Crypto: In the next 2-3 years, India could have a bigger crypto ecosystem than the US: Nischal Shetty
For the first time in history, a global financial market is being built. So far, the financial markets have all been geographically bound. But a new technology makes it possible to have a financial world, says Nischal Shetty, CEO, WazirX.
Cryptocurrencies are currently the biggest flavor. But do people know what they are investing in? Do you understand the risks of something that is so volatile?
Regarding regulation, we as an industry are pushing for regulation in India and that would be a good step forward for the industry. As for the growth of the industry, technology starts as a niche and then things get built and then there’s a hockey stick curve if it’s adopted quickly. We see this happening in crypto now. It’s just in the nature of crypto. Governments around the world are trying to understand this and provide the framework. The problem is that you cannot use existing regulations on crypto because the nature of crypto is different.
At one end it feels like a currency and then you realize that there are other categories of crypto – assets and utilities. We don’t have a framework to overlay the crypto ecosystem. Because of this, it will take longer for governments to regulate it, but what will happen sooner is some kind of guidelines that allow good players to develop better products in this area and keep the bad players out. But the growth is amazing. It’s almost five to six times in the last 12 to 18 months and we’ve seen new startups in India, we’ve seen new investments made. We’re less compared to the US, where there are a lot more crypto startups, a lot more valuable companies, a lot more crypto companies going public in the US. India still hasn’t caught up with the US, but in the next two to three years we will likely have an even larger ecosystem here.
The views on cryptocurrencies worldwide are so divided. Some experts have the crypto craze with the tulip mania in the 17th century.
Many of these arguments also applied to internet startups, and the internet has gone through its own boom and bust cycles. If you looked at the reviews of internet companies in the 1990s and 2000s, the offline businesses were like the internet scam. We are not rated at this price. Why are internet companies rated ten times higher than us? Today it seems normal because we are realizing that internet scales are really fading and that is the whole thing about crypto.
For the first time in history we have this global financial market under construction. So far, the financial markets have all been geographically bound. We are all tied to the economies of the nations and all financial instruments to which we have access are tied to where you live.
Here’s a new technology that makes it possible to have a financial world, and it’s going to be crazy for a while because we understand there is no going back. I still have to meet someone who understands the technology. The general opinion is that crypto is a currency that is the first sign that you need to understand this better.
Crypto is a primary one that is broken down into four main categories – currency happens to be one of them. The others are assets, utilities, and can also be securities. For example, for a long time people thought that bitcoin was a currency, but it replicates more properties of gold; it is limited in number, it is valued by the network of trust that a number of people have in hand. Today there are over 100 million people who own bitcoins and that is where the value of bitcoin comes from.
Bitcoin is owned by over 100 million people worldwide. The internet has 4.73 billion people and all they have to do is educate themselves about it and get access to owning bitcoins. There is a big market ahead of us. As people know about bitcoins, they will keep it and there are only 21 million. This is where the economy of Bitcoin works.
But that doesn’t apply to the other cryptos. Other cryptos depend on the use cases behind them. For example, Ethereum is like a global supercomputer that allows you to run programs without having to use Amazon or Google to host your programs in a completely decentralized manner. This is where the Ethereum token, which is Ether, gets its value.
When we talk about central bank digital currencies (CBDCs) – I am asking – that doesn’t mean you don’t need the other cryptos out there. It’s like saying that the government has a website, why are other websites needed? Each website has its own function and use. It’s similar with crypto. If we discuss and debate more, these things will become clearer and then more people will get involved.