Bitcoins hold potential but need regulatory framework: Survey
A big risk with using bitcoins as currency is that unlike an online banking or credit card or debit card or any other digital transaction fraud, it is impossible to get the money back
Bitcoins, the crypto currency gaining ground worldwide, could act as a potential transaction and payment mechanism for businesses in India, given proper monitoring and regulation of the currency, a recent study has found.
The finding was part of a survey of 223 industry stakeholders, conducted by PHD Chamber of Commerce and Industry. These include responses from industries such as garments, textiles, drugs and pharmaceutical, electronics, machine tools, auto components, leather and so on.
The study found that 97 percent of the respondents were aware of bitcoins, but cited safety and security of the system as a major hindrance. Interestingly, none of the respondents actually used bitcoins for their businesses, and all of them were unaware of the payment mechanism involved in bitcoins.
From a user perspective, bitcoins can be considered to be “cash for the Internet,” the report said. It is a consensus network that enables a new payment system and completely digital currency.
The bitcoin network has resulted in an important ecosystem with projects that have raised approximately USD 1 billion in venture capital financings since 2013, with USD 575 million disbursed in 2015 and 2016 across 63 deals, globally.
“In India, Bitcoin prices depend on a lot of factors like international prices, market volatility, overall demand and supply in India. At times, the Indian buy and sell prices are 5-10 percent higher than international market,” the survey found.
The prices of the bitcoins jumped from USD 100 in June 2013 to USD 3025 in June 2017. The number of bitcoins increased from 5 million in 2010 to 17 million in 2017.
According to the study, the combined trading volumes (all exchanges put together) could be in the range of Rs 200–250 crore per month in India. Roughly Rs 1,200–1,500 crore worth of bitcoins are traded in India every year. A few e-commerce sites accept bitcoins.
However, the Reserve Bank of India (RBI) said on 1 February said that it has not given any license or authorization to any entity or company to operate virtual currency schemes or deal with Bitcoin or any virtual currency.
Besides, a big risk with using bitcoins as currency is that unlike an online banking or credit card or debit card or any other digital transaction fraud, it is impossible to get the money back.“Arguably, bitcoins can be a boon for the large population of the country which is still unbanked; it can provide them with a superior and simple peer to peer digital currency trading platform through desktops and mobile devices. However, it is essential to expand the regulatory framework for bitcoins to reinforce the safety and security aspects of bitcoins, coupled with awareness programmes about the pros and cons associated with bitcoins to bolster the digital campaign in India,” the report noted.