The state of bitcoin, the blockchain, and cryptocurrencies in India

Photo credit: BTC Keychain.

If you had asked me a few months back about what I thought of bitcoin and blockchain technology in general, I’d probably reply with the same words you read in every headline related to this field — a decentralized, public ledger-based cryptocurrency. Fast forward to the present day, I’d describe it as a monetizable peer-to-peer protocol token that is maintained in a digitally scarce manner. I am, however, beginning to understand the implications of this techno-financial blockchain phenomenon for the various industries it will touch.

It all really reached the peak for me when I saw Naval Ravikant’s tweet and closely followed his thoughts on this matter.

It’s tough to argue with the fact that bitcoin is, at best, seen as a form of digital gold with a certain degree of volatility, all constructed over social trust. What I really found out, though, is that there is a whole different world of AppCoins and Protocol Tokens that has started to come up now. It’s not uncommon to see regular VCs raising LP money through such offerings, hedge funds investing in these cryptocurrencies, and super-computer networks offering coins to be later used to access their network.

A simple search will reveal that it’s still only a tiny fraction (~US$29b market cap of all cryptocurrencies) in the whole financial pyramid of venture financing. These digital assets will require whole new investor mindsets to master — different kind of thesis, evaluation methods, and trading skillsets to be able to participate in this protocol layer asset. These are highly risky, sometimes liquid, and often a democratized way of betting on a particular protocol’s usage. It’s easy to brush off bitcoin and other such AltCoins as ‘pump and dump’ schemes or even say that the ones driving these ecosystems forward are the ones who are most invested in it. It is advisable to approach this space with caution. When things are not linked to an identity and most often anonymous, it’s impossible to recover what you have lost in the form of a private key.

I went digging down the rabbit hole and ended up getting further intrigued by this ecosystem. The current breed of Indian crypto-wallets have ridiculous spreads (buy-sell) that make it impossible to do short-term trades, not to mention the UI/UX of these providers make it seem like they are catering to a crowd from the previous generation. It’s better to look at exchanges that have more breadth and are operated by regulated players in international markets. It’s easier to ‘ShapeShift’ to coins that aren’t easily available — because, except basic bitcoin wallets and a single Ethereum exchange in India, there isn’t much to choose from.

ZebPay has a good public document that tries to argue around the tax and legal implications. Reserve Bank of India (RBI) seems to be confused on this matter. They seem to be forthcoming in doing research into this field, but backward in issuing strict notices cautioning against the use of these.

This is a call to all financial cryptographers and blockchain enthusiasts of India to lead the way. I am happy to buy you a cup of coffee if you can enlighten me more by showing me some interesting projects that you are attempting in this space. These could be interesting concept whitepapers, commercial applications or middleware for other developers to lean on. I will be delighted if there are any trading enthusiasts willing to discuss their ‘AltFolios’ and strategies. Find me on Twitter.

P.S. — All views and thoughts expressed here are personal and not representative of any organization or entity.

This post first appeared on Medium.