I’ve been closely following the Bitcoin craze for many months now, ever since demonetisation sent Bitcoin prices rocketing in India.
Being a part of numerous shady cryptocurrency groups finally paid off when someone posted of an Indian site that allows for booking domestic flight tickets using Bitcoins.
For those who don’t know, Bitcoin is digital money used for secure and instant transfer of value anywhere in the world. It’s the first example of a growing category of money known as cryptocurrency.
It is not controlled or issued by any bank or government — rather it’s value is determined by buying and selling in the open market, similar to stocks or property. A bitcoin’s price changes in real time based on the number of people who want to buy or sell it at a given moment.
It was worth roughly $13 in early 2013, went upto $260 in early 2015, before sky-rocketing to a record-high of $3000 in June this year. It currently hovers around the $2600 mark.
India accounted for almost 11 percent of global cryptocurrency trade in the past month, according to data from a Bitcoin trade analyst, Chris Burniske.
This isn’t particularly surprising as the meteoric rise in Bitcoin prices recently has led to it becoming a viable alternate investment vehicle with the potential for quick short-term gains. The value of Bitcoin in India has soared to Rs 1,70,000 today.
There are a number of startups that have opened Bitcoin exchanges in India, making it easy to buy Bitcoin in INR. Unocoin, Coinsecure and Zebpay are the three main bitcoin players in India, with over a million users between them.
Till now, while Zebpay and Unocoin allowed you to recharge your mobile, DTH, datacard and buy movie tickets on BookMyShow, most Indians aren’t really using Bitcoin for purchases.
Because of the ubiquity, security and ease of use of fiat currency (legal tender backed by the government, unlike cryptocurrency), bitcoin today fulfils the ‘store of value’ function of money more than the ‘medium of exchange’ function that economists traditionally use to define money.
While Bitcoin has many advantages over traditional currency: It is inherently scarce (the protocol specifies that only 21 million bitcoins will ever be created), is decentralised (its price cannot be manipulated by any government), is readily transmissible over the internet, easily stored and infinitely divisible; to the average person all of this means nothing.
While we early-adopters in the tech industry may try something for potential, it can only cross the chasm into the mainstream, by transforming that potential into actual experience.
The average person on the street today needs to have many more experiences where using Bitcoins is so much more easier, secure or advantageous in some way than using fiat. For them to use bitcoins without knowing any of the underlying protocols just like you can use the Indian rupee without really knowing how the Reserve Bank of India functions.
While there have been a few cases of merchants in India who’ve started accepting Bitcoins, which makes for a great tweet, there hasn’t been a clear articulation of why paying in Bitcoins is substantially better than using other means to pay.
For a new entrant to disrupt an incumbent solution, it has to be better, not just by a few degrees, but by a margin big enough so as to shake users out of their inertia.
And Flybit strikes at India’s sweet spot — cheaper prices!
I checked prices for a Bangalore — New Delhi flight on India’s most popular OTA — MakeMyTrip.
The price for the ticket after adding a convenience fee came to around Rs 3508.
When I checked the price for the same on Flybit, I was pleasantly surprised to see it being more than Rs 450 lower at just Rs 3049.
Flybit asked me to pay 0.01843519 in Bitcoins to a specific bitcoin address, and sent me the tickets within a couple of minutes of payment.
According to Prayank Gahlot, who runs Flybit, the prices on most domestic routes are discounted by more than 15% to the traditional OTAs, but he wouldn’t reveal the name of the travel third party that provides the APIs behind Flybit. He also plans to provide a free Ola/Uber coupon with every domestic flight ticket soon.
Flybit calculates the Bitcoin-INR exchange rate by taking the mean of all the rates on the Indian exchanges at any moment in time, which also means that those who buy their Bitcoins from US exchanges (where it’s cheaper by 1.5–2%) can save even more money.
Flybit is currently running on break-even basis to provide the cheapest possible domestic air tickets for users, to promote adoption of Bitcoins in India.
More and more such cryptocurrency projects are cropping up in India: meet Pocketbits — that lets you buy any product from e-commerce sites like Amazon, Flipkart and Snapdeal with Bitcoins.
Sohail Merchant, who is bootstrapping PocketBits, told me that while the potential of the market has attracted a lot of speculators and traders, the whole ecosystem around bitcoins has to come up (and not just Bitcoin exchanges) for the mainstream, ‘noob’ crowd to get in.
He started Pocketbits, after having being the victim of multiple credit card frauds and having seen the breeze of using Bitcoins to shop on international e-commerce sites.
Since launching in February, he claims Pocketbits has crossed more than 15,000 signups and transactions worth more than 1200 Bitcoins have taken place on the shopping service.
Money essentially works because it is a universal system of mutual trust.
Even people who do not believe in the same god, obey the same king or are part of completely different cultures are more than happy to take the same coloured piece of paper.
“Money is the only trust system created by humans that can bridge almost any cultural gap, and that does not discriminate on the basis of religion, gender, race, age or sexual orientation. Thanks to money, even people who don’t know each other and don’t trust each other can nevertheless cooperate effectively”. — Yuval Noah Harari, Author of Sapiens
Money then, is the ultimate network effect and it kind of only works because everyone believes in it.
If I believe that you’re going to accept bitcoins as money, then I want more of bitcoins and you want more of them too and so it goes, to create a network effect. The attraction of bitcoins is even more so as it is completely decentralised and no government can declare it worthless as happened in India late last year.
While Bitcoin crossing the chasm into the mainstream may still be a number of years away, for now, I’m happy getting a good deal on my flight tickets.