India is Paying $900+ for Bitcoin Amid Cash Crisis

Indians appear to be braving huge exchange spreads in a bid to accrue Bitcoin following demonetization of the two largest rupee cash bills.

Also read: US Slowly Going Cash-Free, But Where’s the Bitcoin?

Indians Buying At $900+ Per Bitcoin

A week ago, the Indian government suddenly withdrew the country’s 500 and 1000 rupee bills from circulation. Now, bitcoin is experiencing a knee-jerk reaction among citizens concerned about their financial integrity.

Interest in bitcoin and also purchases of it have spiked in India, with buyers quoted huge mark-ups on sites such as Localbitcoins to convert their rupees.

Entrepreneur Tuur Demeester noted earlier this week how such ‘premiums’ are topping 13% compared to average market rates per bitcoin. While they were present before, sources say, the cash debacle has served to intensify the situation.

Info from India on the ground, it appears that the $100 premium dates from before demonetization: https://t.co/NSD3Lwyw95 — Tuur Demeester (@TuurDemeester) November 16, 2016

The government demonetized India’s larger notes, which have a combined value equal to 86% of all circulating cash in the country. The policy aim is to replace them with new 500 and 2000 denominations which will be less easy to forge.

Purse.io CEO: Bitcoin Adopters ‘Won’t Go Back’

With this in mind, Steven McKie of Purse.io suggested panic may be short lived, but the allure of bitcoin for those who made a partial transition now will remain enticing. In September, Purse partnered with Indian exchange Unocoin to bring discounted purchases to Indian bitcoin holders, and has seen the market become the second busiest after the US.

“This shift, in my personal opinion, translates to citizens in India having to look for quick alternatives,” McKie told Bitcoin.com in emailed comments. “Even once things have died down somewhat and the initial shock wears off with the removal of the notes, those that have adopted bitcoin won’t go back.”

On the topic of Bitcoin purchase options locally, he added that uncertainty could spur consumers to “take a hit” in order to safeguard their savings in the long term.

“[W]hen faced with no other options, I am sure people are willing to take a hit to know that at least some portion of their wealth is safeguarded,” he continued. “The people of India are very intelligent and savvy, I am sure they are doing their homework prior to buying in. “In times of hardship, you do what you have to in order to get by, by any means necessary. And, that means is bitcoin.”

Banks Eager To Reel Cash Back In

Meanwhile, further war-on-cash-style noises have come from Australia, a country now toying with the concept of eliminating cash altogether within just eight years. Earlier this week, a report by investment bank UBS stated a desire to see the country’s two largest notes — 50 and 100 AUD — disappear even earlier.

“We believe removing large denomination notes in Australia would be good for the economy and good for the banks,” it said. Similar to India, these two notes account for 92% of cash value in circulation.

At the same time, Citibank announced that it would go ‘cashless’ at some of its Australian branches.

What do you think about India and Australia’s so-called war on cash? Let us know in the comments section below.

Images via Shutterstock

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