With the opportunity of investing in bitcoins for as little as Rs 100 a day, on a daily/weekly or monthly basis, Bitdroplet has been making it easier for people to gain a fair understanding and exposure of the crypto market while arbitraging the risk. We spoke to Bitbns founder, Gaurav Dahake and tried to decode cryptocurrencies and bitcoins.
What motivated you to delve into the world of cryptocurrencies?
Bitcoins and cryptocurrencies have been gaining momentum for the past 10 years. However, while most of us are aware of bitcoins, our understanding and personal investments in this avenue are relatively low. We were exploring different avenues that were available for people to get started on bitcoins. We realised that the market lacked a fairly seamless and easy to invest alternative to begin your cryptocurrency investment or trading journey. In December 2017, we started Bitbns and over the past three years, we fine-tuned and highlighted the key challenges people face when investing in Bitcoins or cryptocurrencies.
One key factor contributing to the hesitation is that the market is fairly volatile. It becomes really hard to figure out when to enter or exit the market. Many had entered the cryptocurrency market when the price was extremely high. Some had entered bitcoin when it was 10 lakhs / 12 lakh or 14 lakhs, and they were stuck with that investment for over three years, until bitcoin reached this target recently in December 2020. That’s when we got into formulating a plan to help people kind of systematically invest in Bitcoins. And the idea for Bitdroplet was created. We are an easy to use systemic option that you can use to invest in bitcoins and other popular cryptocurrencies – like ethereum.
What went into the development of Bitdroplet? What sort of returns can you expect with Bitcoin SIPs?
Bitcoins have been one of the best-performing assets in the last decade, and have given exceptional returns. So we started looking at all the different avenues that people have while looking to systematically invest. Like – stocks with mutual funds, gold with monthly schemes or sovereign bonds, and more traditional investments of RDs. We also started analysing what the returns of these options have been as compared to bitcoins. We created a calculator that tried to capture where our return would stand if we systematically started investing in mutual funds, fixed deposits, recurring deposits, gold or of course, bitcoins.
We looked into the past performance data of these assets and saw that systematically investing in Bitcoins has outperformed other elements by a significant amount. Our tool highlights this fact to investors as well. Where you can simply enter the money that you are planning to invest in Bitdroplet with the time span you are looking to invest, and the tool will show you an instant comparison of the expected returns. Bitdroplet offers a comparatively smarter and more manageable exposure into bitcoins for investors who are testing waters.
Are there any tools that have made it easier or more convenient for people to invest in Bitdroplet?
People are fairly interested in defining short term goals for their investments. With Bitdroplet, they can have complete control of how much they want to invest in bitcoin, their financial goal, and when the investment is created. People can also have a consolidated view of all the different goals they have created. In each goal, one can see the investment made, its current value, and the goal progress. This is broadly what Bitdroplet enables. What is truly astonishing is that some of these goals have been fulfilled much faster than anticipated because the returns have been exponentially positive in the last year or so and overall as well, with respect to bitcoin. When people who are used to 10-15% returns get 10x, they really see the difference and make the most of it. I have personally made investments in bitcoin, and the results are always similar.
Volatility has been one of the biggest concerns stopping people from investing in bitcoins. How does Bitdroplet tackle this problem?
The most significant benefit of an SIP format is that the investments are fairly spread out and therefore tackles the volatility. It helps to counter the volatility seamlessly as you are only investing small amounts. The interesting bit is that people who invest with Bitdroplet usually go for a daily SIP. This is relevant in bitcoins because, in the timeline of one month, the price can move substantially. The daily SIP option counters this in a fairly seamless way. So that is what the product is. And a brief overview of what we have been doing.
People can study the past trends of the volatility of bitcoin on Bit Droplet or other websites like DCABTC. DCA stands for dollar-cost averaging, and you can see the value of Bitcoins across any period. Say you are investing 10$ daily for over three years. Then the current value of your bitcoin investment would be around USD 50,000. That is a return rate of over 300%+ over 3 years or 100% year on year returns. These are the kind of returns that people have accumulated using bitcoins. The higher return rate is one of the key reasons motivating us to encourage investors to create a portfolio with bitcoins. The bitcoin SIP allows you to dip your toes into bitcoin investments without making heavy investments.
Could you approximately share the number of people who have already invested in Bitdroplet?
We have around 100,000+ active users who are investing in Bitdroplet. While most of us have heard of bitcoins, the people who consider it a viable investment option are less. It might be 1-2 %. We at Bitbns, are trying to turn these bystanders into keen investors with Bitdroplet.
Have you considered expanding to offer other cryptocurrency options? Or is Bitdroplet only focused on bitcoins and ethereum?
As of now, with Bitdroplet, users can invest in bitcoin and ethereum. We started with bitcoin, and we added ethereum. We have maintained these two since they are the longest standing options in cryptocurrencies and are the greatest assets out there. The crypto-market cap is around $ 1 trillion, about 64% of this cap belongs to Bitcoins while ethereum contributes to approximately 15% of it. So 80% of all crypto assets right now are credited to bitcoin and ethereum. That is the reason we have limited our current investment to these two options. These two are the most important assets as of today. The market cap for ethidium is $ 156 billion, and that for bitcoin is $ 660 billion.
