The stock market is witnessing its biggest boom in a decade but it is the little understood Bitcoins that many high networth individuals are keen to know about. Following the recent surge in Bitcoin’s value, stock exchanges and brokerage firms have been receiving a large number of queries about the digital currency.
Bitcon’s price has skyrocketed from USD 800 in January 2017 to slightly over USD 17,000 today.
“Bitcoin has become mainstream. There has been a steady flow of enquiries. People are curious about it. They are keen to know what is a Bitcoin, what is a blockchain, particularly after the exponential rise in prices recently,” said Mitra Joshi, a spokesperson at Zebpay a cryptocurrency exchange established in 2015.
Bitcoin is a digital asset and a payment system. It is commonly called a decentralised digital currency, invented by Satoshi Nakamoto in 2009. It is an open source software which means, that no person, company or country owns this network just like no one owns the Internet.
The system is peer-to-peer where users can transact directly without an intermediary like a bank, a credit card company or a clearing house. Transactions are verified by network nodes and recorded in a public distributed ledger called the blockchain.
“Globally, we are witnessing a trend where institutional investors and HNIs are taking a lot of interest in cryptocurrencies in general, including Bitcoin,” Joshi said.
Regulators Keeping Watch
Cryptocurrencies and the surge in their valuations have made headlines globally. It has forced governments and regulators to take note of digital currency as an emerging asset class. Cryptocurrency is a digital asset created to be used as a medium of exchange — like cash
Bitcoin, the most popular cryptocurrency, has sent ripples across global markets as it crossed the landmark USD 10,000 threshold on November 28.
At a recent financial market summit, the Securities and Exchange Board of India had said that along with RBI, they are planning a framework to regulate the country’s Bitcoin market.
“SEBI’s remark is generic and preliminary in nature. Of course, it is encouraging. A decision on Bitcoin as an instrument for investment and trading should be taken after a thorough analysis,” said A Balakrishnan, Managing Director of Geojit Technologies.
Bitcoin is not regulated in the country so far. If the regulator allows investments in the cryptocurrency, it could change the dynamics of the financial market, according to market experts.
According to coinmarketcap.com, a website offering global data on cryptocurrency, as on December 21, there were at least 7,710 markets trading in 1,372 types of cryptocurrencies, including Bitcoin.
The total market cap of cryptocurrencies stood at USD 644 billion globally as on December 21 with Bitcoin alone commanding a market cap of USD 286 billion.
India is on the brink of a digital revolution particularly after demonetisation. Digital transactions in the country have seen a whopping 80 percent jump during 2017-18, with the total amount expected to touch Rs 1,800 crore. The value of digital transactions till October this year stood at Rs 1,000 crore, which was nearly the same as an entire year’s transactions in 2016-17, according to the website.
If the numbers are anything to go by, there could be merit for the Indian government to weigh the pros and cons of floating its own digital currency to further boost digital transactions.