In August this year, Bangalore-based startup Unocoin made news internationally when Bitcoin investor Barry Silbert infused $250,000 in the company.
Unocoin became the first Bitcoin exchange and merchant processor in India to have raised international funding.
For Unocoin founders, Vikram Nikkam, 38, and Sathvik Vishwanath, 31, this was also an opportunity to convince their families about how real the digital currency they were dabbling in was.
The economic downturn of 2008, which hit money as we know it in the real world, was what brought Nikkam and Vishwanath together in the world that deals in digital currency.
Vishwanath had just completed his MBA in Australia. As a student, he was already scripting for Second Life, an online virtual world, for users in the United States.
The hobby became a full-time venture as the number of clients increased and Vishwanath set up his first venture called VentureNext which sold Fennux, a fox-like creature in Second Life. He created about 1.2 million Fennuxes.
The downturn made him look at the concept and fundamentals of money afresh. Then in 2009, he came across Bitcoin and it “got me interested,” he says.
In India, acceptance of Bitcoin has been a tad slow. Initially, the Reserve Bank of India was also not supportive of Bitcoin and though it has allowed its operations, it has cautioned investors about the risk of crypto-currency.
Nikkam and Vishwanath are, however, convinced that Bitcoin has a glowing future in India.
“You need to look beyond money to understand Bitcoin,” says Nikkam. “Over the years, it will be about registering intellectual property on it. Bitcoin is the most transparent system for financial transaction globally.”
Investor interest in India has been significant. “As promoters, we were planning to raise capital ourselves, but were approached by Silbert, the CEO of Bitcoin Opportunity Corp, USA,” says Nikkam.
The company now plans to use the funds to scale Unocoin and make Bitcoin available to the masses.
Part of the investment will be used for liquidity and marketing efforts, while another part will be used towards regulatory compliance and security expenditures.
Silbert is not the only one eyeing the Indian Bitcoin market.
In July this year, venture capitalist Tim Draper, who was the sole winner of an auction of 30,000 Bitcoins by the US Marshals Service, partnered with Silicon Valley-based startup Vaurum, founded by Avish Bhama, to leverage this pool.
Both Draper and Bhama have, in separate media reports, been quoted as saying that these coins will be used in emerging economies where local currencies are not very strong. And India is very much on the radar.
Like Silbert and Draper, Nikkam believes that Bitcoin will prove to be a breakthrough in India, especially for banking the unbanked, instant global reach for e-commerce, freelancers serving the world at the click of a button, charity, fundraising and micro payments.
The biggest hurdle for the acceptance of Bitcoin in India is the lack of regulation and clarity on how to tax it.
“It took us over six months to completely roll out Unocoin.
We took a lot of time brainstorming to come up with a concrete plan to execute an operation where we would fit into the legal system and be able to stay 100% compliant with regards to the know your customer and the anti-money-laundering policies,” says Nikkam.
The company has also applied for approvals under existing tax laws such as service tax to continue to serve the Indian market.
Within India, Bangalore, the hub of technologists, entrepreneurs and businessmen who have embraced technology in a big way through regular meet-ups, has been faster in accepting Bitcoin.
One of the reasons for the 150,000 wallet downloads in India is the Bangalore Bitcoin Progressive Thinkers Meetup that has been a channel of expanding Bitcoin technology education.
“This meet-up group has built a team of cryptographically intellectual minds who love Bitcoin and who supported the Global Bitcoin Conference 2013 that took place in Bangalore,” says Nikkam.
“The level of knowledge and understanding of the subject has greatly advanced,” says Nikkam.
“A lot of people now want to know how they can get jobs in the Bitcoin space.”
Unocoin employs 15-20 people, including engineers, and those looking into sales and marketing, and verification of customers.
With the virtual money tree showing healthy growth, Nikkam and Vishwanath are clearly determined to reap its rewards.