Bitcoin in India

[minorman]

Open question:

Why has Bitcoin so far gotten zero traction in India?

Some thoughts...
---
- India has more programmers/computer people than the rest of the world combined.
- People in India love tangible assets (gold/silver)
- The Rupee is crashing and the gold price has just hit an all time high in Rupees.
- > 10⁸ people in India have no bank account or otherwise access to financial services.
- Millions of Indians live outside India and send money to/from relatives in India.
- Unlike China, India has no "great firewall".

---

Last week, many Bitcoiners got very excited that the turnover on the Chinese Bitcoin exchange spiked for a few days. Why? Because there are a lot of potential Bitcoiners in China, of course.
But India does not even have a Bitcoin exchange of its own! Why not?

[istar]

I have seen some India investors looking at Bitcoin...Its only a matter of time.

[brunozisterer]

There is a big Bitcoin Casino I think somewhere in Marakesh.
http://www.luckycoin.in/

[klaus]

give them time.

today:

India may be the first fallen BRIC angel: S&P

http://in.reuters.com/article/2012/06/11/idINWLA845120120611

http://businesstoday.intoday.in/story/india-investment-grade-rating-standard-poors/1/185301.html

...

[Saturn7]

Money transmission laws are very strict in India.
I think it would be difficult to setup a bank account and explain what you where doing without them saying no.

[Stephen Gornick]

And one more reason ..

Many (especially in the tech sector) use the English language -- so their access to the software, websites, media, etc is not impeded by a language barrier.

- Millions of Indians live outside India and send money to/from relatives in India.

#1 rank, $55 billion for 2010 (estimate) as stated here:
 - http://en.wikipedia.org/wiki/Remittance#Top_recipient_countries

But India does not even have a Bitcoin exchange of its own! Why not?

TradeHill did have a BTC/INR market but the bid/ask spreads were generally pretty wide.
 - http://bitcoincharts.com/charts/thINR#tgSzm1g10zm2g25zv

Bitcoin-Central.net did offer a BTC/INR exchange as well, but they discontinued it -- not sure if it was because of volume being too low or if it had to do with other reasons.

Paxum accommodates wires to India, and they support account-to-account transfers.  There are quite a few bitcoiners who still have a Paxum account even though Paxum cut off their relationship with Bitcoin exchanges.  It shouldn't be terribly difficult to find someone who would accept bitcoins for a transfer to another Paxum user (from India who then withdraws to their bank in India).

I would expect that at some point the hundi providers (same concept as hawalders, ... or like an unregulated Western Union) will discover Bitcoin and begin to consider it.

You're essentially describing hawala.

The difference is that in the remittance destination country, the roughh equivalent of a "hawalder" can work independently and doesn't need to have any trust relationship with the hawalder receiving funds on the other end.

From another thread:

Where is the incentive to add the extra layer of using Bitcoins at both ends though?

Lower fees for one.

You can only compete with WU and hawala if you can offer the same ease of access - a dealer in virtually every neighbourhood.

I'm wondering how long it will take current hawalders to figure out they can use bitcoin to do deals on their own.  Bitcoins don't yet have much value for the recipient of a remittance transfer but in bulk they do have value to an enterprising hawalder, such as being useful to pay for purchases made abroad or to sell to a local investor perhaps.  

a stand-alone money transmission service isn't going to be profitable in many regions.

That's the difference between Bitcoin and a Western Union.  A WU agent location needs lots of volume to pay for the overhead.   An individual who provides a method to cash out your bitcoins can be profitable on every trade.  It doesn't need to be a full time operation or need to start out as a part time gig even.  There no doubt are individuals with a little extra time and money that will do this exchange "as a favor" to be able to earn the 5% or 10% that doing so will bring.  And then word gets out and in the following month there are two recipients who need this favor.  And then it is four, then eight, and pretty soon this individual now has this sideline business doing cash-out service.

Also, then consider how basic business sense starts to take over.  If I am offering a Bitcoin cash-out service to you, and you turn around and use that cash to pay for your mobile phone refill, then why don't I just start selling to yo mobile phone refills for bitcoins, and earn the profit from that sale as well?

