IRJMST Vol 8 Issue 10 [Year 2017] ISSN 2250 – 1959 (0nline) 2348 – 9367 (Print)

“STUDY OF CONSUMER AWARENESS ON CRYPTOCURRENCY IN INDIA "

Mukund Gupta, Dr. Teena Bagga

ABSTRACT

In the history of humans, they have used commodity as currency in Barter system. Fiat
currency(notes and coin) is the mostrecent development, they were first used around 1000 years ago,
but today it is the most dominantform of money. This wasn’t the end of monetary evolution.
Cryptocurrency isthe latest development is the monetary system. Cryptocurrency is neither
commodity money nor fiat money – it is a virtual currency.Compared to conventional payment
systems, Bitcoin lacks governancestructure other than its underlying software. This has several
implications forthe functioning of the system. First, Bitcoin imposes no obligation for a
financialinstitution, payment processor, or other intermediary to verify a user’s identityor cross-
check with watch-lists or embargoed countries. Second, Bitcoin imposesno prohibition on sales of
particular items;This article explains what cryptocurrency is, awareness about cryptocurrency in
Indian marketand, the factors which will help people in adoption of cryptocurrency.

KeywordsCryptocurrency, Bitcoin, Altcoin, Encryption, Blockchain, Digital

INTRODUCTION

Bitcoin is a cryptocurrency invented in 2009. Bitcoin follows the rules set out in a white paper by the
Satoshi Nakamoto, whoseidentity is still not known. Cost per transaction in cryptocurrency is less as
compared to traditional online Payment system. Also, cryptocurrency is not regulated by any
government authority but instead regulated decentralized authority.Today's market cap for all bitcoin
(abbreviated BTC) in circulation exceeds $7 billion. In cryptocurrency Balances are kept on ledgers
on the cloud, which are verified by computers, no use of physical currency is there. Cryptocurrency’s
are not backed or issued by banks or governments, nor are individual bitcoins valuable as a
commodity. In most of the countries cryptocurrency is not yet legal, people are falling for it and is
gaining popularity.

Bitcoin is a type of cryptocurrency: Balances are kept using "keys," which are both public and
private.The keys are generally long strings of letter and numbers linked through the
mathematical encryption, which was also used to create them.The public key can be termed as bank
account number whichserves as the address. this address is published to public so that they can send
bitcoins to their account.The private key is just like an ATM PIN whichis meant to be kept with
yourself and should not be disclosed to anybody and must be used to do bitcoins transactions.

Bitcoin is the first cryptocurrencyto use peer-to-peer technology which facilitate instant payments.
Miners are independent companies and individuals who own the governing authorities. They
participate in the Bitcoin network and are motivated by transaction fees paid in bitcoin and rewards.
These miners can be called the decentralized authority which is regulating the bitcoin and
administering the of the Bitcoin network. New bitcoins are being released for the miners at a fixed,
but declining rate, such that the total bitcoins minted are approaching 21 million. One bitcoin is
divisible to 8 decimal places, and this smallest unit of bitcoin and it is known to as a Satoshi.

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As of November 2017, one bitcoin is cost $6000 – a substantial leap from late 2016, when it was
around $770. Price of bitcoin depends upon size of mining network, that means larger the network
more expensive will be the bitcoin as it is more difficult to create more bitcoin. The aggregated
power of Bitcoin mining networks has more than tripled over the past year.

To study how cryptocurrency work we need to understand that to store currency, one has to have
bitcoin or any other cryptocurrency wallet. It’s free of charge and can be easily obtained. In general,
only an E-Mail address is needed for registration. Such a wallet act like a personal wallet: it is a
place where only registered and legal user has access to. However, opposite to a conventional purse,
a Bitcoin wallet is more specifically the place where the private keys (encrypted data) are stored that
grant the access to the possessed bitcoins. Payments are made by forwarding these electronic access
rights to a bitcoin. Analogous to daily payments in cash, transactions made with Bitcoin are quite
anonymous since randomly generated Bitcoin addresses are used to identify the entities in the
Bitcoin network. For each transaction, new identification numbers are generated and the property of
a specific user is spread over many distinct bitcoins in the ledger. Thus, it is very difficult to track
payments back and to spy out the wealth of a particular user. However, if a person buys it from
exchange his identity could be revealed.

