Including cryptocurrency in India, we will cover everything about cryptocurrency in this article. Dogecoin, Bitcoin, and Ethereum are the words we hear most often from financial Reddit nerds. However, these have suddenly become mainstream. In the news, social media, and especially among Gen-Z, it is often seen. Cryptocurrency prices have been rising and falling rapidly in social media. In addition, exchanges are reporting record volumes, but the legality of all this is being questioned. What exactly is going on in the crypto world? Let’s see what happens.
What led to all of this?
According to one’s perspective, it started in a couple of different ways. The cryptocurrency market has always had its share of fans and those who have made astonishing wealth from bitcoin. Prior to 2019, it was rarely mainstream like stocks or mutual funds. However, this has changed in 2021. Coinbase, a US-based crypto exchange, went public and is valued at $100 billion. Finally, a niche asset class was brought to the forefront.
Users flocked to cryptocurrency in India exchanges in record numbers as well. Up to a million users used the platform simultaneously. We did not see this figure even at shopping giant Amazon. The Indian Premier League (IPL), held during August, further boosted the growth of WazirX, CoinSwitch Kuber, and other exchanges.
Cryptocurrency prices rose?
Bitcoin has experienced very fluctuating growth since its founding, especially in 2020. In May 2020, a single bitcoin was worth $9500.Since January, prices have risen by a meteoric amount, reaching $40000 in January- something that many thoughts was insane- until it reached $65000 last month. Bitcoin’s market capitalization was over a trillion dollars- making it more valuable than Facebook and Tesla combined. Mind you, this is an asset a lot of the world is still waking up to.
Despite the spike in Bitcoin and Ethereum prices, the real surprise was not in the rankings. The price of Dogecoin, a meme currency, soared as celebrities as Elon Musk talked about it. As of last week, Dogecoin was worth $70 billion- more than Uber. Eventually, it spawned a joke-on-a-joke Shiba Inu Coin, whose value rose and then fell.
Who uses these digital currencies? And for what?
The two main uses of cryptocurrency are as a payment method and as an investment tool. Investing has proved to be a successful use case. Many customers purchase coins, hold on to them, and sell them to make a quick buck, or invest when prices are high and hold on for the thrill of the investment.
In some countries, it has been used for payments, but in India, it has been met with skepticism and outright rejection. The volatility of these prices makes them unsafe for payments. Governments do not want a substitute for official currency.
Moreover, prices have risen because crypto has become more legitimate in the last year as large global institutions have embraced its use and value. Tesla customers can now buy a car with bitcoin, the S&P Dow Jones has launched a crypto index, and Morgan Stanley is offering bitcoin fund services. People have even bought Non-Fungible Tokens (NFTs)- digital works of art with a unique crypto identity that can be worth millions of dollars. Even some skeptics began to wonder whether crypto is not only a speculative bubble.
However…is it a bubble?
The question is valid. In recent weeks, prices have fallen significantly, easing investors’ fears that the market is not in a bubble. Yet it is the nature of the beast that it may rise again to a record tomorrow if Elon Musk promotes it subtly.
Tesla has 💎 🙌— Elon Musk (@elonmusk) May 19, 2021
According to analysts, older cryptocurrencies like Bitcoin, Ethereum, Litecoin, and Cardano will continue to hold their value over the long run as they have numerous business applications worldwide. Though meme coins like Dogecoin, Shiba Inu Coin, and a host of others have only experienced temporary booms, they have been deemed irrelevant currencies by many. Currently, these coins have no commercial use.
What caused the price drop?
During the month of April, a power outage in Xinjiang caused bitcoin prices to fall due to the mining of bitcoins there. The same week, Turkey’s central bank banned crypto usage. At the beginning of April, Elon Musk – who has been an unofficial crypto cheerleader so far – said Tesla would stop accepting bitcoin payments because they fuel more fossil fuel consumption, the opposite of Tesla’s renewable energy mission.
In addition, experts have said that after the record surge, a fall was inevitable anyway and that no asset can continue to rise indefinitely. Bitcoin has experienced price changes of over 5 percent 750 times, a price change of over 10 percent 250 times, and a price change of over 20 percent 50 times over the past 11 years. Volatility seems to be the name of this game.
Cryptocurrency in India is legal?
The trillion-dollar question. Recently, the Supreme Court struck down the RBI’s crypto ban, calling it “unconstitutional”. Regulating, not banning, is the answer, the crypto industry has insisted. Despite the fact that bitcoin has been accepted by the industry, officials and ministers in India do not allow it for payments. As long as it’s an asset class, they’re fine. According to the Court, crypto is a legal asset class.
Banks, however, have taken a cautious view and have distanced themselves from crypto exchanges for fear of disciplinary action by the RBI. At the same time, crypto exchanges were experiencing record activity, which exacerbated the problem. Without banks, exchanges cannot function in the long run.
How do users invest and withdraw?
The majority of users are able to invest and withdraw money, but not at will. In some cases, exchanges give more features to new users temporarily so that their first experience is smooth while existing users suffer the consequences of regulatory uncertainty. Several small banks are still working with exchanges, which are also exploring alternative payment options, such as peer-to-peer payments and offline payment methods.
📢 Update on INR deposits— WazirX: Bitcoin & Cryptocurrency Exchange in India (@WazirXIndia) May 21, 2021
We’re at the finishing stages to add new banking partners and bringing in multiple INR deposit options for our users to deposit funds to WazirX wallet.
We’ll update you as soon as we’ve added them.
Thank you for your support. 💪
How are things now?
Several things are happening at the same time. Prices fell in the last few days, which led to a massive selloff, but Indians still seem enthusiastic about crypto. To ensure that clarity is achieved as soon as possible, exchanges lobby and work with regulators. The introduction of new domestic currencies is occurring, crypto is both hailed as incredible and fraudulent, often on the same day, but if the number of users is any indication, cryptocurrency in India is poised for rapid growth.