The Story of India’s First Crypto Unicorn
Amassive increase in the number of internet users has reactivated virtual world concepts and spawned a new market phenomenon known as cryptocurrency to enable financial transactions such as purchasing, selling, and trading.
Cryptocurrencies are digital representations of precious and intangible objects that can be used in a variety of applications and networks, including online social networks, online social games, virtual worlds, and peer-to-peer networks.
Cryptocurrency, which was unheard of until a few years ago, has now become an important and rising element in today’s digital economy. Surrounded by skepticism, resistance, and sensationalism, it is now red hot, with CoinDCX becoming the first Indian cryptocurrency exchange to reach the unicorn status.
Fons Et Origo
Sumit and Neeraj had known each other since 2007. They first met in Kota, Rajasthan, while preparing for their IIT entrance exams, and became good friends and worked their way into IIT-Bombay. They were also inclined towards entrepreneurship.
After college, Neeraj ventured into his family business to understand the nuances and challenges of being an entrepreneur. Post this, he joined hands with many startups to drive their technical architecture. Sumit joined an MNC in Tokyo, which he says, ‘helped him to understand the technicalities and culture within a corporation’.
After college, Neeraj ventured into his family business to understand the nuances and challenges of being an entrepreneur. Post this, he joined hands with many startups to drive their technical architecture. Sumit joined an MNC in Tokyo, which he says, ‘helped him to understand the technicalities and culture within a corporation’.
In 2014, when Bitcoin was gaining traction, Sumit was introduced to distributed ledger technology. He realized that blockchain traders have to keep up with thousands of crypto trades in seconds, and there was no platform to trade from.
He then got the idea of bringing together various decentralized marketplaces and cryptocurrencies, which are the medium of transaction in these marketplaces. He then contacted his friend Neeraj, and both collaborated to close the key market gaps between this new technology and consumers globally.
In 2018, after studying the market and the future of crypto technology, Sumit and Neeraj launched CoinDCX.
“In case of a trading platform like CoinDCX, the key competitive advantage we wished to have was to develop an advanced trading terminal that outperforms any current offering available to traders on the market. In addition to the challenges on liquidity (we initially faced), the other big challenge was to connect fragmented cryptocurrency capital markets within a single trading terminal,” Sumit says.
According to the founders, the company has developed single-point access to trade all the cryptocurrency instruments available in more than 500 markets. It claims to have built a highly scalable trade machine engine, which can handle up to one million transactions per second. CoinDCX charges a transaction fee on every transaction or trade made on the platform.
Regulatory Scepticism
Despite regulatory hiccups pertaining to cryptocurrency in India in the last three years, CoinDCX has grown leaps and bounds, and what helped the company get on track was focussing on building the product from day one.
Neeraj explains, they started with a simple idea — to let people buy and sell cryptocurrencies. But the platform now offers margin trading, derivatives, lending, and borrowing — financial products that add more value to the users.
“We have seen several ups and downs in our journey. What helped was keeping our heads down, focussing on what we had to do, and building the platform. The crypto space is a new one with several uncertainties. One year in crypto is three years in any other sector. So now, our focus is to enhance the product and make it more simple, safe, and compliant,” said Sumit.
Investments surged after the Supreme Court in 2020 quashed a ban on banks facilitating crypto trades. The four biggest crypto exchanges in India saw a daily trading jump to $159 million from $28.6 million a year ago, according to CoinGecko.
For regulators, the volatile nature of the asset has been a worry. After touching a high of $64,870 in April, Bitcoin lost more than half of its value and fell to $28,824 in June. The Reserve Bank of India is looking to create its own digital currency. Gupta believes India has what it takes to achieve dominance in the space.
Business Model & Revenue
The CoinDCX business model has established single-point access to trade all cryptocurrency instruments available in over 500 markets, according to the founders. It claims to have developed a highly scalable trade machine engine capable of processing one million transactions per second. Any transaction or exchange on CoinDCX incurs a transaction fee. Deposit fees (charged on exchanging currencies), withdrawal fees, trading commissions (0.01 percent of the overall transaction is normal on any exchange), and listing fees are how CoinDCX makes money, just like any other cryptocurrency exchange.
