The future of cryptocurrency is being questioned in recent time due to drop in its demand and price worldwide. Especially future of cryptocurrency in India has become matter of concern due to regulatory warnings.
What is cryptocurrency?
It is derived from two words – cryptology & currency. Cryptology is a science of computer coding language. The code thus developed can only be understood between sender and receiver. No third party involved in transaction. The code itself is a store of value. Its value changes as per market demand and supply. So cryptocurrency is nothing but coded digital currency. It does not have a physical presence. Currently there are 9,314 cryptocurrencies in circulation and valued around USD 839 billion. The owners are not identifiable, but all transactions are publicly available. You may read for more details at Basics of cryptocurrency.
Why cryptocurrency is falling
Cryptocurrency or crypto is by nature a volatile product. Its price and demand keep fluctuating from time to time depending upon many economic factors. The current phase of crashing is mainly attributable to the following reasons.
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FTX and Binance dispute
FTX or “Future Exchange” is a digital assets trading platform based out of USA. Binance is world largest bitcoin and altcoin exchange. It is alleged that FTX utilised investors funds in misleading activities which is illegal as per US Securities laws. It made FTX illiquid. FTX struck a deal with Binance for its rescue which also failed. Both these events pulled down price for cryptos by 70%. FTX eventually filed for bankruptcy. It made all crypto investors across the globe jittery about crypto investment and future of cryptocurrency looked gloomy.
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Rising interest rate
During pandemic period, the economies slowed down and it affected people’s livelihood. Governments pumped huge money to revive the economies when pandemic waned. It pushed inflation up across the global. To contain inflation Governments now raising interest rate so that people start saving money instead of spending. Many of investable fund has therefore gone towards interest earning product rather than speculative product like crypto.
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De-pegging of Terra Luna
Terra Luna is a stable coin backed by US Dollar. In mid-2022 Terra Luna was de-pegged from US dollar making it purely a speculative product without security. It led to devaluation of Terra Luna by 95%. Consequently, many other crypto plunged in the crypto market. BTC prices dropped by more than 70%.
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Improvement in stock market performance
Post pandemic with Government intervention, economies started bouncing back. It reflected in improvement in stock market performance. Investors started moving towards stock market vying away from crypto market. Large crypto investors used speculation and manipulation to take advantage of the situation. The crypto market then triggers FUD or fear, uncertainty, and doubt that further influenced the drop in the market as if future of cryptocurrency is doomed.
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Depreciating computer system
The Crypto miners use very high-end computing system. These systems consume lost of energy. Over a period, these systems also requiring replacement and large investment. This too working as a drag in development of crypto market.
Future of cryptocurrency in India
India is one of the most active countries in crypto investment. Reportedly India has 60% crypto investors of the world. Over a period India has developed an eco-system around cryptocurrency. Currently there are 230 start-ups associated with cryptocurrency. It indicates that future of cryptocurrency in India is bright and expected to grow more.
The factors in favour of brighter future of cryptocurrency in India are
- Reserve Bank of India (RBI) is not banning cryptocurrency in India, though cautionary circular issued from time to time. It has also imposed at tax of 30% on virtual assets.
- Government in November 2022 introduced e-Rupee, a digital currency for both public and business use. Currently, its circulation is limited with an intention expand its use countrywide.
- There is high adoption of cryptocurrency in India. Reports says in terms of adoption India is second in the world. The Millennials and Gen Z investors irrespective of caste, creed, social status, rural and urban divide are embracing cryptocurrency as a mean for financial freedom. They be
Global outlook on future of cryptocurrency
The future of cryptocurrency is going to be more exciting as it evolving in different forms. New tokens are being introduced in different formats. Some examples are,
Dash 2 Trade
It is more investor friendly platform. It gives notifications for new coin listing and presale launching. It provides trading signals and social trading facilities. The D2T token has already raised $6 million through 3 tranches of presales.
IMPT.io
This token has merged blockchain with carbon offsetting. As a result, it has gained tremendous support from investors. It has already raised $16 million through presale
RobotEra
It allows users to own virtual land and build their own planet posing as a robot. They can carry out many activities in their virtual planet. Such as allowing other users to enter for a fee, advertising for product etc.
TARO
It is also known as Taroverse. Taproot Asset Representation Overlay (TARO) is based on taproot protocol of bitcoin blockchain. It allows users to issue digital assets – both fungible and non-fungible. It can be transferred over the Lightening network. Therefore, it has best of both bitcoin and Lightening network.
Conclusion
As we could see future of cryptocurrency in India stand strong, we can not ignore the concern of regulators and Ministry of Finance. RBI Governor recently warned that next financial crisis will come from private cryptocurrencies.
Further, there are significant investment in meme coin in India, whose value fluctuate more than token. It is matter of concern.
Looking at popularity as well as vulnerability, it is most likely that Government will introduce blockchain infrastructure and bring some regulations in future. The exchange operators will be required to obtain license and investors to follow laid down guidelines.