There are smaller cryptocurrencies that have been around for some time. But they are relatively unproven in terms of how much value they hold, or how much money people have invested or how old they are. You don’t buy copper just because it is cheaper than gold. You want to buy gold because it offers that value in terms of returns. The same is true with the blue-chip companies in the stock market. And bitcoin is precisely that for the crypto world.
There is a larger risk in investing in these options. This is why we have not considered them as viable investment options when it comes to SIPs. We have also recently added tokenised gold and silver. It is similar to the gold that you have. Instead of physical possession, you have the tokenised version that also enters a blockchain, identical to bitcoins or cryptocurrencies.
Could you explain the fund withdrawal process that is followed at Bitdroplet? Are there any charges that investors should know about?
When it comes to Bitdroplet, deposits are instant; and so are the withdrawals. You can either withdraw the investment as bitcoins or sell it for USDT or INR. USDT is a US dollar-based cryptocurrency so you can actually keep your returns in this form or redeem it in INR. If you want your INR returns, you can click on withdraw and transfer the money back to your account, and it would hit your account within 120 seconds. So there is no restriction. You can withdraw the entire amount in a day. And you can also invest any amount in a day, and all the withdrawals and investments are based on IMPS, so it is all instant.
We issue a 0.25% charge on each trade. This is a flat charge with no other exit load charge or adds on fees that one might usually incur with mutual funds or other investments. The main goal of Bitdroplet is to make high-return investment options available and accessible to people. Our understanding is that if we have a nominal charge levied and pass on the majority of the earnings back to the users, they are bound to be happier and more satisfied with our services.
You mentioned that you levy a fixed charge on your transitions. But what are the taxation and regulations around cryptocurrency that investors need to consider?
The 0.25 % charge is the fee we levy on every trade, and there are no other fees charged by us. Usually, in mutual funds, there is an expense ratio, exit load and others. And the returns with Bitdroplet are again 8x to 10x, which is comparatively higher. When it comes to taxes, there is no tax on trading as of now. But when you cash it out, people can file it for capital gains, or if it’s an investor or trader, they can pay taxes according to their tax slabs. Right now there is no clarity on what the tax rates on bitcoins are. But as individuals, you can do your due diligence, and still, enjoy a higher return as compared to other investment options.
Most cryptocurrencies are characterised by finite supply. Bitcoin is capped at 21 million, How does it affect the trading market?
It would positively impact the bitcoin SIP because hundreds of companies globally are working on adapting to bitcoins, Bitdroplet being one of them. There are hundreds of them globally. And even if we get 1000 new users a day, in addition to the 100,000+ users that we are already catering to every day, the value of bitcoins is sure to rise. The finite supply of bitcoins, combined with the power of users churning daily volumes, will positively impact the trading and investment market.
Many experts have cited their scepticism on bitcoins, calling the rise in the prices a bubble effect. As someone who has been keenly studying this avenue, what are your thoughts about the market?
The value of bitcoin has always gone up, especially over a longer period of time. There is a reason for this. As we discussed, bitcoins are finite in supply, but the demand for bitcoins is only set to increase as more and more people grow an interest in the asset. When you see the below draft of US dollars vs how much bitcoins you can buy, over the period of the past few years, you can progressively see that the cost of bitcoins has been increasing. 10 years ago you could buy 256 million Satoshis (100million Satoshis make 1 bitcoin), for a dollar. This has kept decreasing to the extent that now one dollar can only get you 2829 Satoshis.
The value of the dollar against bitcoin kept on decreasing. Typically the purchasing power of your rupee or dollar keeps decreasing. It is one of the fundamental factors people consider while planning their finances. Growing one’s wealth so they have a comfortable life even after they stop working is crucial for all investors. However, most people tend to stick to traditional investment options or those promoted by word of mouth, like mutual funds, FDs, bonds, etc. However, these assets have not even been able to beat inflation. For a 5-year lock-in period, FD provides a 25-26% rate of return, which is post tax deductions. This is really low when it comes to the returns you expect on such investments. That’s what is different with bitcoins. The finite supply helps us, as more number of people come in, the momentum of the instrument goes up, and that has been visible substantially with this sort of craft.
Budget 2021 is almost here, and there is a lot of chatter on some regulations or taxation schemes for cryptocurrencies being established. What are your expectations from the Budget?
I am hopeful that we enter the regulations phase rather than the limitation or restriction phase. The global climate around cryptocurrency has been focused on regulations. Whether this will be explored in this year’s budget, needs to be seen. Based on the conversations we have had and the industry trend, I am not sure that there is any key development in this avenue.
What is the one advice you would give to new investors who are exploring cryptocurrency investment options?
Bitcoin has been predicted to die almost 450 times over the last 10 years across the globe. But it has stood the test of time and has continued to grow, and now it has also reached network effects. One key learning is to never make investment decisions just based on what you hear or read. Things can get too euphoric or too bearish at times based on the perception of the market. Typically, over a period of time, an investment in bitcoins is always good. Taking it in a SIP format is always the smartest way to do it. Because timing the market is hard, and a SIP has worked well to counter this. Start with smaller investments or a certain portion of your portfolio into bitcoins and over the time you can increase your exposure.
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