Bitcoin maximalists have always been known to refer to Bitcoin as digital gold. It is speculated that Bitcoin will surpass gold in the coming years as a preferred store of value. It seems to be the case with every bull market, as the Bitcoin topped gold 10 times in 2020.
Gold has always been a preferred investment for families in India. This is because of what it means in 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 everything it touches. Families in India own more than 25,000 metric tons of gold. Placing Indians among the largest holders of the precious metal in the world.
But the tide seems to be turning with Gen Y. Young people with more tech savvy are choosing digital assets over physical ones. According to Chainalysis, India has grown from $200 million in crypto investments to nearly $40 billion in the space of one year.
Ban on cryptocurrency trade in India
In 2018, the Central Bank of India issued a circular ordering the ban on cryptocurrencies in India. Banks were asked to suspend the accounts of players who supported the purchase and sale of cryptocurrencies in the country. Banks were required not to deal in cryptocurrencies or help deal with cryptocurrencies. Fines should apply to those caught trading or holding crypto.
A proposed bill for 2021 has doubled on that. Culminating in what would be one of the strictest cryptocurrency policies in the world. The bill would allow for the criminalization of the holding, mining, trading, issuing and even transferring of cryptoactives.
Despite the bans, the crypto market has grown a lot in India. With citizens saying they’d rather put their money into Bitcoin than into gold.
The number of people buying and selling crypto in 2021 in India now totals over 15 million. In contrast, there are 23 million merchants in the US and only 2.3 million cryptocurrency merchants in the UK
This puts India at the top of the list of people using digital currencies.
Bitcoin is easier to get than gold
In addition to all the other factors that encourage the use of Bitcoin, ease of purchase is an important point for Indians. You can buy Bitcoin online and you don’t need to verify it. This is different from gold, which presents a very difficult purchase and verification process.
The Supreme Court decision in 2020 to overturn the ban on trade on Banks saw an increase in trade in the country. While authorities still do not welcome cryptocurrencies, citizens consider this a good sign.
Another factor driving adoption is immediate gains. Gold gains can take years to materialize, depending on market movements. But with Bitcoin, people have found that earnings update much faster. Sometimes it takes just a matter of months to get the product.
The amount of cryptocurrency held by the Indians is still only a small part compared to their gold reserves. Still, the rise in adoption of digital assets shows that Indians are ready to move into riskier investments.