How Cryptocurrencies are Helping Tech Startups in India

How Cryptocurrencies are Helping Tech Startups in India

In early 2009, the world’s first cryptocurrency called Bitcoin was created and distributed to the masses. The bitcoin system was built to allow the transfer of funds directly between users without the need for a banking institution to handle the transactions. The database that allows these interactions to occur is recorded on every device and then used to transfer the currency, which is called the blockchain. Originally conceived as a way to separate the government’s absolute control of cash flow, no one really knew how the tech would eventually be used.

How are innovators and entrepreneurs using cryptocurrency as a means to fund their start-ups?

Legal Hurdles and Loopholes

With the recent rise of crypto coins like Bitcoin and Ethereum reaching the mainstream, we see them fast becoming the target of government sanctions and regulation. Recently, India, in particular, has made it a goal to stamp out crypto trading, cited as being a security risk because it could lead to money laundering or funding terrorist organizations. However, the decentralized and untraceable nature of cryptocurrencies is proving to be quite difficult to eliminate by authorities.

One way in which businesses in India are bypassing this Bitcoin crackdown is through the use of coin exchange platforms. Exchange sites like those listed on Crypto Head are allowing organizations to take crypto payments through a legal loophole. To make sure they’re following the rule of law, companies never list prices by cryptocurrency value nor do they actually accept the coins themselves; instead, these coins are converted into fiat money by the exchange before being deposited into a regular bank account.

How Cryptocurrencies are Helping Tech Startups in India

When Traditional Venture Capital Funding Isn’t Possible

Conventional methods of fundraising for new startups can be a bureaucratic nightmare, and just downright impossible to obtain for many startups. Venture capitalists are putting their investment on the line: they expect a return and will do anything they can to make sure that happens. Unless you’re already part of a well-established organization with considerable resources, the time and effort involved in obtaining funds could be outside your range of ability.

The bedroom inventor couldn’t hope to ever achieve venture capital backing, as the process is just too much for one person to handle. Even if venture capital can be obtained, entrepreneurs run the risk of losing equity in their creation, which will drastically limit decision making.

Initial Coin Offerings, or ICOs

In the world of rigid restrictions and examinations that could last for months, what’s the humble startup to do to fund their projects? ICOs allow those not fit for venture capital backing to get the money they need by advertising directly to their potential clients, rather than VC investors. The globally-connected and decentralized nature of cryptocurrencies allows funding from all corners of the globe, and at any price.

This low-cost, high-speed acquisition of funds makes the ICO method extremely attractive for both investors and startups. Investors are at much less risk if a project fails to make it off the ground than if they had invested using traditional means.

Though there are definitely very legitimate concerns involving the security threat that cryptocurrencies might pose, there’s little that can be done now due to the destabilized nature of the beast. However, there’s no denying that Bitcoin, Ethereum, and the like have created a favorable environment for inventors and visionaries to pursue their goals and achieve success.

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