Why is there a sudden rise in Bitcoin investments in India?

Snapshot:

• The history of Bitcoin.
• The questions that the masses were asking with the rise in Bitcoin investment.
• Reasons why Bitcoin investment saw a sudden rise.

In 2017 when Bitcoin had hit an unimaginable amount of $20,000, the world collectively took an increasingly detailed interest in it. The new asset class was being studied by investors at large. Masses started to ask questions about :

• What is Bitcoin?
• How does it work?
• What is blockchain technology?
• How can I trust the decentralized system?
• How is the decentralized system different from the centralized system?
• How can I earn via Bitcoin?
• How to easily access it?
• Where can I easily buy Bitcoin?

What these questions brought about are more innovative possibilities and along with it came the mass adoption of the same. As more people were adapting to the newest asset class the more options for easier investments were being updated.

But the possibilities did not stop at updates and innovations, with the increase and the rise of Bitcoin adoption and the bigger market caps that the crypto space attracted each year, investors and masses at the time of writing compared Bitcoin to Gold as the total market capitalization of cryptocurrency reached $1 trillion!

India most probably has the best market opportunity for making mass adoption of crypto possible. It should not be a surprise that it has seen a steep rise in investments into the new asset class. With acknowledging the overall reasons why Bitcoin was compared to such extremes, let us dive into the smaller but detailed reasons why we are seeing such a sudden rise in the Bitcoin investment in India.

Reasons why there is a sudden rise in Bitcoin investment in India:

The doubtful beginning:

When Bitcoin first came into the market, its potential was heavily doubted by investors and the mass in general. When it hit an unexpected all-time high in 2017, that the potential was recognized. This resistance at first is one of the reasons why Bitcoin attracted huge amounts after 2017. The fear of missing out and the possibility of achieving great feats lured in more investors, and as it goes, the more possibilities became evident for investors the more they wanted to invest. This resulted in a huge rise in Bitcoin investment in the global market and in India as well.

Bitcoin is secure:

Unlike other well-known assets, such as Gold, Bitcoin is not directly manhandled. The whole trading process of Bitcoin is run through a new-age technology; Blockchain. Blockchain is a similar database that allows multiple users to record and make changes in it. Once the data is entered, it cannot be removed or changed as it only provides the feature of adding the data. The data can only be added to the blockchain once the majority of the participants provide the consensus to confirm the authenticity of the data with the process called ‘mining’. The data (a transaction in the case of Bitcoin’s blockchain) will be represented as a block in the network. The data gets broadcast on the blockchain network and it will validate the authenticity of the transaction using a consensus mechanism. A new block is generated once the block is deemed authentic by the network. After which it gets added to the most current state of the blockchain.

Also read: What are the different types of blockchain?

Bitcoin is controlled by you:

The Bitcoin transaction which happens through the Blockchain technology falls under the decentralized system. This means no one is in control of the transaction other than the computers, where the transaction is actually taking place.

In the decentralized system, the information is not stored in one place. Every time a new change occurs or a new transaction happens, the node first verifies the transaction and then receives a copy of the new state of the ledger. A full node is basically a device (like a computer) and not a human who is doing the verification task manually. However, the entire blockchain data is publicly available on the internet and anyone can become a node by downloading the same. All nodes on a blockchain are connected to each other and they constantly exchange the latest blockchain data with each other so that all nodes stay up to date. They store, spread, and preserve the blockchain data. Hence, theoretically, a blockchain exists on nodes.

Bitcoin is scarce:

Why does the scarcity of Bitcoin matter? That might be the first question that comes to your mind. What makes the value of Bitcoin rise at such a steep level is because we know how many Bitcoin is out there in the market and how many more there possibly could be. This simple transparent knowledge very well makes Bitcoin the only asset on the planet, about whose availability is known to all. The total amount of Bitcoin available for investors and traders is limited to 21 million Bitcoins. To date, 18 million of those Bitcoins have been used. Due to the known facts about the availability of the asset, there is a rush for everyone to get their hands on the new asset class. The FOMO, abbreviation of Fear Of Missing Out, was also one of the reasons why the all-time high price of Bitcoin welcomed so many new investors.

Institutional adoption of Bitcoin:

We have established the sudden rise of curiosity and trading in Bitcoin because of the journey Bitcoin had in 2020, mostly after the revoking of the banking ban. But the adoption of cryptocurrencies was not just happening on the retail front. There were institutions who were coming forward to include Bitcoin in their portfolios as well. This gave the already rising Bitcoin investment another boost.

Bitcoin as a payment option:

The easiest way for us to tackle any form of investment is via an online transfer of funds right? This option has been accessible via Bitcoin since the very beginning. (almost) This added a lot more value for people, as the asset that they are investing in can also be liquified into buying the smallest of things like pizzas to even invest in real estates.

The Halving mechanism:

This might be the most important and intriguing part of Bitcoin investment. As discussed above, there is a finite amount of Bitcoin available in the market. But with every four years, the remaining Bitcoins get halved. Reason for halving Bitcoin lies in the laws of supply and demand. If the coins are created too quickly and there is no end to the number of bitcoins that can be created; eventually there will be so many bitcoins in circulation that they would have very little value.

To read more about halving, click here.

Though the above-mentioned reasons are not the only ones why we are seeing such a huge rise in Bitcoin investments, they are most definitely the major reasons why we are seeing such a cumulative trajectory of Bitcoin and cryptocurrencies. If you are wondering where to get your first bitcoin, click here.

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