CRYPTOCURRENCY IN INDIA - ITS AWARENESS AND FUTURE ON

ECONOMY
Abstract

From a few years onwards cryptocurrencies would capture a major relevance in the financial
industry. Cryptocurrency is a internet currency which makes use of cryptography for
security. Cryptocurrency has created unmatched changes in the financial market having both
positive and negative contributions. The meaning of cryptocurrency is a little hard to accept,
but it is easy to use. It is considered difficult because it is altogether different from our
conventional currencies that we people are using since ages. Bitcoin was created in the year
2008 global financial crisis which operated outside of government institutions , central and
state banks and financial hubs. Crypto-currencies are a type of digital cum internet currency
that relies on networks which are distributed and are shared transactions which registers to
combine the basic ideas of cryptography along with a monetary system to make and execute
anonymous, traceable, secure and potentially stable virtual or digital currency. , which will be
effective in India in future. Bitcoin and Ethereum are two highly disruptive crypto-currencies
seeking to leverage blockchain technologies to drive innovation in many sectors in India.
With regard to the Blockchain, India can not be neglected. It is an incredible country with
over a billion inhabitants that has recently experienced demonetization. The objectives of this
research paper are to understand the future of cryptocurrency in India and to assess the
perception of bitcoin as a future currency.
INTRODUCTION

There is no other doubt that the era of information and communication technologies has
developed different golden opportunities in various aspects and eras. One of the fields that
benefit from these technologies and online connections is the financial and business sector.
An alarming number of online users has activated virtual world concepts and created a new
business phenomenon Thus, new types of trading, transactions and currencies have been
arising. One of the remarkable financial forms that have been emerged in the past few years
is Cryptocurrency.

Cryptocurrency (CC) can be defined as any means of exchange, except for the real currency
that can be used in many financial transactions, whether virtual or real. Cryptocurrencies are
valuable and intangible objects that can be used electronically or virtually in different
applications and networks such as online social networks, online social games, virtual worlds
and peer to peer networks.

This paper explores many aspects of Cryptocurrency platforms attempting to answer the main
questions which are “Will Cryptocurrency be the next currency platform? Are virtual
currency platforms safe enough to be used?” It investigates different Cryptocurrency
platforms in order to provide deep insight about mechanisms of implementing, controlling,
issuing, spending and exchanging Cryptocurrencies which will provide a useful and an
organized CC classification.
OBJECTIVES OF THE STUDY
 To understand the concept of crypto currency, its working, and the top player Bitcoin.
 To analyse the awareness of Bitcoin in India.
 To analyse the legal status, challenges and opportunities of Bitcoin in India.
 To study the future of cryptocurrency in India .

RESEARCH METHODOLOGY
This study uses Survey method and exploratory study to gather different kinds of data , which
provides different type of data to understand viewpoints which would help in attaining the
objectives .Secondary research has been used in collecting the information and analysing the
trends and future prospects of cryptocurrency in India.

A survey has been conducted and primary research has been carried on and 68 questionnaires
(respondents) were used in the final analysis.

Exploratory Research : This research was carried on before collection of data to understand
the Indian context with respect to cryptocurrency to have a vivid picture.

Literature Survey : A groundwork was developed to analyse the papers written by authors
with regard to awareness and future of cryptocurrencies in India .

This paper is also based on secondary data referring to various sources such as

 Journals
 Newspaper articles
 Websites and Statutory reports

Rationale Behind the Research

From the point of view of technology, cryptocurrency shows a remarkable improvement in
the use of the existing currency. And the use of increasing day by day but not at the height of
its price. The main objective of the research is therefore to determine to what extent people
know what cryptocurrencies are and what their preference is.
LITERATURE REVIEW

1. Authors Joseph Bonneau, Andrew Miller, Jeremy Clark, Arvind Narayanan, Joshua A.
Kroll and Edward W Felton :

They examined three individual components of bitcoins that needed to be analysed and
assessed individually, in their paper: “Research Perspectives and Challenges for Bitcoin and
Cryptocurrencies‟(2015). The authors also stated that “bitcoin is one of the rare case wherein
practice seems to be much ahead of theoretical aspect” because there doesn’t exist a scientific
model to answer questions in relation to bitcoin .