More reading on the subjet:
 - http://bitcointalk.org/index.php?topic=85174.msg939331#msg939331
 - http://bitcoin.stackexchange.com/a/3651/153
 - http://www.quora.com/Bitcoin/Might-Bitcoin-have-a-success-as-a-hawala-system

Look for Coinapult's SMS Wallet, currently only available in the U.S. and Canada, to be offered in India, or globally even.  That enables Bitcoin transactions for person-to-person trading like how M-Pesa is used in Kenya, with nothing more than a feature phone with SMS text messaging service.
 - http://coinapult.com/sms-wallet

WalletBit just created a WAP (WML) wallet for feature phones that have WAP data connectivity:
 - http://bitcointalk.org/index.php?topic=85684.0

Here's a Twitter feed on the topic (India):
 - http://twitter.com/bitcoindia

[minorman]

Money transmission laws are very strict in India.
I think it would be difficult to setup a bank account and explain what you where doing without them saying no.

I doubt that this is the only issue. If it were we would have more people from India on these forums as well.
How many people from India are on IRC? I guess a service like bitcoinary.com would also catch on quick in countries with legal hassels?

[Stephen Gornick]

#1 rank, $55 billion for 2010 (estimate) as stated here:
 - http://en.wikipedia.org/wiki/Remittance#Top_recipient_countries

Well, inbound remittances ended up being $58 billion for 2010.
$64 billion in 2011
and $70 billion expected for 2012.

The Reserve Bank of India (RBI) on Friday increased the number of remittances a single individual beneficiary can receive in a calendar year to 30 from 12.

The move is expected to boost remittances to the country in a big way.

Indeed, coupled with the depreciation in the rupee and an increase in the number of white-collar migrants to other countries, this will ensure inward remittances log at least $70 billion during 2012,

To be sure, remittance flows into India amounted to $64 billion in 2011, compared with around $58 billion the previous year, according to World Bank’s Migration and Development report, published in April.

 - http://www.dnaindia.com/money/report_rbi-eases-rules-for-inward-remittances-further_1700032

[hazek]

Bitcoin sucks for remittance. Yes the tx fee from one Bitcoin address to another is super low, but you have to add the fees for exchanging fiat into bitcoins and bitcoins into fiat which add up and end up the same or more than traditional wire transfers.

A good example of this is presented in this thread:
https://bitcointalk.org/index.php?topic=76395.0

[notme]

Bitcoin sucks for remittance. Yes the tx fee from one Bitcoin address to another is super low, but you have to add the fees for exchanging fiat into bitcoins and bitcoins into fiat which add up and end up the same or more than traditional wire transfers.

A good example of this is presented in this thread:
https://bitcointalk.org/index.php?topic=76395.0

In a few years that will either no longer be true, or bitcoin will be dead.  Exchange fees will come down as the demand for exchange comes down.  The more bitcoin accepting businesses, the sooner this can happen.

[hazek]

In a few years that will either no longer be true, or bitcoin will be dead.

or Bitcoin will be alive and well and simply not used for remittance from one fiat currency to another?

[notme]

In a few years that will either no longer be true, or bitcoin will be dead.

or Bitcoin will be alive and well and simply not used for remittance from one fiat currency to another?

What will it be used for?  If it is used to buy and sell things than it won't have to touch fiat currencies.  It is still a remittance regardless of the involvement of fiat.

[giszmo]

http://en.wikipedia.org/wiki/Remittance#Top_recipient_countries

Sometimes people suggest if there is high inflation, just buy bitcoin. This would not work as you can only buy bitcoins in countries where there are bitcoins. remittance is the *only* way to get bitcoins to countries with high inflation.

[minorman]

Remittance aside, why don't we hear about mining in India? Plenty of computers and geeks.
And what about Indians (programmers, graphics designers, etc.) working for bitcoin? I don't see it?

[Technomage]

Like it or not, the world is run by the media. It's possible that there just hasn't been much news about Bitcoin in Indian media. This combined with the regulation could be why Bitcoin is not used there yet.

