Use digital currency to pay bills or shop online

Online shopping
As a wide section of Indians get used to paying bills and shopping online through internet banking or credit cards, here comes another mode of payment that has remained in the shadows so far.

You can now pay your mobile or DTH bill through the digital currency, Bitcoin. Online shopping and utility bill payments via the virtual currency should be available soon.

“Users are increasingly using Zebpay to pay their mobile bills using bitcoins and to buy vouchers for online shopping. Last month, users paid bills of more than Rs.15 lakh using bitcoins. This number is doubling every month,” Sandeep Goenka, co-founder of Bitcoin mobile app-based platform Zebpay, told IANS.

Bitcoin is a digital currency not produced by any government or statutory authority. It’s generated by encryption techniques using peer-to-peer technology to operate. It has the power of infinite divisibility, which enables its use for tiny online transactions.

The total number of Bitcoins is limited as its global supply has been fixed at 21 million by its founder, who has remained out of sight. Nobody owns or controls Bitcoin and everyone can take part in it.

When a user wants to pay for a bill of, say, Rs.500, the bitcoins from their Zebpay wallet are transferred to the company at the current bitcoin price. Zebpay then pays the amount in rupees to the mobile carrier companies. For the user, the process is instant.

By the year end, Zebpay plans to expand services to payment of broadband, electricity and landline phone bill, Goenka said.

Bitcoin’s legal status varies from country to country. In India the Reserve Bank of India (RBI) maintains that the digital currency is under observation. But it has neither been banned nor is it regulated.

“Unregulated does not mean it is illegal, just that there are no specific laws for this new technology. It is legal to buy and sell bitcoins under all existing laws,” Goenka said.

At present, only the state of New York in the US has started giving licences for bitcoin trading. The NYSE (New York Stock Exchange) also has an official bitcoin index. Russia, though, has moved to ban it.

Each bitcoin’s value now is around Rs. 30,000, having rallied over 100 percent within a year. The price of bitcoins depend on demand and supply, just like the price of shares. The bitcoin exchanges publish prices, which are influenced by factors including international rates, liquidity and trading patterns.

“Like gold, there is a finite supply of bitcoins at 21 million. Bitcoin was modelled in several ways after gold: they are both scarce, and it is impossible to artificially inflate supply,” Jincy Samuel, COO and Center Head, Coinsecure, told IANS.

But if bitcoins are likel gold, how do you mine them?

Well, you need huge computing power to mine a block of 25 coins. High-end hardware is required to process, but even then a solo effort perhaps would take up more in electricty cost — and depreciation — than the value of coin it will yield. Working alone, it could take up to three years or more to build a block.

That’s the reason why people join pools of “miners” putting together their computers and running the algorithms endlessly to produce a block.

Bitcoins are kept in digital wallets on the computer. If you lose the computer then the you lose the money.

With trading companies offering bill payments at a very low transaction cost of less than one percent, the virtual currency is being seen as an alluring proposition.

Coinsecure, a trade platform for the currency, said it is going to launch a service later this year which will allow the users to directly shop online in bitcoins.

“We will soon be launching our merchant payment gateway this year, which will allow mobile companies or anyone else to accept bitcoins at zero percent volatility risk. We will be charging one percent transaction cost, instead of 3-4 percent by credit card companies,” Samuel of Coinsecure said.

“We are in talks with the service providers for tie-ups to accept bitcoins and a lot of them are willing. We see a lot of online service providers, e-commerce companies and start-ups coming on board,” Samuel said.

The grey legal area for the digital currency creates concern, but like any new technology the laws are yet to catch up with it.

“Bitcoin operates on blockchain technology, which is an open ledger and offers full transparency. Flipkart and Ola were also not regulated earlier. It is only recently that the government has regulated e-commerce and defined marketplace. We are also a marketplace,” Kamesh Mupparaju, CEO of bitcoin trade exchange platform BTCXIndia, told IANS.

Blockchain is an open digital ledger that records all bitcoin transactions that cannot be altered.

The companies claim that fraud is unlikely with bitcoins as the entire operation is digital in nature, secured by strong encryption keys which guarantee the ownership of the currency.

“Bitcoin works on self regulation,” online portal Unocoin Co-founder and CEO Sathvik Vishwanath told IANS.

Unocoin has already about 2,000 average mobile and DTH bill payments taking place through its online platform. “In a month’s time we will launch insurance premium, electricity and water bill payments at zero percent transaction cost,” Vishwanath said.

The popularity of bitcoins has seen a sharp increase in India.

In its very first year of operations last fiscal, Zebpay crossed Rs.100 crore turnover. At the same time, BCTXIndia jumped from a mere Rs.4 crore turnover in 2014-15 to Rs.70 crore in 2015-16. Unocoin said it is expecting to grow by 10-20 percent per month.

China, where the currency is unregulated, like India, does a trade of more than Rs 10,000 crore in bitcoins every day. The trading amount in India is around Rs.500 crore per year, Goenka said. That is likely to change quickly.

Meghna Mittal / IANS

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