India’s key cryptocurrency platforms saw transactions nearly triple and new users more than double in the weeks leading up to what is known as ‘halving’ of bitcoin on Monday, industry insiders said.
For traders of bitcoin, a popular cryptocurrency, ‘halving’ is a significant event because scarcity underpins its value. Only 21 million bitcoins exist in total. To receive bitcoin as reward, people (who in industry parlance are termed “miners”) follow a set of complex protocols to solve puzzles.
So, the halving of rewards – for example if one used to get 12.5 bitcoins earlier to solve a puzzle, it gets reduced to 6.25 bitcoins – automatically means there is a shortage of bitcoins.
In bitcoin history, the first halving happened in 2012, while the second took place in 2016. “Cryptocurrency in India is emerging like the TikTok (popular short-videos platform) of investments,” said Nischal Shetty, CEO of WazirX. “Young people who have disposable income and are digitally savvy are taking to bitcoin because globally interest rates are falling,” he pointed.
Millennials must, however, exercise caution while trading in bitcoin, at a time when the cryptocurrency is being preferred ahead of traditional assets like equity or gold, industry experts said.
In fact, the Bitcoin community often uses the term ‘Hold on to dear life’, or HODL, to be cautious while making investments in bitcoin. “History suggests that only short-term investors have lost money on bitcoin. My advice to investors would be to get into an investment with long-term returns in mind,” Shetty said.