[Stephen Gornick]

This would not work as you can only buy bitcoins in countries where there are bitcoins.

Are there no Western Union or Moneygram locations which can be used to send a monet transfer?   Here's an exchange that accepts Western Union money transfer (converted to Canadian Dollars / CAD first):
 - http://www.canadianbitcoins.com/westernunion.php

And here's some digital currency exchanges where Liberty Reserve can be purchased.  Liberty Reserve can then be used to purchase Bitcoins.
[cautioin though, LR exchanges are notorious for hidden fees, delays, etc.]
 - http://lrbuysell.com
 - http://www.libertyreserveindia.in

Here are ones that takes cash deposit at ICICI Bank, State Bank of India, and AXIS Bank or payment using Payza (formerly AlertPay) for instance:
 - http://ashishhundekar.com/buy
 - http://www.entelnova.com/indexhome.htm


Instead of an intermediary, bitcoins could be earned from trade when exporting.  Including exporting labor.

Here's a talk by Michael Levinson, VP of Product, oDesk, which has a lot of freelancers from developing nations.  He describes the challenges to (and importance of) paying those contract workers.  Notice that the bitcoin topic just keeps coming up over and over by those in the audience.
 - http://vimeo.com/29287295

Also, nothing is stopping a person in India from sending funds using PayPal to a friend in San Francisco and asking that friend to go down to 7-11 and load the funds using BitInstant.  If there are tourists, presumably the tourists will be looking to buy rupees, and might be informed ahead of time that bitcoins traded for rupees once at the hotel are how to get the best exchange rate.  There's nothing stopping a person in India from adding listings to http://BitMit.net, or http://CoinDL.com, for instance, to try to earn bitcoins.  

And "remittance" doesn't have to work the way Western Union works.  With Western Union (or moneygram, or PayPal, or whatever), there is a per-transaction cost so the recipient wants to (or must) cash out everything at one time.  With Bitcoin, cashing out can be done as it is needed.  Or perhaps there are goods and services that those bitcoins would buy.  Like Airtel and TATA wireless:
 - http://www.bitcoinwireless.com (coming soon)  
 - http://bitcointalk.org/index.php?topic=84348.0

Or web hosting, or VPN services, etc.
 - http://en.bitcoin.it/wiki/Trade

Remittance aside, why don't we hear about mining in India? Plenty of computers and geeks.
And what about Indians (programmers, graphics designers, etc.) working for bitcoin? I don't see it?

One of the first mining operations on GLBSE (April, 2011) was DISHWARA:
 - http://bitcointalk.org/index.php?topic=5750.msg363437#msg363437
 - http://bitcointalk.org/index.php?topic=5750.msg628733#msg628733

[dogisland]

http://en.wikipedia.org/wiki/Remittance#Top_recipient_countries

Sometimes people suggest if there is high inflation, just buy bitcoin. This would not work as you can only buy bitcoins in countries where there are bitcoins. remittance is the *only* way to get bitcoins to countries with high inflation.

I've been thinking about this as well. I know someone with ties to india that's lived in the UK all his life. He has a bank account in India. He would be able to act as a market maker and accept Rupees into his Indian bank account and payout Bitcoins minus a commission.

There must be a lot of people in this situation and it wouldn't be long before locals saw the profit potential and started to make a market for themselves. Once you have market makers in a country workers can start accepting Bitcoins knowing that they can convert them to Rupees when needed.

Sound plausible ?

[notme]

I regularly do work for a guy in India.  When I suggested he pay in Bitcoin, this was his response:

Thanks for introducing me to Bitcoins, a nice decentralized currency system and I guess it has real issues with money laundering. I was able to download its client and for past few hours it is synchronizing with the network and it also gave me an address which I can use to request coins.

Since I don't have any coins, to send you a payment, I will need to buy coins using a credit card and this step involves some processing fees. May be I can mine coins but  I have little idea about how to set it up.

Lets stick with PayPal because it would help me to keep all accounting at one place and save time in long run. On top of that I would add a bonus component to the project amount for celebrating successful project completion and cover up any fees or misc. expenses.

