Why are Indian bitcoin prices higher than international prices?


This is the exact reason that bitcoins in India are higher. Given a completely free market, arbitrage would almost immediately cause this difference to settle. However due to the restrictiveness of INR itself, and the inability to effectively move INR, BTC/INR is much more expensive relative to some other international markets for BTC. The free market of bitcoin is essentially putting a markup on BTC purchased with INR because the market itself is saying INR has less value than the official exchange rates, likely because of portability of INR itself and the restrictive regulations the Indian government uses to control INR.

The demand spike in India follows a similar trend in neighbouring China. In the past month, while the dollar strengthened, and the Chinese currency weakened to an eight-year low, the demand for Bitcoin in China increased dramatically. Over this period, the price has surged over 25% to around $740 per Bitcoin on major global exchanges. 
On Indian exchanges, the Bitcoin prices are being quoted at 25-28% higher than cost. The interest among people here has been fuelled mainly by the government's demonetisation move.

On November 8, the day Prime Minister Narendra Modi announced that Rs 500 and Rs 1,000 banknotes would cease to be legal tender, Bitcoin was priced at about Rs 52,000 on leading Bitcoin trading exchanges Unocoin and Zebpay. On that day, the international cost of one Bitcoin, when converted into rupee, stood at Rs 46,942. So, the difference between the cost and trading quote came to about 10%. Compared with that, the trading price at present is at Rs 64,000, while the international price is around $740 (about Rs 51,000), a difference of over 25%.

Unocoin Chief Executive Officer Sathvik Vishwanath says: “The price of Bitcoin is higher than the international price because there is high demand but limited supply for Bitcoin among Indian traders.” 

Sandeep Goyenka, CEO of Zebpay, India’s largest Bitcoin exchange by volumes traded, says: “There is a surge in interest for Bitcoins. Indians are inquiring about Bitcoins as an alternative and safe investment option. They are downloading Zebpay as they want to experiment with digital currencies. There has been a 50% increase in Zebpay downloads.” Google search data show that Indians’ search for the keyword ‘Bitcoin’ was at its peak soon after demonetisation.

Sathvik adds: “It cannot be easily imported because of capital controls in India,” so the supply is always less than demand. But, his company Unocoin targets Indians abroad looking to send remittances home. The best way, he suggests, is to buy Bitcoin on an international exchange and transfer it to India, where it can be immediately sold on a Bitcoin exchange. The transfer can take place through blockchain, a transparent public ledger. The Indian receiver, while encashing it, gets a premium and all deals are done using the banking channel, with proper know-your customer records.


Source:  http://www.business-standard.com/

Comments

Post a Comment

Popular posts from this blog

Coinbase - International digital wallet - Earn $$ Free

Coinbase Founded in June of 2012, Coinbase is a San Francisco based bitcoin wallet and platform where merchants and consumers can transact with the new digital currency bitcoi n It is an international digital wallet that allows you to securely buy, use, and accept Bitcoin currency. You simply connect your bank account with Coinbase to start buying and selling Bitcoin, which you can send to anyone in the world just like you would an email. It’s free to create a Coinbase digital wallet, plus you can get $10 worth of BTC for free through the Coinbase referral program for each new customer that you refer who buys $100 of Bitcoin or more. Coinbase $10 Referral Program Bonuses The Coinbase referral program lets both new and current members earn free Bitcoin. When a current Coinbase user refers a new user, both the current and new users will earn $10 of Bitcoin when the new user buys $100 of Bitcoin or more. The Coinbase referral program now offers both new and current users...
Read more

Japan Ends 8% Consumption Tax On Bitcoin

Bitcoin users in Japan no longer have to pay the 8% consumption tax on bitcoin transactions as of today, July 1.  Under the “Cabinet Order for Partial Revision of the Order for Enforcement of the Consumption Tax Act,” digital currencies are exempt from consumption tax. The revised law abolished consumption tax on digital currencies, but other taxes such as personal income tax, capital gains tax or corporate income tax still remain, according to Bitcoin.com. Currency, checks, and promissory notes fall under the payment methods governed by the Foreign Exchange and Foreign Trade Act and are exempt from taxation under the Consumption Tax Act, according to the National Tax Agency, cited by bitflyer. In addition, the prepaid methods of payment, which electronic money is generally considered to be, that were governed by the Payment Services Act are considered under the Consumption Tax Act to be “physical certificates” and are exempt from the consumption tax. Nu...
Read more

May 22 has come to be known as Bitcoin Pizza Day

May 22 has come to be known as Bitcoin Pizza Day because of its the day when a programmer used bitcoin to buy pizza.  Laszlo Hanyecz handed over 10,000 Bitcoin in return for the two Papa Johns back in 2010.  Now the sum would be worth a whopping $20million (£15.38m), as the currency today hit its highest ever level of $2,185 (£1,681). But back in 2010, Mr Hanyecz reportedly believed the coins he held were only worth around 0.003 cents each - so the 10,000 coins amount to around $30.  He asked a forum user to accept the coins for the pizza. While bitcoin's value has grown astronomically since 2010, it's price is at an especially high peak right now. On Tuesday morning, one Bitcoin was valued at $2,245, according to  CoinDesk . That one bitcoin today could buy you more than 100 $20 pizzas — let alone what the 10,000 bitcoins Hanyecz spent in 2010 could buy. That amount of the cryptocurrency was then valued at $41.   Hanyecz's pizza purchase was a big deal ...
Read more