2. Ittay Eyal , Adem Efe Gencer, Emin Gun Sirer and Robbert van Renesse

They evaluated the efficiency and effectiveness of blockchain protocols in their article
"Bitcoin-NG: an evolving blockchain protocol" (2015). They analyzed and concluded that "it
is possible to improve the scalability of Blockchain protocols to a point where the network
diameter limits the latency of the consensus and where the processing power of the individual
nodes is the bottleneck. flow rate ".

3. Juan A Garay, Aggelos Kiayias and Nikos Leonardos :

They talked in their paper ,”The Bitcoin Backbone Protocol‟ (2017)” about the security models and maps
of formulation of effective cryptocurrencies. Author Gregory Maxwell presented his research
„Confidential Transactions‟ (2015) regarding the techniques that users can make use of to hide the amount
of their payments from the public using novel cryptographic methods.

4. Authors: Winston Moore and Jeremy StephenIn :

Published paper from the Central Bank of Barbados, economists Winston Moore and Jeremy
Stephen concluded that holding a meagre portion of reserve assets in bitcoin can turn out to
be advantages to the small island nation. The appropriate portfolio allocation can improve
returns and inflate diversity against speculative attacks, without majorly affecting the
volatility of the reserve balance. The authors recognized that "Digital currency can become a
key currency for settling transactions" and that it is important for central banks to assess their
potential impact. This paper is significant and beneficial as it encompasses the emerging
worldwide recognition of bitcoin as an effective store of value among central bank
authorities.
What are Cryptocurrencies really?

Cryptocurrency was born from the need for secure communication during the Second World
War. A defining characteristic of cryptography, and perhaps its most endearing attraction, is
its organic nature, which is not emitted by any central authority, which theoretically makes it
immune to government interference or manipulation. A cryptocurrency is a digital currency
that uses cryptography for security. It is also called virtual money. Cryptocurrency is a form
of digital currency designed to be secure and, in many cases, anonymous. Cryptocurrency is
associated with the Internet that uses cryptography. Cryptography is the process of converting
legible information into an almost impassable code, making it possible to track purchases and
transfers. Cryptocurrency is a way to secure communications, information and money online.
He evolved into the digital age with elements of mathematical theory and computer science

What is Bitcoin?

Bitcoin is a cryptocurrency and global payment system. Bitcoin is a digital currency created
in 2009 by Satoshi Nakamoto. It is inspired by the ideas presented in a white paper by the
mysterious Satoshi Nakamoto, whose true identity has not yet been verified. Bitcoin regulate
and generate currency units using the rules of cryptography. It is also called decentralized
digital currency. The transaction costs of traditional online payment mechanisms are higher
than the transaction costs of a bitcoin transaction. These transactions are managed by a
decentralized authority contrary to the currencies issued by governments. Bitcoins are fully
virtual coins designed to be self-contained. Banks do not need to move and store money.
Bitcoins are not physically present, so only balances are kept on a public wallet in the cloud.
All transactions in bitcoins are verified by a huge amount of computing power. A personal
database that you can store on your computer's player, on your smartphone, on your tablet, or
elsewhere in the cloud is called a wallet. Bitcoins are transferred from one personal wallet to
another.
Working of Bitcoin

Individuals may use Bitcoins to make payments to other individuals or merchants without
using a third party, such as a bank or financial institution, for validation purposes. Instead,
transactions are cleared and validated within the system via the blockchain. Most crypto-
currencies are based on blockchain technology. In simple terms, it is a system for transferring
and storing data or information generated during a transaction in a cryptocurrency. The
blockchain is a public registry that publicly records and displays all Bitcoin transactions
executed in the Bitcoin system. A block is a permanent record of recent transactions. The
recorded data blocks build on each other to form the blockchain, which dates back to the first
Bitcoin transaction. The transparency established by the blockchain is essential to secure the
validation process as it allows the community to monitor and self- analyze transactions. It
also makes it possible to check both the spender and the recipient and ensures that the double
expense of a Bitcoin is impossible. When creating a Bitcoin wallet to store Bitcoin, the
person will receive a public key and a private key. Public and private keys are a set of
numbers and long letters; they look like his username and password. People need their public
key if they want to send money to them. Since it's just a set of numbers and numbers, nobody
needs to know their name, email address, etc. This makes the users of Bitcoin anonymous.
But the private key is not disclosed. In the blockchain, the private key is the identity of each.
The private key is used to access Bitcoin. If anyone sees it, he can steal all the Bitcoins from
the account or wallet.

