India's Bitcoin Google Search Index Hits Record High, Can It Be the Next China?

According to Google Trends search data, Bitcoin awareness has reached an all-time high in India, while the country is still reeling from Prime Minister Narendra Modi’s demonetization policy.

India's economy, which was once 90% cash-dependent, is now facing a shortage of new 500 and 2,000 rupee notes, thus creating an incentive for people to choose alternative currencies to replace the seemingly exhausted Indian legal tender. Engineer Mr. Shoran told The Washington Times:

"I still remember standing in line at the bank door from 6am to exchange for the new currency, and when I got to the window in the afternoon, I found that the bank had no money to withdraw."

Interestingly, the data above shows that interest in Bitcoin appears to be highest in the remote Mizoram region of India. According to an Indian government report, in many rural areas, people have resorted to a primitive system of bartering goods due to the lack of cash:

“In many villages, crops are being exchanged for vegetables and other daily necessities.”

In addition, in border areas of India, people are using currencies of neighboring countries, mainly because Indian banks are too far away from them and there are too many people queuing in front of those banks to exchange notes. Millions of people have to choose to seek alternatives, such as Bitcoin, which, although on a smaller scale, currently seems to have become a competitor to bartering or neighboring currencies.

Bitcoin usage increases in wealthy coastal India

Goa, located on the coast of India, is the richest state in India, with a GDP 2.5 times the country’s average, which is completely different from the Mizoram region. Goa is a tourist destination for foreign tourists, and this region has seen a special growth in interest in Bitcoin.

One of the reasons is that Westerners are spreading their awareness of Bitcoin in the region. Bitcoin seems to appeal to both the rich and the poor. Both groups seem to have found the same alternative to cash shortages. According to India Today:

"Major Indian bitcoin exchanges report a 250% increase in user numbers, though trading volumes in India are still relatively small."

According to The Hindu, India now has more than 300 million people using mobile phones to access the Internet, allowing them to trade Bitcoin freely. Zebpay, one of India's largest Bitcoin exchanges, expects to add 50,000 new users a month, while Unocoin, which claims to be India's most popular Bitcoin exchange, announced that they broke all Indian Bitcoin records last week and now provide Bitcoin services to nearly 1,600 merchants.

Could India be the next China?

The current Bitcoin premium in India is around $200, as the demand for Bitcoin in India is significantly higher than in China, but the trading volume is not comparable to that in China. This may be because despite the rapid economic growth in India, corruption is a particular problem, and some parts of the country lack basic infrastructure such as roads or electricity, and even courts.

In contrast, China is using its new wealth to advance infrastructure, and China's high-speed train is moving faster than even the West. Some of China's developments have surpassed traditional banking, with giants such as WeChat and Alipay accounting for more than 50% of China's financial transactions. Many factors combine to provide an attractive environment for Bitcoin to develop, and Chinese entrepreneurs are looking to take advantage of every opportunity.

India's law enforcement is very lacking compared to China or Western countries, probably because the government is unable to collect taxes, so despite having an economic growth rate similar to China, it has failed to embark on a similar development path as China.

However, this may be improving. According to Finance Minister Arun Jaitley, India's demonetization policy has increased the country's tax revenue by 14%, but whether these fiscal revenues will be used for infrastructure construction or go into the pockets of officials remains to be seen. Moreover, with the demonetization policy and the rupee hitting a record low against the dollar, the cost to the Indian people and economy will be considerable.

In this environment, Bitcoin has great potential for growth, especially in the wealthier coastal regions as Indians seek to protect their wealth.