For a long time, the most typical asset for every Indian family was considered to be gold. Apart from its cultural significance across diverse Indian cultures, gold as an asset was regarded to be a hedge against the volatility of the markets and independent of Government control. Investment firms and brokerages always suggest their investors and clients to invest a portion of their total portfolio in gold. The Indian festival of Dhanteras every year sees the discussion on the future of gold as an asset. This year, on the contrary, saw the debate on whether bitcoin could replace gold as India’s favourite asset in the next decade. With the advent of cryptocurrencies, various analysts and stakeholders believe that this space could gain much prominence in the next decade.
Manoj Dalmia, Founder and Director of Prosaasetz Exchange said, “Like gold, cryptocurrencies are also a limited digital asset as there will never be more bitcoin released.” Due to the limited availability of bitcoins, they are often compared to gold from the point of scarcity, unlike fiat money whose production and availability is controlled by the Government from time to time. As the production of bitcoin is fixed, its value shall depend on the market forces surrounding its demand and supply. Four features that advance the claim for the rise of bitcoin are rarity, durability, divisibility and hard to be fake. From the point of utility, every cryptocurrency enjoys its own inherent utility along with an underlying technology whose value increases along with the increase in the price of the cryptocurrency itself. For instance, Bitcoin enjoys a unique feature of decentralisation and limited availability. Its value does not depend on any centralised authority and allows complete freedom for the market to determine its price from time to time. Hence, a way for value investors to pick cryptocurrency is looking at the potential of its intrinsic technology.
Renowned cryptocurrency influencer, DaCryptoGeneral believes that bitcoin, being a decentralised asset, has the potential to create wealth for generations to come. He believes that the young generation shall lead this change due to their higher risk appetite as compared to senior generations and willingness to understand the science behind this development. He said, “With the future right in front of us, it is important that the younger generation rethinks traditional paths and choose what’s there in front of them”. He goes on to suggest that being a volatile asset, it is important that investors understand the technology before investing their hard-earned money. With the growing popularity among the youth, there has also been significant mis-reporting regarding bitcoin and other cryptocurrencies along with advertisements by Indian crypto exchanges that have been called out to be misleading and overpromising.
With the recent remarks by the Indian Prime Minister on the subject and various developments, a fresh legislation to regulate cryptocurrency could be on its way. Many prominent Indian exchanges in this ecosystem have decided to hit pause on their public-outreach campaigns. Internationally, the Securities and Exchange Commission (SEC) rejected a proposal to list a Bitcoin ETF, namely VanEck bitcoin fund by Cboe BZX exchange due to inadequate measures to protect investors from fraudulent practices. As an emerging technology, Governments around the world are keenly studying the developments in this space and looking at a balanced regulation framework.
On the Indian side, it is expected that cryptocurrencies would be accorded the status of assets such as gold and be regulated under the Securities and Exchange Board of India. In light of this event, DaCryptoGeneral welcomes progressive regulations on cryptocurrency that remove the uncertainty and prevent its misuse against the interests of the vulnerable investors. He said, “Regulations could define the boundaries that would allow exchanges, investors and other stakeholders to move out of the constant uncertainty and ambiguity of Government action.” This would give confidence to young investors towards the brighter aspects of cryptocurrency and their underlying technologies.
With some estimates by crypto exchanges that suggest that there are more Indian investors in crypto markets than the stock market, it is likely to expect bitcoin, the largest cryptocurrency, to become India’s favourite asset in the years to come.