Bitcoin Legalization in India

The increase in transaction volumes and Bitcoin activities with significant margins is the
expected initial impact after the legalization of Bitcoin in India. The legalization will
probably allow Bitcoin start-ups to signal their security concerns and the risks stem from the
use of Bitcoin, which will eventually work to improve its infrastructure. In addition, the
legalization helps to eliminate the apprehensions related to its consistency for the average
Indian consumer. Considering that, according to some information, the Bitcoin trade would
amount to money laundering and spread the financing of terrorist suits. To relieve these fears,
Bitcoin start-ups in India perform several security checks. A government-verified address
indicates a permanent account number (PAN) or a mandatory Aadhaar number as valid proof
of identity for users of all Bitcoin companies.
Theoretical Framework 

In this research, we oppose the idea of investment, investing in cryptocurrency and raising
awareness about it. Then we synthesize the results from surveys conducted by different
people. In doing so, I like to clarify these definitions.

• Awareness - to know that there is something or to understand a situation or topic at the

moment based on information or experience gained

• Investing - Investing is giving money in the hope of future benefit. In finance, the benefit of
the investment is called a return. The return may include a capital gain or investment income,
including dividends, interest, rental income, etc., or a combination of both. The projected
economic return is the appropriate discounted value of future returns. The investment usually
leads to the acquisition of an asset, also called investment. If the asset is available at an
attractive price, it is normally expected to generate income or value, so that it can be sold at a
higher price (or both). investors generally expect higher returns from riskier investments.

ANALYSIS
The analysis has been executed using softwares like SPSS for primary research and
secondary research has been done taking into consideration the latest data available till 2019.

Various tests like :

 Chi Square Test

 Anova test
 T Test

Has been carried out to get the desired results of the objectives stated in the research
paper.
Inferential Statistics

1. Chi-Square test between Gender and Awareness

● H0 (Null Hypothesis ) - There is no significant relationship between gender and awareness

about cryptocurrency

● H1 ( Alternative Hypothesis ) - There is a significant relationship between gender and

awareness about cryptocurrency Value .

Value df Asymp.Sig.(2- sided

)

Pearson Chi-square .717 1 .397

Continuity .002 1 .962

Correction
Likelihood Ratio .576 1 .448

Fisher’s Exact test

Linear–by-Linear .707 1 .401

association

N of valid cases 68

Interpretation –
The following table shows the result of the chi-square test performed to generate a
relationship between sex and knowledge of cryptocurrency. The value of the test statistic is
0.781, which corresponds to the p value of the test statistic the value is greater than our
significance value (the confidence level is 95%) 0.05, we can not reject the null hypothesis.
 2. Anova test between age and awareness

● H0 -There is no difference between respondents with different age group and awareness
about cryptocurrency

● H1 - There is the difference between respondents with different age group and awareness
about cryptocurrency

AGE

Sum of df Mean square F Sig.

squares
Between .180 1 .180 .796 .376
groups
Within 14.938 66 .226
groups
Total 15.118 67

Interpretation –

The following table shows the result of the ANOVA test performed to generate a
relationship between age and knowledge of cryptocurrency. The value of the test statistic is
0.796 with the corresponding p value of the test statistics is p = 0.376 our significance value
(confidence level is 95%) 0.05, we can not reject this assumption.

3. Anova test between occupation and awareness

● H0 - There is no significant relationship between occupation and awareness about
cryptocurrency

● H1 - There is a significant relationship between occupation and awareness about

cryptocurrency .

ANOVA

Occupation
Sum of df Mean Square F Sig.
Squares

Between 3.420 1 3.420 2.278 .136

groups

Within groups 99.109 66 1.502

Total 102.529 67

Interpretation
The table below presents the results of the ANOVA test conducted between professional
relations and taking into account cryptocurrency. The value of the test statistic is 2.278,
which corresponds to the p value of the test statistics: p = 0.136, because the value p is
greater. that our significance value (confidence level is 95%) 0.05, we can not reject the null
hypothesis .

