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Role of Cryptocurrency in Promoting India’s Digital Economy

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The benefits of cryptocurrencies are many. But the biggest advantage comes from the fact that these currencies, by their nature, are secured and are easy to transact. Today countries like India are trying to regulate the cash economy and move the country toward digitalization. But while the efforts are noble, the fact is that digitization is now totally dependent on cell-phones. Today, there are around 300 million smartphones in the country and the number will double to 700 million by 2020.

According to the Morgan Stanley report – ‘The Next India- India’s digital leap’,  there is scope for visible shifts in economic activity starting in 2018 eventually leading to India being a) the third-largest economy in the world with a GDP of US$6 trillion, b) among the top five equity markets in the world with a market capitalization of US$6.1 trillion and c) the country with the third-largest listed financial services sector in the world with a market-cap of US$1.8 trillion by 2027.

 Morgan Stanley also expect India’s consumer sectors to add about US$1.5 trillion to their current market cap of US$500 billion over this period.

Real Estate:

Cryptocurrencies will be very beneficial in the area of real estate. This is because bitcoin, one of the leading cryptocurrencies, is powered by blockchain. The blockchain is a decentralized ledger that allows users to transact with each other directly and the biggest benefit of a blockchain is that a transaction can never be reversed. Thus the chances of fraud get minimized. In the case of real estate, in most developing countries, land records are in a mess. Tracking these records is not easy. Many times these records are tampered. Once these records go on a blockchain it will not be easy to tamper the records and this could ideally solve a major problem for most Indians who lock their wealth into real estate. Poor people with no land records can be benefited through the use of cryptocurrency.

Immediate Settlement:

In the case of an absence of a middle man, the cryptocurrency typically becomes a peer to peer transaction. In such a situation, the contracts can be settled immediately.

Transaction Done at Fraction of a Unit

Cryptocurrencies can be done at a fraction of a unit. Thus even when someone wants to do a transaction for a few rupees or a few dollars, there will not be any additional cost. Typically, banks charge more for smaller transactions and less for larger transactions.

No Theft in Transaction

There can be no identity theft in a cryptocurrency transaction. So while India can go digital on the basis of Jan-dhan and aadhar, there are huge chances of criminals hacking into Aadhar or even the jan-dhan accounts. That won’t be possible in a typical cryptocurrency transaction. The person who wants to send cryptocurrencies is in total control of their transaction as compared to a credit card transaction, where the third party bank is in control of the transaction.