India is headed towards one of its worst economic crises in 30 years, with all projections pointing towards negative GDP growth in 2020. However, over the last two months, local bitcoin trading, especially on peer-to-peer crypto exchanges, has reached record-breaking volumes.
This is believed to be a direct impact of the Supreme Court lifting RBI’s “unconstitutional” two-year ban on cryptocurrencies in March, a few weeks before India went into a lockdown.
It also coincided with one of the biggest depreciations of the Indian rupee — the yearly inflation rate is 9.66 percent now — leading to an overall rise in interest in alternate forms of money.
As a result, bitcoin (BTC) volumes traded in India have surpassed the spike of December 2017, when the digital currency was enjoying a bull run globally.
One of the biggest gainers of this recent spike is Paxful, a US-based P2P bitcoin exchange marketplace and cryptocurrency wallet.
The platform charges an escrow fee to sellers. The percentage is undisclosed, but CoinDesk estimates it to be 1 percent of every transaction.
Interestingly, a large section of Paxful users are women. It is because this segment of the population, especially in developing economies, is largely unbanked or underbanked.
“The more you make bitcoin visible, the more normal people will be able to use it. We are educating our traders that you don’t need a lot of money to start,” says the co-founder. However, some operational challenges remain.
“The biggest challenge in P2P is controlling fraud. So, we’re trying to build a fully localised KYC solution, launch new safety initiatives, and make the product more responsive,” Ray states.
Future roadmap and industry landscape
Paxful is riding the popularity of bitcoin, the most well-known cryptocurrency in the world, according to surveys. (The next popular crypto is Ethereum.)
“Bitcoin is being validated right now,” says Ray. “We’re focused on the key players, the entrepreneurs who are building crypto communities around them. Some of them are 20-year-olds, who’re already making six-figure profits.”
The 300-people startup is also looking to open its India office in Hyderabad by 2021. “We were planning to launch this year, but it has been delayed due to COVID-19,” the co-founder shares.
Paxful also wants to expand its B2B network in the country, and make bitcoins more acceptable in merchant payments as they provide the highest margins.
The startup operates in a market that is witnessing phenomenal growth. In the first quarter of 2020, $8.8 trillion was traded in cryptocurrencies globally, according to TokenInsight (a blockchain and crypto research firm).
In India, Paxful’s competitors include LocalBitcoins, Coinbase, Binance, WazirX, Zebpay, UnoCoin, BitBuddy, and others. Not only are more global crypto exchanges entering India now, but VCs are also ramping up their investments in local crypto startups.
Ray signs off by saying, “The Indian market holds great potential and importance for the future of the crypto-economy. We are actively focusing our efforts on bringing cryptocurrency to the masses to aid in the eradication of poverty, boost economies, and create jobs, especially post-COVID-19.”
(Edited by Teja Lele Desai)
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