Are Indians Choosing Cryptocurrencies Over Gold Now?
Indians used to be obsessed with gold, but now they are moving towards crypto assets. Will this trend continue?
According to data from blockchain firm Chainalysis, investments in cryptocurrencies in India jumped to nearly $40 billion last year from around $200 million. India has more than 15 million traders of these assets against the 23 million traders in the U.S and just 2.3 million traders in the U.K.
This report comes at a time when RBI has been warning Indians about the downsides of buying cryptocurrencies. Even though the country’s Supreme Court has quashed RBI’s order to ban cryptocurrencies, we are still not sure what the government’s stance is when it comes to cryptocurrencies. There was also reports in March 2021 by Reuters that said India will propose a law banning cryptocurrencies, fining anyone trading in the country or even holding such digital assets.
But Fewer Gains
Another report by Chainalysis said that Indians earn way less from bitcoin, the oldest cryptocurrency. The country ranked 18th in bitcoin investment gains, with Indian investors earning $241 million from bitcoin in 2020. Meanwhile, the U.S bitcoin investors earned around $4.1 billion in realized bitcoin gains while Chinese investors made $1.1 billion in bitcoin profits during 2020.
This is somewhat of a concerning report because the first report shows how Indians are buying more cryptocurrencies these days, but the second report shows how Indian investors aren’t making many profits from buying bitcoin. But why so?
The report said that it might be a result of the Indian government’s historical unfriendliness to cryptocurrency. Rameesh Kailasam, CEO at IndiaTech.org told Financial Express Online, “…Uncertainty prevents people from making long-term career and investment decisions. If we have enabling regulations that allow wealth and the developer ecosystem to compound, we will be in the top three in no time.”
In The End,
Indian households own over 25,000 tonnes of gold, but it looks like the latest generations have less interest towards buying gold. Latest World Gold Council data indicated that Indian adults under age 34 have less appetite for gold than older consumers. Also, it is easier to buy cryptocurrencies than it is to buy gold. However, there are also worries about what would happen to their holdings if the government bans cryptocurrencies altogether? Some traders are planning to shift their crypto holdings to other countries in case there is a ban.
But for now, it is obvious that Indians are buying crypto assets despite warnings from RBI and other uncertainties. And they might continue to do so as the value of cryptocurrencies keeps on increasing. With more and more companies accepting cryptocurrencies and countries like El Salvador legalising bitcoin, more Indians see crypto as a big investment opportunity and a massive gold mine.
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