You know Bitcoin has finally gotten some traction in India because a hair salon in Chandigarh, a city in Northern part of country, is now accepting the virtual currency in exchange for a bit of the snippity-snip. This makes the salon, CastleBloom, the first merchant in India to start accepting Bitcoins officially.
For some 1,000 member-strong Bitcoin community in India, with most of them based in Bangalore, this comes as a huge endorsement, and a bit of surprise. The salon, after all, isn’t based in India’s tech capital, Bangalore.
“We have been talking to several boutique merchants in Bangalore and elsewhere, but never thought this would start in Chandigarh,” said Benson Samuel who quit his full-time job with a mobile payment startup last year to become a Bitcoin developer. Samuel, who also moderates Bitcoin meet-ups across several Indian cities, says he is already making “more than enough” to support his family that includes his wife and two children. To date, he has organized about 40 Bitcoin meet-ups.
“For past one year, I have only been earning in Bitcoins from customers in Germany and other European countries,” Samuel said.
I went to a Bitcoin meet-up in a bar in Bangalore last week where I met entrepreneurs, investors and even engineers working with companies such as PayPal in the city who are beginning to take the digital currency seriously. Of the fifty community members in attendance, there were at least half a dozen entrepreneurs who are already earning a living by offering Bitcoin-based services.
How widespread is adoption? The WSJ reported that India ranks in the top thirty Bitcoin-using countries. According to The Genesis Block, Indian Bitcoin software downloads increased 17.23% in the third quarter and this is nearly double the average rate of growth in Bitcoin downloads registered by the other thirty countries. There are an 30,000 Bitcoin users in India, at least according to community estimates. The actual number could be far more.
For entrepreneurs like Sathvik Vishwanath, who runs CoinMonk, a Bitcoin mining startup based in Bangalore, the opportunity is just beginning to gain momentum in India. He told me that the first ever Bitcoin conference in India will help spread more awareness among startups, regulators and even investors.
“Hopefully, after we do the first Bitcoin conference, we would be able to set up an exchange, even if it’s at a small scale,” said Vishwanath.
Another entrepreneur, Mahim Gupta, runs a website called BuysellBitco.in, based in Ahmedabad, Gujarat, which offers Bitcoin exchange in the local currency. He told me that in past 3 months, his daily turnover has increased exponentially.
“We are out of stock at least 2-3 times every day,” said Gupta. His customers include bank managers, employees from the state-run oil companies, housewives and students.
“These investors are looking at Bitcoin as an alternative to gold,” he said. His monthly turnover is about $200,000.
Setting up a Bitcoin exchange in India is a logical next step for the Indian Bitcoin community. But that would also need approvals and ‘a no objection certificate’ from the country’s banking regulators including SEBI and RBI.
These Bitcoin startups, especially those offering to exchange he digital currency for Indian Rupee, are already following ‘know your customer’ and other norms specified by the regulators.
Samuel said that startups such as BuySellBitco.in, do not process any requests unless a user submits details including Permanent Account Number provided by India’s Income Tax department.
But for Bitcoin startups to attract good investments from VCs, some clarity from the regulators is needed. I spoke to a government official who said the regulator is still “watching and evaluating options on whether to regulate Bitcoin, and when, if at all need be.”
Maninder Gulati of Lightspeed Venture Partners said he continues to look at such opportunities in India but it’s still early days. Lightspeed Venture has invested in some of the biggest Bitcoin exchanges globally.
“For Bitcoin to be meaningful for us, it needs to gross few thousand per day from just few hundreds daily now. Merchant acceptance is an important benchmark to track Bitcoin’s progress everywhere, and India lags on that front currently,” he said.