Only two users with a Bitcoin wallet and an Internet connection are required. It is possible to transfer
bitcoins directly from one party to another without the need of any third trusted party like banks or
credit card institutions.

OBJECTIVES OF THE STUDY

 To study about the consumer awareness of cryptocurrency in India.

 To study the various factors, which are important in adoption of cryptocurrency.

LITERATURE REVIEW

An attribute of the academic publication research process is the shortage of time between writing and
the publication of an article. Given the fact that Bitcoin has been in existence for roughly five years,
it is understandable that there is not much academic research available on it. Starting with Andy
Extance (2015), concluded that security is the most important concern in the Bitcoin and the value of
Bitcoin is determined by market and not by the network. Bohme, Rainer, Nicolas Christin, Benjamin
Edelman and Tyler Moore (2015), concluded that blockchain technology has been improved a lot as
compared to its initial design, however talking about confirmation of transaction, it needs
fundamental change.(Pandey, 2017)Dr Mark Abell, Simon Fielder and Mumuksha Singh (2014),
held that Government policies do not affect bitcoin and this can be used for exchange of goods and
services providedit is not declared illegal. John Merriman Sholar(2016), held that Bitcoin will not
succeed, however blockchain technology may be applied to solve many of the previously unsolved
problems in the financial sector. Jonathan B.(Huhtinen, 2014)Turpin (2014) held that there is no
guarantee that Bitcoin will succeed and that there are too many unknown variables Kevin Dowd and
Martin Hutchinson (2015), held that Bitcoin may survive in the short run, however in the long run;
its survival rate is zero. Siba, Tarun and Anuj Prakash (2016), held that Blockchain is in infancy
stage however it can be applied in coming times in sports, games, tourism and others. Sandeep

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Bhattacharjee and Harmeet Kaur (2015), concluded that the results attained by Bitcoin so far may
give rise to new hopes to both consumers and market who seek more freedom in terms of volume
and payment methods Tara Mandjee (2015), concluded that Bitcoin is now young and experimental,
however in coming times it will make a long-lasting impression. Trevor I. Kiviat (2015), held that
Bitcoin has both upside and downside, however blockchain technology may be adapted and that
policy makers should make regulations with caution and precession.

Cedillo (2013) presentsanother intriguing point of view of money related improvement and portrays
how the shadow managing an account industry has concocted numerous budgetary advancements
that whatever is left of the monetary world has later grasped. His dialog additionally expresses that
even the European Central Bank has perceived that its administrative system lingers behind 21
mechanical advancements by years. One can sort Bitcoin to be a piece of shadow saving money
since it is a fiscal framework that works outside of the authority budgetary framework. In such
manner Bitcoin may speak to such a development, to the point that the authority money related world
will grasp in some shape later on.

As an investment, bitcoin is a very high-volatility and high-risk instrument. To gain a better

understanding of this risk, it would be important to understand the drivers of this volatility and how
bitcoins could be used in investment portfolios. Based on data from Hommes et al. (2008), Husler et
al. ( 2013) examines the emergence of bubbles that exhibit faster-than-exponential growth. The
bubble and crash of Bitcoin in April of 2013 is mentioned as such an example. The study utilizes a
learning-to-forecast laboratory experiment with human subjects and concludes that these types of
super-exponential bubbles can occur in such a setting. In fact, a common feature of such bubbles is
found to be that prices are only loosely connected to fundamentals. This study helps to understand
how the dramatic price swings have been possible because bitcoin is completely disconnected from
fundamentals. Another interesting study on the drivers of bitcoin price is the paper by
Kristoufek(2013) who examines the connection of Google Trends data and Wikipedia activity to the
price of bitcoin.

