Recent Developments

Recently, a lot of talks is going on regarding the future of crypto-currency in India in the last few years. With talks of a ban on the horizon, the entire country is eager to know about the future of this economy within the country. Also, an RTI revealed that the RBI had neither researched nor consulted experts before filing for the ban on crypto-currency. Hence, the Government has refrained from clarifying the enforcing of this ban, and crypto-currencies future depends on this decision. Just last year, Mr. Subhash Chandra Garg, (Economic Affairs Secretary) said that his committee is developing a template to govern the crypto-currency influx.

The “Banning of crypto-currency Bill 2019” has proposed a 10-year sentence to people found transferring or dealing in such virtual money. Interestingly, crypto-currency cannot be banned as users have the option of holding it for as long as required. However, the RBI stated that virtual currencies can improve the existing financial system’s efficiency but may become a threat due to the lack of governing rules. Therefore, the board decided to ban the use of such currency for their dealings. But, the RBI has specified that entities providing such services may continue to do so for a stipulated time-frame. However, this is not the end of the crypto-currency market in India.

The Global Landscape

Even in 2018, the global market had over 1564 crypto-currencies and more than 9422 verified exchanges. The market value of all traded crypto-currencies soared over $275 Billion with the daily volume being around $18 million. The Bitcoin owns 45% of the market share at $142.2 Billion with a market price of Rs 5,35,767. India with more than 1 billion people has a flourishing and prospective economy that can greatly accelerate the growth of such crypto-currencies. As a country, India is undergoing an economic renaissance with the IMF hailing it as the fastest-growing emerging economy. Over 40% of India’s population uses the internet, making crypto-currency a viable financial asset.

Rise in India

As early as 2012, Bitcoin transactions were taking place within India, though the crypto-currency was still in its infancy. At this time, only crypto hobbyists dealt in Bitcoin. A year later, Bitcoin went viral, gaining a huge market in several countries around the world with a few businesses even beginning to accept Bitcoin payment. For instance, a pizza shop in Warli was the first restaurant to accept Bitcoin payments in India.

Within a small time-frame, cryptocurrency exchanges became a normal affair in India and pioneers such as BtcxIndia, Koinex, Unocoin, and Coinsecure began trading. Soon enough, Zebpay and Bitcoin-India joined them and the industry grew to a modest level in 2013 with Bitcoin ATMs springing up in major Indian cities.

Prime Minister Narendra Modi announced the demonetization policy in 2016, and many businessmen with large money holdings bought large orders of Bitcoin. The demonetisation also helped people realise that paper money isn’t exactly “real” as it has no support system. This belief led many Indians to look for alternative currency models.

The Future of Cryptocurrency

Cryptocurrency is now used to purchase virtual goods and even physical goods. Therefore, it offers great opportunities to companies and business people to monetize a lot of digital applications. Crypto-currency can become parts of social networks, social games, loyalty point schemes and even peer to peer networks.

The offer-based method of propagation allows online gamers to earn cryptocurrency by watching advertising videos, undertaking surveys, or even winning social games. Such implementations will help in the wide-spread use of crypto-currency as not just a financial token, but as a marketing method. By awarding users with crypto-currency for successfully completing a given task, companies can enforce an efficient and secure loyalty scheme.

To date over 600,000 Indians, use Bitcoin, and the number will grow exponentially in the years to come due to economic reforms. With India being the 7th largest economy in the world with a GDP worth over $2.5 trillion, it comes as no surprise that the future of crypto-currency looks bright in India and people are taking help from Crypto Exchange development companies in India in order to develop their cryptocurrency-based websites. In the future, the government looks all set to regulate Bitcoin in stages, and the economy will welcome these changes. With countless investment opportunities and avenues to choose from, with a little support from the government, cryptocurrency can develop to become a major player in India.

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The process of exchanging a cryptocurrency includes an ‘order book’ (a general ledger), in which the seller will register the request for selling their assets. Here the buyer, too, will look for good offers for buying the digital currency and if the buyers do not find any good offers in the order book, they can place their order along with the terms of buying in the order book.

The exchanges can be direct, i.e. peer to peer, or through an intermediate channel. Before discussing the peer-to-peer cryptocurrency exchanges, let’s discuss what is a centralized or regular cryptocurrency exchange:

Centralized Cryptocurrency Exchanges: The regular crypto exchanges are the centralized entities which carry out the trade for the cryptocurrency between two particular parties. This exchange seems to execute the trading directly, but on the contrary, it has multiple steps included. This type of exchange provides the facility for the users to buy, sell or exchange the digital currency at a fixed market price. But the process is more time-consuming.

Peer-to-Peer Cryptocurrency Exchanges: A peer-to-peer cryptocurrency exchange involves only two parties, the seller and the buyer. This type of exchange does not need a third party or any central authority to carry out the exchange between the two. Unlike the regular crypto exchange platforms, the prices for the exchange for the cryptocurrency is defined by the seller and may vary accordingly. There are no hidden charges included for the crypto exchange for either party, and the fee for transaction ranges between 0%-0.7%.

Along with matching the order value in the order book, the peer-to-peer exchange allow the buyer and the seller to connect directly and exchange information. The two peers can exchange the information with each other even if no transaction is going on. Even after the order has been matched, the software does not complete the trade by itself. The seller and the buyer can decide their new conditions for the trade before the completion of the transaction.

Advantages of Peer-to-Peer Crypto Exchange:

1) Security: Since there is no central authority involved in the exchange on a peer-to-peer network, the information shared between the two parties is always censored. Also when the order value is accepted by both the buyer and the seller, the platform locks the assets, such that those assets cannot be accessed by any other party, providing greater security for crypto being stolen.

2) Privacy: The Peer-to-Peer crypto exchange doesn’t include any third party for the trading, so it is more private. Even the communication between the parties, that are up for trading the crypto, is kept private and only the two parties are involved in the negotiation.

3) Immunity to Government Regulations: The regular crypto exchange is liable to the government authorities even for the smaller transactions, as it is the central authority such as a bank which is involved in the process of conversion, deposits and withdrawal of the cryptocurrency. But on the P2P exchange, the transactions are done mostly for the smaller amounts, and the assets can be deposited to the accounts of both the parties directly, without having to trust a third party to process their trades.

4) Minimal Charges: For the smaller transactions, the regular crypto exchange platforms can be a bit pricier as both the parties are charged with a fee on deposit, withdrawal as well as for the trade. But since the trading in P2P exchange is done without the help of a third party, the two parties are charged with a minimal fee for the trade.

Though the centralized or the regular crypto exchanges are the first exchange platforms and are still a popular choice among the people, with the time passing by people are becoming more aware of the concept of the digital currencies as well as the exchange platforms and are opting for the peer-to-peer exchange platforms for the trading.

The P2P exchange platforms are cheaper and are best suitable for smaller transactions. Also, the people who are concerned about the fees and security must go for this exchange platform.

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