Launched in 2013, Unocoin lets customers buy, sell, store, use and accept bitcoins. The startup has nearly 3.7 lakh unique customer logins and sees 2,000 daily transactions.
Over the past few months, bitcoins and Blockchain have been in the news like never before. From eateries in Bengaluru accepting them to self-made millionaires who put in thousands and raked in crores, everyone is betting on bitcoins, the worldwide cryptocurrency, and digital payment system.
But for Sathvik Vishwanath, the realisation came differently. Between 2009 to 2013, Sathvik was a freelancer. One of his projects involved building custom scripting experiences for an online virtual world game developed in San Francisco. While on the project, Sathvik realised that close to seven percent of his total payment was lost as a part of transaction fees through intermediaries like PayPal and Western Union.
Things changed when he enrolled himself at India Bitcoin Meetup and was introduced to the world of bitcoins. He was pleasantly surprised to learn that bitcoins involved negligible transaction fees.
But the bitcoiners at the meet were grappling with the problem of where they could buy and sell bitcoins.
That, in 2013, led to the inception of Unocoin, a Bengaluru-based platform where individuals can buy and sell bitcoins.
Sathvik recalls, “Initially, I didn’t really bother much. But bitcoins saved me money, so I knew they worked.”
The meetup also introduced Sathvik to his future partners, Harish BV, Abhinand Kaseti, and Sunny Ray, all of who believed in a market for bitcoins.
On the platform, consumers need to sign up and verify their e-mail ids. Once registration is complete, consumers must enter details, including PAN number, phone number, and address, along with uploading scanned copies. The last step requires users to furnish bank account details.
According to the company’s FAQ page, users are allowed to buy and sell 10 bitcoins every day, with no limits on sending and receiving them. However, Unocoin doesn’t hold any of these bitcoins and only acts as a middle platform with inventory coming from the users.
At present, the platform sees 2,000 transactions on a daily basis, seeing equal numbers of bitcoins sold and bought every day.
Sathvik claims that average value of transactions on the platform is Rs 30,000. It has close to 3.7 lakh unique customer logins. However, only one lakh of these are active customers and have conducted one or more trades.
Unocoin charges one percent as commission for every transaction on the platform.
The prices of bitcoins are decided by international exchanges such as Kraken and Coinbase.
Ruminating on the challenges ahead, Sathvik says: “Although the entire ecosystem [of bitcoins] is evolving, there are still certain issues which rules can mitigate.”
The first challenge is government policies, which haven’t yet evolved to accommodate bitcoins. In February this year, the Reserve Bank of India (RBI) stated that it had not authorised dealings in or use of virtual currencies while cautioning the use of these instruments. In March, it released another statement warning about the potential financial, legal, and security risks arising from the same.
If reports are to be followed, in January 2017, a single bitcoin was being traded at $1000 and surged to an all-time high of $3000 at the start of this month.
For example, on Tuesday, the opening price of trade was $4054.94, according to coindesk.com, but rapidly declined to $3,687.28.
At the time of publishing the article, the price of one bitcoin, according to the website was $3,866.93, a 4.64 percent decline from its initial price yesterday.
His startup is trying to promote bitcoins and the benefits of digitisation to show how transaction fees can be completely avoided.
Unocoin also offers a systematic buying plan that allows users to hedge risks and invest over a period of time. For example, if a user wants to buy bitcoins worth Rs 20,000, they can set up the process so that everyday at midnight the system buys bitcoins worth Rs 100 for the user. This averages out the risk, rather than buying bitcoins worth Rs 20,000 at once and facing the impact of volatility.
But just building awareness isn’t enough. Unocoin is also helping build merchant acceptance through its payment gateway for bitcoins.
The startup has tied up with close to 45 banks, and allows users to recharge their BookMyShow wallets, phones or DTH boxes from most operators.
Depending on the current rate, bitcoins worth the value of the transaction are deducted from the account.
The gateway and bank integrations also make net banking possible through bitcoins, Sathvik states.
Currently, Unocoin’s merchant gateway sees close to 250-300 transactions every day.
By the end of this fiscal year, the 70-member team plans to increase the footprint of its payment gateway infrastructure. It aims to double the number of transactions and users in the coming year, reaching close to twice the volumes.
But Unocoin isn’t the only Indian bitcoin exchange. There is also Ahmedabad-based ZebPay, which operates a bitcoin wallet app and had secured $1 million (around Rs 6.6 crore) in Series A funding from Claris Life Sciences CMD Arjun Handa, Jindal Worldwide MD Amit Jindal and other unnamed investors.
Unocoin has raised $1.75 million in a pre-Series A round from Blume Ventures, Mumbai Angels and ah! Ventures along with other international investors.
According to a recent article in Business Insider, South Korean-based Bithumb was hacked and data of 30,000 customers compromised. In May, TechCrunch reported that the Coinbase website and app were unavailable to users for hours due to unprecedented levels of trading and traffic.
Apart from volatility, security remains a major concern for bitcoin players at present. But Unocoin is confident that bitcoins are here to stay!
[Update: The sentence was updated to: 'He was pleasantly surprised to learn that bitcoins involved negligible transaction fees.']