Perspective for the role of money and regulation says Lemieux (2013) looks at how a wide
acceptance of Bitcoin is not in the interest of governments. It would lead to the loss of control
making execution of monetary policy difficult or even impossible. This could fundamentally change
the way states are financed. According to Lemieux, it is very uncertain whether the regulatory state
allows Bitcoin to be developed further. He even states that the regulatory state could simply kill the
experiment. Although, technologically killing the Bitcoin network is extremely difficult if not
impossible, regulation can be used to affect the gateways between fiat currencies and bitcoins
(Varriale,2013). A more futuristic account of Bitcoin regulation is given by Plassaras(2013), who
envisions how the IMF could potentially enable a quasi-membership for virtual currencies such as
Bitcoin to collect a stockpile of bitcoins for absorbing maturity mismatch losses to stabilize exchange
rates. The paper discusses that an IMF membership would be a way of avoiding negative effects of a
future speculative attack on fiat currencies carried out by bitcoin holders. Plassaras does not estimate
what the market value of bitcoins would need to be for such an attack to be possible. Even though an
IMF membership could theoretically stabilize the exchange rates, in practice collecting a sufficient
stockpile would be problematic.

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IRJMST Vol 8 Issue 10 [Year 2017] ISSN 2250 – 1959 (0nline) 2348 – 9367 (Print)

RESEARCH METHEDOLOGY

To perform descriptive research, a surveyhas been used as a research instrument. The survey in form
of questionnaire helped me inanalyzing the consumer awareness about cryptocurrencies.The research
was conducted by a quantitative survey in theform of a questionnaire to collect data from the
appropriately selected sample. Thequestionnaire consists of a well-defined set of questions.
Responses are recorded fromthe survey to draw required interpretation and concluding the results to
achieve theresearch objectives.The target audience was selected conveniently, irrespective of ageand
gender. Survey was conducted by taking responses from 250 people but out pf 250, 210 respondents
out rightly said that they are not aware of Bitcoins. So further response was not collected from them.
Sampling Method used was Random Sampling Method.

DATA ANALYSIS & INTERPRETATION

Table :1 demographic profile

N % CUL. %
Gender
Male 27 67.5 67.5
Female 13 32.5 100
Total 40 100
Age group
18-24 30 75 75
25-40 5 12.5 87.5
41-60 3 7.5 95
60 and above 2 5 100
Total 40 100
Academic qualification
10th pass 2 5 5
12th pass 6 15 20
bachelor's degree 17 42.5 62.5
master's degree 15 37.5 100
Total 40 100
work department
Finance 14 35 35
Accounting 5 12.5 47.5
Administrative 1 2.5 50
customer service 1 2.5 52.5
Engineer 1 2.5 55
Hr 1 2.5 57.5
Operations 2 5 62.5
Marketing 2 5 67.5
Others 12 30 100
Total 40 100

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Result shows Out of 40 respondents 32.5% were female and 67.5% were male, which shows that
most of our respondents are male. On age parameter 75 % were between 18-24, 12.5% were between
25-40, 7.5% were between 41-60 and 5% were above 60. This distribution shows that maximum
respondents were between 18-24 age groups. On work field parameter 35% of respondents are from
finance field and 12.5% are from accounting field, 5% people are from operations and marketing and
2.5% of the respondents are from HR, engineering and admirative field.

Table :2 Response related to usage of cryptography

Experience of cryptocurrency
N % cumulative %
no experience 25 62.5 62.5
small amount of experience 8 20 82.5
general amount of experience 3 7.5 90
great deal of experience 4 10 100
total 40 100
Future use?
Frequency Percent cum percent
Yes 22 55 55
No 18 45 100
Total 40
if no, why
exchange risk 8 44.44 44.44
theft & hacking 2 11.11 55.56
required expertise 5 27.78 83.33
no central authority 3 16.67 100
Total 18 100.00
if yes, why
low cost for small transactions 7 31.82 31.82
user anonymity 2 9.09 40.91
no third-party interruptions 4 18.18 59.09
no taxes applicable 9 40.91 100.00
Total 22 100

According to the survey 62.5% of the respondents have no experience of using cryptocurrency, 20%
said they have small amount of experience, 10% of respondents say that they great deal of
experience. This shows that though people are aware about cryptocurrency but they don’t use it as of
now.

