BANGALORE: Tarun Thadani, the proprietor of a vintage-themed pizza outlet in the posh Worli area of Mumbai, thinks he is making history. On Saturday, his restaurant Kolonial announced that its patrons can pay in bitcoins instead of rupees, thus laying claim to the title of being India’s first eatery to accept the new-age currency. “Right now, people are a bit sceptical about bitcoins, but it’s going to become big. I am testing the waters,” said Thadani, 30, who is a bitcoin owner and a host to several bitcoin meetups at Kolonial.
The only other business establishment in India which accepts bitcoins is Mumbai’s Castle Blue spa and salon. In Bangalore, the technology startup accelerator Microsoft Ventures Accelerator is doing its bit for bitcoin by lending its office space to host the country’s first Bitcoin meetup of 2014 in India’s tech capital.
Benson Samuel, a Bangalorebased bitcoin enthusiast who runs coininsecure.in, a portal on the digital currency, said Microsoft Ventures has offered a 100-seater conference room, with a projector, audio-visual support and a cafe area for Bitcoin meetups starting next month. “They seemed quite happy to get us on board. They are also open to providing us with Wi-Fi, as and when we start off some hackathons.”
Initiatives such as these explain why bitcoin, an electronic currency that is minted in the cyberspace and stored in digital wallets, is encouraging entrepreneurs, venture capitalists and technology enthusiasts to invest their money in businesses that use bitcoins to buy and sell goods on the internet.
Founded in 2009, bitcoin is not issued by any central bank but by an open source software through a process called ‘mining’. India has a 50,000-strong bitcoin community, with at least 30,000 of them owning the digital currency, according to bitcoin enthusiasts and observers in the country.
While bitcoin gains in popularity in India, entrepreneurs and investors say they are concerned about the RBI’s stance on the digital currency. In August, ET had reported that RBI was “watching and learning” about bitcoins.
On Tuesday, the RBI made clear its displeasure with virtual currencies, including bitcoin, saying they pose “significant financial and security risks”. In a statement, RBI said bitcoin payments are not authorised by any central bank or monetary authority and that it is presently examining the issues associated with the usage, holding and trading of virtual currencies.
“There is no underlying or backing of any asset for virtual currencies. As such, their value seems to be a matter of speculation…No regulatory approvals, registration or authorisation is stated to have been obtained by the entities concerned for carrying on such activities,” the statement said.
But Alok Kejriwal, digital entrepreneur and founder Games2win, agaming portal that claims over 20 million unique users each month, described bitcoin as a “fun currency”.
India has a very young, techsavvy population and that is driving bitcoin’s popularity, he said.
Last month, British entrepreneur Richard Branson-owned Virgin Galactic said it will start accepting bitcoin for trips to space while in September, Cameron and Tyler Winklevoss, the internet entrepreneur twins, said they would launch a bitcoin fund that would let investors trade in the digital currency. As with other transactions, bitcoins too have the share of undesirable consequences.
In October, the FBI arrested Ross Ulbricht, an entrepreneur said to be behind Silk Road, an online marketplace for illegal drugs and arms. Silk Road, which the FBI cracked down on, accepted only bitcoin payments and could only be accessed via the Tor Web network, an anonymous networkwithin-the-internet.