4. T-test between important factors in cryptocurrency and gender

● H0 - There is no significant difference between important factors in cryptocurrency and
Gender.

● H1 -There is a significant difference between important factors in cryptocurrency and

Gender.

One Sample Test

Test Value = 0
T df Sig.( 2- Mean 95%
tailed) Difference confidence
interval of
difference

Gender 2.989 67 .004 .118 0.20

Please rate the 17.907 63 0.000 2.7192 3.02
following factors
which you consider
important for the
adoption of Bitcoin
Improved
government
legislation(improved
legislation about
bitcoin)
Please rate the 20.170 63 0.000 2.992 3.21
following factors
which you consider
important for the
adoption of
Bitcoin(education
about bitcoin)

Please rate the 17.924 63 0.00 2.422 2.69

following factors
which you consider
important for the
adoption of
Bitcoin(advertising
about bitcoin)
Please rate the 19.765 63 0.000 2.594 2.86
following factors
which you consider
important for the
adoption of
Bitcoin(more stable
bitcoin price)

Please rate the 24.131 63 0.000 2.938 3.18

following factors
which you consider
important for the
adoption of
Bitcoin(major banks
accepting proceeds
of bitcoin sales)

Please rate the 25.063 63 0.000 3.904 3.34

following factors
which you consider
important for the
adoption of
Bitcoin(major retail
websites accepting
bitcoins)

Please rate the 22.394 63 0.000 2.859 3.11

following factors
which you consider
important for the
adoption of
Bitcoin(simplified
method for bitcoin
purchase)

Please rate the 20.926 63 0.000 2.922 3.20

following factors
which you consider
important for the
adoption of
Bitcoin(more secure
bitcoin storage
methods )
 Please rate the 17.473 63 0.000 2.625 2.93
following factors
which you consider
important for the
adoption of bitcoin.
(Government stamps
of approval)

INTERPRETATION :

From the table, it is interpreted that the p value is 0.00 which is less than 0.05 level of
significance . hence do not reject the null hypothesis.

FINDINGS

 Out of 68 respondents ,94% people knows what cryptocurrency is .

 Greater than 50% people believe that usage will substantially grow over 5 years .
 Out of 21 respondents who trade in cryptocurrency ,the main objective is Capital
Growth .
 Out of 64 respondents who are familiar about cryptocurrency , 30 % thinks
cryptocurrency as a bubble .

OPPORTUNITIES OF CRYPTOCURRENCY IN INDIA

 Entrepreneurs in the country see it as a natural opportunity for proliferation of Bitcoin

and other encrypted currencies in the country.
 It is reported that India currently has about 30,000 Bitcoin owners in the country and
this number is expected to increase.
 For consumers, it is a payment system that does not require the provision of private
identity information.

CRYPTOCURRENCY IN INDIA
In India, bitcoins have been available since 2012. And currently in India, there are 11 trading
platforms and about 1 million bitcoin users. During the move, RBI banned the bitcoin deal in
India. Thus, one can not use cryptocurrency for the payment of goods and services. Recently,
in 2018, during the Union's budget statement, the Indian government declared that crypto-
currencies such as bitcoins were not a legal offer. No protection is available for those who
use, exchange or use them. Finance Minister Arun Jaitely recently said that when questioned
by the media, the government was aware that cryptocurrency was used for illegal activities
such as terrorism, cryptocurrencies in the community.

CHALLENGES OF BITCOIN IN INDIA

Government regulation: The Indian government's position towards Bitcoin is the main
challenge of its growth. The future of cryptocurrency is doubtful in India at the moment.
Currently, in 2019, RBI announced that cryptocurrency would not be considered a legal offer.
Because it's completely decentralized.

Threat to security: hackers and malicious users can create as much virtual currency as they
want if they break the system and know the virtualization method. This will lead to the
possibility of creating a fake virtual currency or stealing virtual currency by simply changing
account balances.

