From Coinbase’s direct listing to the way Non-Fungible Tokens (NFTs) are now breaking through the zeitgeist and powering the creator economy, it’s clear that crypto is here to stay. We are still at the very early stages of what may become the third generation of the internet.

And the continuing surge in global crypto momentum is also keenly felt in India.

After the Reserve Bank of India (‘RBI’) lifted the cryptocurrency ban in March 2020, the country’s cryptocurrency market has rebounded very quickly, surging 641% over the past year, catapulting the nation to be ranked second on the global crypto adoption index, according to a recent Chainalysis report.

Among the top three cryptocurrency global usage countries – Vietnam, India, Pakistan- India had the largest share of its activities taking place on Decentralised Finance (DeFi) platforms, pointing to greater innovation to increase accountability to the blockchain, crypto-based trading, yield farming platforms, and more.

Seeing everyone talking, trying, and adopting cryptocurrency everywhere in India, Srinidhi Moodalagiri, who mined his first bitcoin back in 2011, intuitively knew he had to jump in right away.

He left his job at American Express where he was building credit and fraud risk models for multi-billion-dollar consumer portfolios, to join Entrepreneur First where he met Srivar Harlalka, a third-generation entrepreneur, who had built multiple consumer-facing businesses in the past.

Together, they founded Flippy, one of India’s first social-first crypto investment platforms.

We caught up with them to learn more about India’s crypto landscape, its burgeoning opportunities, and potential risks.

The rise of the Internet and crypto access

With the advent of mobile, over the past few years, India has witnessed a rapid spurt in the number of first-time internet users, driven especially by those from rural India, and this trend is continuing to persist.

According to The Internet and Mobile Association of India (IAMAI) Kantar ‘ICUBE 2020’ report, the rural population continues to clock a 13% year-on-year growth over the past year.

“This rising tide that we are seeing coincides perfectly with the time when the RBI reversed the cryptocurrency ban.

Cryptocurrencies are truly borderless when there’s the internet – anyone can just explore and experiment with crypto on their mobiles anytime, anywhere,” explains Srinidhi.

“One of the bigger trends in India that we are observing today is this: more and more young, tech-savvy Indians are hopping onto the cryptocurrency bandwagon.”

Introducing the Gen Z crypto investor

Risk perceived by the young generation can be very different. They are in the earlier stages of their careers and have a higher risk-taking appetite.

“The Gen Zs’ immediate concerns aren’t building retirement nests. They are after a novel, interesting, new, and fun investing experience. They want that sense of belonging that comes with becoming part of a wider community,” tells Srinidhi.

“And this is why they are flocking to cryptocurrencies. Crypto and its global communities give them what traditional bonds, stocks, and gold can’t.

Furthermore, there is also the COVID-19 effect – many young working adults were forced to go back to their native homes, away from expensive big cities where they worked.

They suddenly found themselves with plenty of disposable cash and time, making trying out cryptocurrencies the next best entertainment cum investment activity.”

Naturally, India’s crypto market began booming, various cryptocurrency trading platforms came into being, and today the country is home to notable and huge crypto exchanges like WazirX, CoinSwitch Kuber, CoinDCX, Unocoin, and Bitbns.

While it is easy to start crypto investing in India, making the right trade is still just as challenging.

The onus of earning an investment yield is often passed on to the trader, in crypto’s case, the new crypto adopter.

Making crypto discovery more accessible

“We believe that what’s lacking in the cryptocurrencies journey today is the discovery phase; there’s plenty of crypto trading platforms and exchanges working to make crypto transactions seamless and efficient,” shares Srinidhi.

“The young, tech-literate crypto adopters aren’t your typical seasoned investor.

The information and content out there are full of complex jargon, leaving them just as confused and clueless even after going through them.”

To test their hypothesis, the duo conversed with many on-the-street crypto enthusiasts in India and identified a common thread: these people are very aware and cognizant of what’s going on around the ecosystem, they have heard about NFTs, DeFi, and more. But when it comes to making that investment, they are very unsure of the types of projects and don’t know what to invest in.

“We began experimenting with assembling and organising investments thematically to distribute to our users.

In each of those, we would build content around what the project is actually doing like building a p2p payment infrastructure, for instance.

This helps to give more colour to these projects, enabling investors to understand what they are investing in per se, hopefully, to promote more long-term investments, instead of merely trading on crypto volatilities.

And there’s also the option of purchasing pro-traders’ baskets to leverage the expertise of the crypto experts,” recalls Srinidhi.

“Through these bite-sized, actionable content and various investment options, we hope to be the bridge to make crypto more accessible to the Gen-Zers.”

Flippy’s minimum viable product was very well received, showing traction quickly.

“Our platform saw close to 70% of novice investors making their first investments. We have also secured a partnership with one of India’s largest crypto exchanges,” reveals Srinidhi.

Unfolding crypto regulatory risks in India

The ascent of cryptocurrency in India also invites heightened regulatory scrutiny, and the ambiguous relationship India regulators have with crypto is certainly not helping.

On that, Srivar is quick to point out that things might soon be changing.

The India government recently held a meeting with crypto industry representatives to hear their views regarding how crypto could be regulated. Rather than an outright ban, they are looking to classify cryptocurrencies as an asset class. Bitcoins and the likes won’t be an accepted tender, however.

“In any case, given the current signals we are seeing from the government, a blanket ban on cryptocurrency is highly unlikely,” adds Srivar.

“Regulation, if anything, is a step in the right direction. This will drive greater clarity, transparency, in turn, instilling further confidence in the market.”

Besides, as far as Flippy is concerned, the startup functions as an intermediary between retail traders and the crypto exchanges.

“Users don’t park their crypto assets with us. We are essentially building a platform on top of existing exchanges.

In India, though the crypto exchanges are unregulated, they have partnered with the Internet and Mobile Association of India (IAMAI) to form a self-regulatory body.

The self-regulatory code focusses on anti-money laundering, combating the financing of terrorism and KYC requirements, to ensure compliance with the existing Prevention of Money Laundering Act and FEMA,” explains Srivar.

Crypto’s broadening dominance and global opportunity

India’s groundbreaking growth in crypto adoption is simply just the start for Srinidhi and Srivar.

“As more and more people come online, so do the physical items – treasured photographs, artwork, books – and the need for blockchain technology and cryptocurrencies will become more apparent,” shares Srinidhi.

“When we send files across the web, we are merely making copies and this can be done infinitely.

There is no real way to assign a unique value to any digital item, and blockchain is the revolutionary solution: giving authentic ownership to all things digital through an immutable ledger.”

This means unless people stop going online, the blockchain and cryptocurrency opportunities will only grow in time at an accelerated pace.

And Srinidhi and Srivar are here to tap on this upside with Flippy.

“We were on the same page that crypto is global from Day 1 and that mindset set the stage for building Flippy from the ground up.

From finding customer pain points, choosing a viable business model to the content we build on our platform, it was done with the end goal of scaling it across the world.

In the near-term, we have plans to begin partnering with global exchanges to enter crypto-friendly countries such as Singapore, the US, and the UK,” explains Srinidhi.

Indeed, what the world is seeing now is just a glimpse of how trust that has been established by the blockchain is making waves in an unprecedented way in just a short span of time.

“We are really only at the beginning of what’s to come, and the many startups that will emerge from this nascent and exciting space.”