Bitcoin maximalists have always been known to refer to Bitcoin as digital gold. There are speculations that Bitcoin will overtake gold in the coming years as a preferred store of value. This seems to be the case with each bull market as Bitcoin outperformed gold by 10 times in 2020.
Gold has always been a preferred investment for households in India. This is due to what it signifies in the culture and society. Gold is a symbol of wealth and good health in Indian society. It is also a symbol of purity in some religions as gold is believed to purify anything it touches Households in India own more than 25,000 metric tonnes of gold. Putting Indians amongst the top biggest holders of the precious metal in the world.
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But the tide seems to be turning with Millenials. Young people who are more tech-savvy are picking digital assets over physical ones. According to Chainalysis, India grew from $200 million in crypto investments to nearly $40 billion in the space of one year.
India’s Trading Ban On Crypto
In 2018, India’s central bank issued a circular ordering the ban of cryptocurrencies in India. Banks were asked to suspend accounts of players who were supporting the sale and purchase of cryptos in the country. Banks were ordered to not deal in cryptocurrencies or aid in dealing with cryptos. Fines were to be placed on those caught trading or holding crypto.
A 2021 proposed bill doubled down on this. Culminating in what would be one of the strictest crypto policies in the world. The bill would allow for the criminalization of holding, mining, trading, issuing, and even transferring crypto assets.
Bulls hold bitcoin price steady at $33k | Source: BTCUSD on TradingView.com
Despite the bans, the crypto market has boomed in India. With citizens saying that they preferred to put their money in Bitcoin than they would in gold.
The number of people buying and selling cryptos in 2021 in India now totals more than 15 million. In contrast, there are 23 million traders in the U.S. and only 2.3 million crypto traders in the U.K.
This puts India at the top of the list for people using digital currencies.
Bitcoin Is Easier To Get Than Gold
On top of all of the other factors encouraging the use of Bitcoin, the ease of purchase is an important point for Indians. You can buy Bitcoin online and you wouldn’t have to verify it. This is unlike gold which presents a much difficult purchase and verification process.
The decision of the Supreme Court in 2020 to overturn the trading ban on banks has seen the rise of trading in the country. While authorities are not yet welcoming of cryptos, citizens are taking this as a good sign.
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Another factor driving the adoption is immediate gains. Gains in gold can take years to actualize, depending on the market movements. But with Bitcoin, people have found that the gains actualize much faster. Sometimes in only a matter of months to get proceeds.
The amount of crypto held by Indians is still only a small portion compared to their holdings in gold. But nonetheless, the increased adoption of digital assets shows that Indians are ready to move towards more risky investments.
Featured image from Bitcoin News, chart from TradingView.com