Crypto-currency Bitcoin recently hit its all-time high of $11,370, and then dropped to $9,292. But Indian investors aren’t too worried about its future.
New Delhi: Praveen Kohli was one of the early Indian investors in Bitcoin, back in 2013. He put his money in the crypto-currency simply because he found himself flush with cash after selling off a flat in Mumbai.
“I was going to use the money to buy my parents a new flat, but they couldn’t pick one. So I invested in Bitcoin, thinking I will withdraw my investments once they make up their mind,” Kohli said.
However, that day never arrived for Kohli. Then, he began to see big returns on investment in 2016.
“That is when I became really interested in Bitcoin, and started suggesting it to friends and family. You put in Rs 2,500, and it increases to Rs 20,000. I told them it (money) has increased ten times in a very short span of time,” he said.
Kohli’s initial investment of Rs 10 lakh is worth a few hundred crore rupees today.
Correction coming after incredible ascent?
The world’s largest digital currency, Bitcoin has had an incredible ascent since it was first launched at a mere six cents. Just this Wednesday, the crypto-currency broke all records by smashing through the $10,000 mark and hitting a fresh high of over $11,370.
“People have been comparing this to the dot com bubble, and there are definitely similarities,” said Pramod Emjay, a long time crypto-currency miner.
Having invested in Bitcoin in 2013, Emjay now runs a company called CryptoMe, and advises over 15 clients on how to invest in crypto-currency.
“The reason I started using it (Bitcoin) is because I actually saw real world utility for it. If I were to go right now to the Dell store, I could buy a laptop using Bitcoin,” Emjay said.
However, shortly after achieving its meteoric rise Wednesday, the currency corrected itself, plunging 18 per cent to $9,292. Emjay said the currency at a bullish state is a “bubble right now”, and that he expected another, much bigger crash soon. Being a seasoned crypto-currency miner, he wasn’t too worried about it, though he did say the crash would “freak out” the more “uneducated” miners who invested in Bitcoin to make a quick buck.
He said while advising his family and friends, he was always upfront about the shortcomings of “magic internet money”.
“When I tell friends or family about Bitcoin, I am very honest that you could lose all your money; it is a very volatile market. I make people understand that you only put in as much money in this as you’re willing to lose. If I just start off by saying I had 100 per cent returns in the last year, they tend to forget everything that comes after it,” he said.
Cumulatively, however, Emjay and his clients hold less than one per cent of Bitcoin currency, because according to him, in the future, Bitcoin may not have the kind of growth that other currencies have. “It is extremely over-priced at this point, and a correction is incoming,” he said.
Between Bitcoin and Ethereum, Emjay is placing his bets on Ethereum, foreseeing a better future for Bitcoin’s main competitor.
Unlike Emjay, however, Kohli is not worried about the spiking price of Bitcoin, saying it is a result of greater demand than supply.
The legal position in India
Gautam Singla’s investment in Bitcoin, worth a mere Rs 2,500 in 2012, is worth Rs 35 lakh today. Singla, a student who also runs an IT company, reiterated Kohli’s sentiment about demand and supply.
“Since the RBI hasn’t considered it as legal tender, Bitcoin trading is not something that is happening openly. It is something which is still an underground activity, and because of that, major banks are not able to provide people with Bitcoin. Since there is more demand than supply, there is a premium on Bitcoin in India,” Singla said.
Bitcoin currently sells at around $13,110 in India — a 30 per cent premium. “So, even if there is fluctuation, I am able to get a good return on the investment I have made,” said Singla, unfazed by Wednesday’s dip in Bitcoin’s value.
“When I first invested in Bitcoin in 2012, I wanted some subscription services in the US, but the credit card method was not authorised and the payment accepted was Bitcoin. At that time I got to know that crypto-currency makes international transactions a lot easier,” he said.
He also said that transacting with his clients in different parts of the world had become a lot easier through Bitcoin.
“A Russian client owed me around $7,000-8,000, and through conventional means, there would have been some legal hassles. But he transferred around 3.2 Bitcoins, and I offloaded them in the Indian markets within 15 minutes. Bitcoin is easier to offload than gold,” he said.