When respondents were asked about future growth of crypto currency 50% of the respondents said it
will grow in use, 15% said it will grow substantially over the 5 years, 7.5% respondents think that

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IRJMST Vol 8 Issue 10 [Year 2017] ISSN 2250 – 1959 (0nline) 2348 – 9367 (Print)

the use of crypto currency will decline substantially and 12.5% respondent says that it will decline at
a slow pace.

We can also interpret that though respondents are aware of cryptocurrency but the experience of
using is less but most of them showed interest in using it near future which indicates that use of
cryptocurrency will increase. Result shows that 55% of respondents are open to use cryptocurrency
in future whereas 45% of respondents says that they don’t want to use it. In further investigation it
was found that most of the respondents who said they will use cryptocurrency in near future said no
taxes on transaction as a most important factor, followed by low cost for transaction as second most
important factor for choosing cryptocurrency and user anonymity was the least opted choice by the
respondents as they don’t want to hide their identity.

And respondents- who said they won’t use cryptocurrency stated that exchange risk is major factor
for not adopting cryptocurrency in future, and secondly people also think they would be requiring
expertise to use cryptocurrency and that’so why they are reluctant to use the same.

Table :3 Factors affecting usage of cryptography

Variable N MIN MAX MEAN S.D.

Exposures to websites with bitcoin at checkout 40 1 2 1.33 .841

Improved govt legislations 40 1 5 3 .853
Education about bitcoin 40 1 3 1.24 .744
Advertising about bitcoin 40 1 3 2.4 .615
More stable bitcoin price 40 1 4 1.7 .715
Major banks accepting proceeds of bitcoin sales 40 1 3 1.55 .714
Major retail websites accepting bitcoin 40 1 5 3.31 .916
Major bricks and mortar stores accepting bitcoin 40 1 5 3.56 .831
Simplifies procedure for bitcoin purchase 40 1 4 2.22 .790
More secure bitcoin storage methods 40 1 4 2.87 .843
Govt stamps of approval 40 1 4 3.45 .767
Faster transaction process 40 1 4 3.81 .882
Transactions savings on bitcoin passes to
consumers 40 1 4 2.21 .723
Better tools for e-commerce merchant 40 1 5 3.97 .1.15
1- Being highly important and 5- least important

The respondents were asked to rate the 14 factors in a scale of 1-5, 1 being the most important and 5
being the least. According to the survey respondents said these were some most important
factors‘education aboutbitcoin, ‘ Exposures to websites with bitcoin at checkout’,‘Major banks
accepting proceeds of bitcoin sales’, ‘more stable bitcoin price’.And these were the least important
factor as stated by respondents ‘Better tools for e-commerce merchant, ‘Faster transaction process’,
‘Major bricks and mortar stores accepting bitcoin’.We can interpret from the above table that people
think adoption of cryptocurrency would increase if people are educated about cryptocurrency and

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acceptance of cryptocurrency increase in e-commerce websites and banks. Also, people are afraid of
fluctuating prices, this fluctuation should be controlled to make adoption easy.

Conclusion

From the above research we can clearly see that cryptocurrency is still in an evolution phase and it
has not gained much of the user base in India.Also very less population of India aged between 18-24
is aware about cryptocurrency and even if they are aware of cryptocurrency they hardly use it.
People said the reason they are reluctant to use cryptocurrency is that Exchange rate is very volatile,
i.e. in April 2017 1BTC≈ 1200$ but in November 2017 it has crossed $6500.Cryptocurrency is a
peer-peercurrency, thus doesn’t require any intermediaries or broker to complete the transaction
which reduces the cost per transaction significantly and that was the major reason given by
respondents for using the cryptocurrency.

Also, when asked from respondents about the factors which might help in future adoption of
cryptocurrency, respondents said acceptance of cryptocurrency by major banks and e-commerce
website is very important and also educating people about cryptocurrency will significantly help in
adoption of cryptocurrency.

References

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