Everyone is talking about the recent announcement made by the Prime Minister of India, Narendra Modi in early November 2016 which threw Indian citizens in turmoil. People struggled to make transactions or obtain cash. Banning of Rs 500 and Rs 1,000 notes in the world’s largest democracy has not only shaken the world but inclined people towards digital transaction.
There was a time when the term ‘digital transaction’ was far-fetched for all of us but, today many countries are using digital currency for cashless transactions. As WorldAtlas states, Canada, United Kingdom, Sweden and Australia are the world’s most cashless countries which use digital money for meeting their needs.
What is digital transaction? According to the Cambridge Dictionary, digital transaction or Electronic Transaction or e-transaction is an act of buying or selling something or sending money electronically, especially over the internet. According to The Indian Express, Digital payment channels like mobile wallets, USSD and RuPay have seen massive uptake after demonetization and the number of USSD transactions saw a whopping 5,135 per cent jump, from 97 such deals a day on November 8 to 5,078 on December 25.
Apart from internet and mobile banking, digital wallets and credit cards, payment option such as Bitcoin has also gained considerable traction in the country. As according to Zebpay, an Indian bitcoin company, Bitcoin price was at $550 on August 2, 2016, and after demonetization, its value went from $800 to more than $1,100. Is this a coincidence or impact of demonetization?
Bitcoin: The Cyptocurrency
According to CoinDesk, Bitcoin is a form of digital currency, created and held electronically. These aren’t printed, like dollars or euros – they’re produced by people, and increasingly businesses, running computers all around the world, using software that solves mathematical problems. It’s the first example of a growing category of money known as cryptocurrency.
Invented on October 31, 2008 in a research paper called “Bitcoin: A Peer-to-Peer Electronic Cash System” by a software developer, called ‘Satoshi Nakamoto’, it uses peer-to-peer technology to operate with no central authority or banks. The management of transactions and the issuing of Bitcoins are carried out collectively by the network. These transactions are verified by network nodes and recorded in a public distributed ledger called Blockchain.
Since the system works without a central repository or single administrator, the US Treasury categorizes ‘Bitcoin’ as a decentralized virtual currency, produced by mining. Mining is the process of adding transaction records to block chain. The primary purpose of mining is to allow Bitcoin nodes to reach a secure, tamper-resistant consensus.
Mining is also the mechanism used to introduce the currency into the system as Miners are paid transaction fees as well as a “subsidy” of newly created coins. This serves the purpose of disseminating new coins in a decentralized manner as well as motivating people to provide security for the system.
The first real world transaction of Bitcoin took place on May 22, 2010 when a Jacksonville, Florida programmer, Laszlo Hanyecz, offers to pay 10,000 Bitcoins for a pizza on the Bitcoin Forum. At the time, the exchange rate put the purchase price for the pizza at around US$25.
Has demonetization welcomed Bitcoin in India?
The life-changing demonetization move has increased the value of Bitcoin nearly two times its prior levels, pushing its value to new highs. According to Forbes, the Bitcoin prices in India since the early days of demonetization has been hovering in an upper range of $866 to $896 a piece but in a mere 18 days after the demonetization, the price of the cyptocurrency on Zebpay had surged from $757 to $1,020 (per Bitcoin). Additionally, the Bitcoins in the US are trending at $770 a piece, marking a clear premium on the Indian Bitcoin exchanges.
In fact, the country’s three funded Bitcoin trading platform- Zebpay, Unocoin and Coinsecure have registered a surge in new users. The government is also pushing citizens toward a cashless economy which is one of the reasons people seeking out digital payment apps while others have looked into Bitcoin.
The success of Bitcoin is not certain in the country but the currency has marked its presence positively on a big chunk of people due to this demonetization. Having said that, I think India has been prepared to become a complete digital country. More and more people are getting aware of Bitcoin in the country. Media has mentioned more about the currency on TV channels in the past few months. Many people in the country are investing in the cyptocurrency and making others aware regarding Bitcoin. Looks like a good start to me!
Views are of the author and Techseen may not necessarily subscribe to them