So it seems Bitcoin doesn't have a very good reputation in his region, and they are hard to acquire. He would rather pay me more to cover Paypal fees than spend the time to figure it out.  Of course, this is just one guy, but maybe it gives an idea of the issues Indians face getting bootstrapped in the Bitcoin economy.

[Stephen Gornick]

He would rather pay me more to cover Paypal fees than spend the time to figure it out.

Well, there's the saying that you can recognize a pioneer by the arrows in his back.  There has never been a decentralized digital currency before, so nobody knows what to make of it.  There's nothing wrong with taking a conservative approach with something new -- that would describe the majority of the population.

Fortunately, those reading this thread don't fall under that category.

We are the part of the population that sees the potential.  We see the day that we don't need to give PayPal its pound of flesh.  We know that some day this will pay off where sending a remittance to family using bitcoins is a better alternative to sending fiat in one country and having it arrive as a different fiat currency in another.  We know that some day we'll be sending bitcoins, and those bitcoins will be of value to the recipient and thus spent or saved, but not exchanged into fiat.

There's just this sizable gap between where we are today and how we envision the future.  But we know how to get there.  Notme's inquiry is a perfect example of how it starts.  Then some day this guy will have been given the same request over a half dozen times, and then he might not be so quick to dismiss it.

[Stephen Gornick]

Here's a great article from Transaction World:

Have you been tracking the Google wallet? ISIS? Paypal? Fuggeddaboutit! If you want to see the most exciting developments currently underway in the payments business, look to India. Even more so than in China, India is where the action is right now.
 
All the new technologies coming out in the U.S. get such hype that they are hard to ignore. There’s virtually a daily update on gossipy tidbits about Google or speculative stories about how Apple will take over the payments world. These are all fun to read, but these initiatives represent incremental improvements in the payments process as we know it today. Even self-proclaimed payments revolutionary, Square, is just another gateway to the processing world – an aggregator of micro merchant demand that no one thought amounted to much. While Square’s numbers are impressive in the aggregate, that model has a long way to go to prove the skeptics wrong. Square aims at the 10 million or so micro merchants in the U.S. It’s interesting for sure, but look at what India has to offer as a comparison.

Two things are key the to rapidly advancing payments infrastructure in India: the rising middle class and a robust and ubiquitous cell phone population. According to recent government figures there are 865 million active cell phones in India. While cell-connected ‘roving’ payments have never really caught on here in the U.S., in India, the cell phone will be the payment platform of choice for merchants and consumers alike. But the market is different than the U.S. in important ways that can’t be ignored. You can’t just impose our way of doing things on India and expect that to work.
 
For example, despite the growing economic clout of the Indian middle class, credit cards as a payment instrument are limited. There are only about 18 million active credit cards in India today – and that’s down from 27 million in 2005. Down 30% in 6 years? That’s one of the only sectors of the Indian economy that’s NOT growing by leaps and bounds. Why not? After all, credit cards in the U.S. are a key feature of our economic lives.

The answer lies in a variety of places, but foremost among them is the fact that India is and has been for thousands of years a cash-based economy and almost everything is prepaid. Cell phone and television are two good examples of staple services that are almost entirely prepaid.

I had just posted a similar article describing how in Nigeria, the Paga mobile network has a network of 550 agents that accept cash and then load the funds into the subscriber's mobile wallet.  That then allows payment for prepaid services, such as cell phone and other prepaid services.  The link to the article is in here:
 - http://bitcointalk.org/index.php?topic=63687.msg958729#msg958729

And continuing on the Transaction World article, it appears the same reliance on cash occurs in India:

More promising technologies exist and are taking a significant hold. Solutions that we don’t see here in the U.S. make a lot more sense in the Indian culture. They are simpler, mobile solutions that allow consumers to gain control of their money with a non-cash virtual currency.

What India needs is simple financial tools that allow people to perform basic daily functions without a lot of friction or cost. Paying bills is just such a function. Given that India is an all-cash economy, bills for basics like cell phone, satellite TV, power water, etc. all have to be paid in person and in cash.

 - http://www.transactionworld.net/articles/2012/april/money_guy.asp