Negative impact on the Indian monetary system: Crypto-currencies such as Bitcoin help help
users to buy virtual and real goods and services with virtual currency on some platforms can
reduce the need for real money. Users will no longer depend on real money to buy what they
want and will instead use virtual money. On the other hand, some platforms allow users to
exchange their virtual currency for real money, which will increase real money requirements.
This fluctuation in demand and supply will have a negative impact on real money systems.

Use for alleged activities: Several incidents have been reported stating that Bitcoins have
been used for illegal and illegal activities around the world, such as money laundering, black
marketing, tax evasion, etc.

No mediator: any help or claim, as a result of which Indian consumers are exposed to
transactional and informational risks. Next entry of Indian cryptocurrency. According to the
report of the commercial standard, the Indian government will introduce its own bitcoin-like
crypto-currency called "Lakshmi". His discussion continues.
Deep integration into local currency: Paul Brody, Global Head of Innovation for EY, said that
bitcoin and other cryptocurrencies have no practical practical value in the country, as the
local currency is deeply embedded in the economy .

Human misbehavior in online trading: People who manage unregulated online trading that
trades against Bitcoin species may be dishonest or incompetent. The only difference is that
classic bank losses are partially insured for bank users, while Bitcoin exchanges do not have
any insurance coverage for users.

FUTURE OF CRYPTOCURRENCY

Crypto-currencies such as bitcoins are quickly transformed into real money, which will give
healthy competition to the various currencies issued by the centralized governing bodies. The
current rise in Bitcoin prices could reflect a promising future. It is obvious that Bitcoins has a
very promising future. Cryptocurrency is also called digital currency in any payment system,
like the points we get in some random stores. True cryptocurrency is decentralized.
Cryptocurrency will be developed in the future and will have a huge future to come, but this
new form of currency does not benefit all the systems of power and control currently in place.
It is difficult to say what struggle will be put in place to control the cryptocurrency and the
obstacles that will have to be overcome to consolidate its presence in everyday life.

It has the potential to be the currency of the world in the future. It will not be necessary to
keep a specific currency for each country permanently. With a type of currency that is
difficult to regulate, decentralized, that everyone can use and that eliminates the exchange
rate of the world, makes the future of the world a centralized currency around the world. This
suggests the concept of a world, a currency. Central banks are slowly coming to the
conclusion that cryptocurrency is here to stay. And according to various research and
economists, the value of digital currencies such as bitcoin is determined by the market. Much
remains to be done to analyze the effect of cryptocurrency in the future. Example of
cryptocurrency: - Ether (ETH), Litecoin (LTC), Bitcoin. And in these "Ether" is the second
largest cryptocurrency in terms of market capitalization. Litecoin allows faster blocking time,
about 2.5 minutes, while bitcoin needs 10 minutes.
CONCLUSION

Cryptocurrency, in particular Bitcoin, offers a new model of efficient and attractive payment
methods that can increase the revenues of businesses and operators. It also provides an
alternative payment method, in addition to real money, which allows users to easily perform
financial activities such as buying, selling, transferring and trading. Cryptocurrency can bring
more positive changes to the e-business and e-payment industries. However, cryptocurrency
does not have much confidence yet. Many concerns, challenges and problems exist in many
cryptocurrency platforms. Until cryptocurrency is well regulated and controlled, users must
take extra precautions to use this virtual currency. The lack of legislation is therefore
considered the main concern of cryptocurrency systems. The silence of the RBI on the
regulatory status of Bitcoins can be damaging. An industry has developed around Bitcoins in
India - traders, stock exchanges and merchants who accept Bitcoin payments. Bitcoins are
already widely accepted around the world, so banning them is not an option in India. Instead,
this industry should be regulated. The sooner it is done, the better.
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https://www.economist.com/sites/default/files/the_future_of_cryptocurrency.pdf

https://www.totalassignmenthelp.com/free-sample/literature-review-on-cryptocurrency-like-bitcoin

https://www.frontiersin.org/articles/10.3389/fpsyg.2019.00475/full

https://www.researchgate.net/publication/324770908_The_Growth_of_Cryptocurrency_in_India_Its_Chall
enges_Potential_Impacts_on_Legislation

https://www.indialawjournal.org/cryptocurrency-21st-century-myth-or-future-money.php