Bitcoin is a peer-to-peer network for digital currency developed by ‘Satoshi Nakamoto’, a pseudonymous person or group which created the virtual currency.
The service was launched in 2009.
1. Bitcoin has been in the news over the last couple of months across the world for the wrong reasons. From China to the US, there have been voices of concern over its use in illicit activities.
But in India, it has created a fair amount of excitement and anticipation, going by media reports.
Sabyasachi Mitter, managing director, IBS, explains why the service is creating buzz in the country. He says, “It’s creating buzz because it is a new concept. People think that they can make money since it’s a new commodity.”
Much of the excitement in India has been driven by the spike in price of Bitcoin currency. Mitter noted that there will be early adopters in India, who will reap the benefits of a jump in value.
“There will be early adopters. India has a decent number of people who have been lured towards it. Some people are selling assets to get this. It’s not attracted the mass market yet because people need real stories of people who have made money out of this. It’s much like the share market in the early ‘90s. It’s still a Western phenomenon,” adds Mitter.
Mohit Lalvani, co-founder and CEO at mobile payment startup LivQuik, attributes the buzz to the price rise. He says, “Obviously the price rise is causing excitement. Something that was worth single digits (in dollars) now commands four digits. The rise has come in just a year, so it’s bound to overwhelm people.”
On the advantage of the service, Lalvani says, “The upside of Bitcoin is very low transaction costs for merchants versus credit cards which usually cost 2 per cent or more. But for consumers, a Bitcoin transaction can’t be reversed, so there’s no such thing as charge back and you have to eventually rely on the processor or exchange you’re dealing with. More will have to be done by the ecosystem to push bitcoin forward.”
2. Mahesh Murthy, founder and CEO, Pinstorm, thinks that Bitcoin’s USP, anonymity, could be the reason Bitcoin could prove to be a success. He explains, “Bitcoin has been a limited success so far. Maybe after mid-2014, it could do better. The reason it could prove to be a hit with consumers is anonymity. Hence, expect it to be used by politicians and their agents. Our politicians are worth billions of dollars each. More than anybody else in the world, they can afford it.”
3. The price to purchase a full unit of Bitcoin in the last month (December 2013) has ranged between Rs 64,000 and Rs 67,000 (fluctuating around USD 1000 to USD1,100). But with the service divisible to 0.00000001 of a unit, it makes the service affordable in India as well.
4. LivQuik’s Lalvani sees Bitcoin as a service that could do well in the future. He reasons that this was a much-needed product, given the development of the digital ecosystem – for a while now. Lalvani explains, “The world has become sort of borderless. A couple of decades ago, phones were a luxury and everyone relied on snail mail. Today, you can Skype and Facebook, but the banking system is still nearly the same. It’s expensive to remit money, there are fees, currency conversions, so wouldn’t it make sense to have one global currency, which I see as a really big advantage for Bitcoin.”
5. Mitter suggests that while the service has created buzz, it won’t reach the heights some people expect it to. He surmises, “It needs to reach that tipping point, which I personally don’t think it will. But let’s see.”
What it means…
- Privacy, safety in transactions.
- Another option to make an investment.
For online retailers
- Low transaction costs.
- Concern over misuse.