Bhubaneswar: Cryptocurrency was back in the news for the wrong reasons recently with the Canadian crypto exchange Quadriga losing over $145 million as fallout of the untimely death of its CEO Gerald Cotten. With Cotten’s death, the accounts (cold wallets) of many of Quadriga’s cryptocurrency holders became inaccessible; Cotten solely held their passwords and records containing these were not traceable. Quadriga itself admitted that it may not be able to regain access to all the accounts.
The incident has raised fresh concerns about the security of cryptocurrency holdings among users and watchers of the digital form of exchange in the state, too. Crypto investors in the state are now unsure of the market, particularly with the RBI barring banks and financial institutions from crypto transactions.
Jayant (not actual name), a former crypto investor from Bhubaneswar, says from his own experience and from those of his peers that the craze for cryptocurrency has come down in Odisha, and perhaps countrywide, since the crytocurrency market crashed last year.
Like other cryptocurrency enthusiasts, Jayant, too, had started investing in the digital medium of exchange lured by the returns. He had learned about bitcoins in 2013 and did his own research about how it worked. He initially believed it was a hoax but then grew confident based on his understanding of the crypto-ecosystem.
“Towards the end of 2015 I felt like investing in cryptocurrency, considering the rapid growth in their prices. I started investing in satoshi (a unit of bitcoin), opened an account in Zebpay and learned the trading details from there,” Jayant recalls.
Till January 2016, he had invested Rs75,000 in 2 bitcoins whose value then was Rs90,000. And till late 2017, bitcoins were priced as high as Rs12 lakh and drew geeks and investors in Odisha to cryptocurrency. “Post-demonetisation, the value of each bitcoin jumped to Rs13 lakh. This was a time when a lot of people started investing in cryptocurrency,” Jayant says. Although the boom was being witnessed globally, he believes black money had a big role to play in the spike in India.
Things changed quickly, though. “There was a massive crash in 2018 and bitcoin price dropped to Rs2 lakh; it was a disaster for those who had invested when the values peaked. Fortunately I didn’t suffer any loss as I had invested at a time when the value of bitcoin was at its lowest,” Jayant says.
But that is no true consolation as his money is now stuck in his crypto wallet. “With the bar on cryptocurrency transactions and cyber restrictions associated with them, it has become impossible for me to encash my investment. I now consider my investment of Rs 75,000 lost,” Jayant says. The only way he can now put the cryptocurrency to use is in international transactions.
Biswajit Kumar, another cryptocurrency user, who continues to trade in the digital exchange internationally, says: “You can transfer your holdings in an Indian crypto exchange to a foreign one. Investors wanting to trade long term, will need to look at global exchanges such as Binance and Coinbase to continue trading.”
Despite the problems, the one thing investors such as Biswajit and Jayant agree on is that the blockchain technology behind the working of cryptocurrency is here to stay. “Through bitcoin we got blockchain technology and that is gold,” Jayant says.
Biswajit believes banning trade in cryptocurrency will make the country “technologically poorer” since blockchain technology has wide applications in fields such as farming, education, health, banking and real estate. “If the cryptocurrency market is legalized or regulated, it can benefit from the boom in start-ups,” he says.
Dinesh Kumar a cyber expert echoes the sentiment. He says: “India is a developing nation. The economy can use multiple ways to revitalise itself and will benefit largely if the [cryptocurrency] market is regulated in safe hands.”
Banks in several countries are exploring the possibilities of using blockchain technology; the RBI itself had proposed to bring out a digital currency to be named Lakshmi Coin. But the project appears to have been scrapped.
Security remains a chief fear when it comes to cryptocurrency. According to Dinesh, the cyber expert, bitcoin was being used for anonymous cross border money transfers and has been linked to drug dealers and money launderers. “It was used on the online black market site Silk Road, a platform that sold illegal drugs. Anonymity makes cryptocurrency attractive for criminals and terrorist organisations to trade in illegal goods and weapons which is not a favourable attribute, considering the country’s safety,” Dinesh says.
Snigdha Sarkar, member of faculty at KIIT University, feels cryptocurrency such as bitcoins are threatening to devalue fiat currency. “The predictions about the death of banks and financial institutions have become a matter of concern among regulators and central bankers around the world,” Snigdha says
While there are several factors dampening the cryptocurrency market, the entry of multiple organisations in crypto trading may be the chief spoiler. “Many elite organisations are making Initial Coin Offerings of their own and are trading satoshi for their own coin. I invested Rs1,200 worth satoshi for 1 monero (an open-source cryptocurrency created in April 2014). I also invested in coins such as ethereum and ripple. Bitcoin today has lost its relevance,” Jayant says.
The impact of the cryptocurrency boom and apparent bust may not be huge on Odisha, which has few investors. But those once bitten are sure to be twice shy of investing in the still-mysterious currency.
Dipti Ranjan Das, PNN