Millennials pick bitcoins over gold

Twenty-year-old Sahil Shah, a business administration student at Nirma University, Ahmedabad, started dabbling in bitcoin investments four years ago, and has been an avid investor ever since. 

After a correction Bitcoin began its rally once again on Friday and touched $18,000. And for many millennials, bitcoin, and not gold, is becoming a symbol of store of value.

Shah, who submitted his university research project on the cryptocurrency, says bitcoin is a hot topic at their canteen and on WhatsApp. He and his friends, however, are not looking at it as a speculative asset or a bubble and are trying to understand the benefits. 

Bitcoin is also a hot topic in Mumbai locals. The discussions often resemble the ones during the 2000 or 2007 bubble. Though many don’t understand it fully, they do not hesitate in investing in bits through bitcoin exchange mobile apps. 

Besides, for many, bitcoins have also become a preferred choice of transferring money. A music professional, who performs abroad, turned to bitcoins as bringing his fees via PayPal was costing him 6-7 per cent, including other conversion costs. Last year, he began transferring fees in bitcoin and selling it on Indian exchanges, which costs noting. 

Ashrith Govind, a 23-year-old Bengaluru-based professional, has been accepting fees for the IT services he provides to overseas clients at his start-up WiLoop Networks for five years.

Earlier, he was converting bitcoins into rupees. But he started keeping some of his fees as investments when prices started rising three years ago. “Bitcoin has seen some fantastic jump in prices, and I started keeping partial payment as investments. The cryptocurrencies’ market cap would cross a $1 trillion,” Govind said. He said he traded in bitcoins and paid tax on the capital gains, short- or long-term.  The income-tax (I-T) department is yet to come up with taxation regulations but investors expect rules would come soon. 

According to a bitcoin investor, on questioning an I-T official on how to treat gains from bitcoins, he had said that since the Reserve Bank of India or the government had not termed it illegal, gains from it could be taxed. 

The long-term capital gains tax is at 20 per cent after indexation for assets owned for more than three years, while the short-term capital gains tax are at the person’s tax slab.

So far, bitcoin has had limited use in India except as an investment. However, Shah buys e-commerce websites gift vouchers and recharges his cell phone using bitcoins. Recently he paid for his guitar class with the currency.

Shah has a clear strategy on bitcoin investing, and sounds like a financial planner, advocating the asset class. He said, “Bitcon is not for trading or speculating. Anybody interested in investing should do a systematic investment plan (SIP) and invest regularly at all prices average his investment cost. Use bitcoin as a store of value.” 

Bitcoins are not the only cryptocurrencies to have rallied — etherium, litcoin, ripple, IOTA and others, too, have. 

“All other cryptocurrencies, known as alt coins, can be bought only with bitcoin. You have to buy bitcoin first. Even using the Indian exchange platform you can buy bitcoin and with that you can buy alt coins from some overseas exchange like Bitfinex,” explained an investor. 

However, the flip side of this is that bitcoin, purchased from Indian bitcoin exchanges using banking channel with full know-your-customer, can be used to send money abroad. Not that all are doing so, but authorities would have concerns. A bitcoin trader also explained that Telegram— a messaging app like WhatsApp — is being used for transferring bitcoins as it has strong security features and cannot be tracked by authorities. Globally, 90 per cent of the bitcoin deals, especially using it as a currency, or sale-purchase that are not taking place on an exchange app are routed via Telegram. The bitcoin community calls such routes for transferring bitcoins dark pools. 

Regulators are not comfortable with such platforms. Bitcoin investors also warn that there are many Ponzi schemes that newbies should be careful of.