than in other countries
In India, there is high demand but limited supply
The burgeoning bitcoin has blown away the stock market bull run and the shinning bullion.
The cryptocurrency made global buzz after international hackers demanded it as ransom to disinfect computers. But growing demand has made it a top investment choice for many even in India, leaving behind the traditional gold rush.
Bitcoin has almost tripled in value in the last twelve months as it traded at over Rs 2 lakh on Thursday. Analysts had earlier projected the price of the cryptocurrency to reach $3,000 (Rs 1.93 lakh) by the end of this year, but the recent rally suggests that this target could be hit within a couple of days.
In fact, bitcoin price has already surpassed the $3,000 mark on Indian exchanges. The rate in India is much higher than in other countries because there is high demand but limited supply. People here are only interested in buying bitcoins at the moment and not in selling them, which has also led to increased valuation.
WHAT IS BITCOIN?
Bitcoin is a digital token that is computer generated and not printed or minted physically like a country’s currency. It is created and held electronically in a decentralised system, so no single person, bank or authority has control over it.
It works as conventional forms of currency and is traded worldwide.
On Indian exchanges, bitcoin prices are being quoted at premium of $400-500 higher than cost. The interest among Indian people fuelled largely after government’s demonetisation.
“In India, bitcoin has already crossed the $3,000 mark. The demand has risen phenomenally and there is scarcity in supply,” said Sandeep Goenka, CEO of Zebpay, India’s largest Bitcoin exchange by volumes traded.
At Zebpay a bitcoin was available for Rs 2,28,023 while another Indian exchange, Unocoin was selling it at Rs 2,33,175.
NOTE BAN EFFECT
On November 8, the day Prime Minister Narendra Modi announced that Rs 500 and Rs 1,000 banknotes would cease to be legal tender, bitcoin was priced at about Rs 52,000 on Unocoin and Zebpay.
On that day, the international cost of one bitcoin, when converted into Indian rupee, stood at Rs 46,942.
The surge in interest for the e-currency came as it evolved as an alternative and safe investment option. Google search data show that Indians’ search for the keyword “bitcoin” was at its peak soon after note ban.
But increasing demand has also raised security concerns. Experts say there was a rush following the cash crackdown announcement as many traders exchanged their black money against bitcoins. The demand of the largest and oldest among cryptocurrencies is high as it is untraceable by security agencies and does not require physical storage that can be raided by authorities.
EMERGING ASSET CLASS
Experts say the price has gone up as many countries are now making bitcoins legal. In April, Japan began accepting bitcoin, which also fuelled the international price. Indians too are catching the bitcoin fever as there is a demand of Rs 40-50 crore daily.
The volume here though is still just the tip of the global iceberg of Rs 10,000 crore and too little to influence the price.
However, traders caution that new investors should be careful before pumping money into the e-currency.
Experts say bitcoin is an emerging asset class and the price is volatile. Sceptics feel this is just another investment fad which will wither away. A rise in bitcoin prices has led to a surge in Ponzi schemes in India. The central bank too has cautioned people against cryptocurrency use.
Security agencies say global criminals are transacting in bitcoins while dealing in drugs, arms and porn.
This creates a hurdle in their investigation as tracking this money on the web and beyond the country’s boundary is impossible.
The currency has been used by terrorists too. The recent Wannacry ransomware attackers also demanded payments in bitcoins, which bothers regulators or countries who want to legalise the digital money.
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