The trader will convert INR to Cryptos and vice versa on DCXInsta, gain by lending their holdings with DCXlend, and leverage trades with DCXmargin on DCXtrade’s 500+ markets. CoinDCX aspires to be the world’s best cryptocurrency exchange. Its patented liquidity aggregation model gives users access to liquidity from the world’s leading cryptocurrency exchanges. CoinDCX hasn’t seen any brand ambassadors to date. The first brand ambassador that the company has settled on, according to the reports dated October 4, 2021, is the veteran actor, Amitabh Bachchan. With this agreement, CoinDCX aims to boost the overall knowledge of crypto and popularize the currency as an emerging asset class. Furthermore, Bachchan is also deemed to be the new face of the latest campaign by CoinDCX.
“This (2021) has been the most exciting year for CoinDCX. While the pandemic forced everyone indoors, CoinDCX scaled up exponentially and continues to do so. Our team tripled in number from 30 in March to 90 in December, and we are continuing to hire aggressively,” said Sumit Gupta, CEO and co-founder of CoinDCX in a statement.
If more investors looked into these emerging liquidity alternatives as a result of the global pandemic, interest in digital assets grew steadily. As institutional and individual investors adopt these emerging asset classes to diversify their portfolios, this trend is expected to intensify exponentially, according to analysts. India is regarded as a developing market for cryptocurrencies, with retail investors aged 25 to 40 spending millions of dollars every day on cryptocurrency trading in the nation. In the April-June quarter of 2020, the exchange says it saw a 3X increase in total volume traded and a 4X increase in daily active users.
The Metamorphosis
CoinDCX has raised around $109 million over 5 funding rounds that the company has seen. CoinDCX became India’s first cryptocurrency unicorn after the exchange raised 6.70 billion rupees ($90 million) from investors led by Facebook Inc. co-founder Eduardo Saverin’s B Capital Group, even as local authorities push back against crypto assets.
The latest funding round values the firm at $1.1 billion, Chief Executive Officer and co-founder Sumit Gupta said in an interview Tuesday. Other investors include existing partners Coinbase Ventures, Polychain Capital, Block.one, and Jump Capital.
Gupta plans to use part of the funds to double his team in the next six months to about 400 people in India, where crypto investments grew to nearly$6.6 billion in May from some $923 million in April 2020, according to Chainalysis. The investment comes as policymakers continue to debate on the status of digital currencies in India — as recently as last week the central bank said it has “major concerns” about private virtual currencies and the government will take a final stance on the matter.
“I am pretty sure the industry will be regulated at the right time,” Gupta said. “We have chosen to put at stake our money and career as we feel this is going to be a very good wealth generation opportunity for people.”
The Future
Speaking from a development perspective of the app, Neeraj Khandelwal, Co-founder, CoinDCX said, “Most of the app users are in the age group 22 to 45. This app has been introduced to serve a simple purpose; remove the fear of technology, make the market numbers more understandable and provide the ability to make informed decisions in the crypto universe. A smart investor will regularly invest at least 1 percent of his disposable income for Bitcoins in his investment portfolio. People having faith in the future of technology should do the same. The app just makes the induction easy. Buying Bitcoin on CoinDCX Go will be as easy as using any of the popular apps such as WhatsApp, Instagram, Amazon, or booking your cab through Uber.”
The company invested $1.3 million in TryCrypto, its project aimed at making blockchain and cryptocurrency more available to mainstream consumers, in yet another effort to accelerate mass acceptance of cryptocurrencies.
The company plans to offer new products including for wealthy individuals in comithe ng months.
“We have a very tech-savvy population, good mobile penetration, big base of engineers and developers who can leverage blockchain technology,” Gupta said.
He believes India will produce more than 100 crypto unicorn start-ups in the next few years once regulation is firmed up.
