foreword

Original compilation: TechFlow

foreword

Entering 2022, India has a huge economy and is developing rapidly. The Indian government project is expected to grow by 9.2% this year to reach 3.1 trillion US dollars. According to the International Monetary Fund, which estimates growth at a more conservative 8.5%, India will retain the title of the world's fastest-growing economy in 2022, outpacing China's projected growth of 5.6%.

This growth is expected to continue in the near future, with "India's nominal GDP in dollar terms projected to rise from $2.7 trillion in 2021 to $8.4 trillion in 2030," according to information provider IHS Markit. This means that within a decade, India will overtake Japan to become the second largest economy in the Asia-Pacific region, with Germany and the UK third in the world.

While Sino Global Capital is generally optimistic about India’s growth, broad economic growth alone is not enough to make a convincing argument for cryptocurrencies in India.

Facts about India:

1) According to the World Bank, India has a population of 1.35 billion and is growing at an average of 1% per year, making it the most populous democracy in the world.

2) According to UN data, the median age in India in 2020 is 28.4 years, 38.4 years in China, and 38.3 years in the United States.

3) Although India is an ancient civilization with a rich cultural history, it has only existed as a modern independent state since 1947.

4) According to NHA, India has 1.18 billion mobile phone users, 700 million internet users and 600 million smartphone users.

5) 80% of Indians above the age of 15 have a bank account (World Bank Global Search Report 2017).

6) "India Stack" is the name of a set of open APIs and digital public goods aimed at unlocking the economic fundamentals of identity, data and payments at a population scale, with huge gains in financial inclusion (IMF ).

- Aadhaar [digital identity card] is a unique 12-digit number that is entered into every Indian citizen using biometric technology and is the main identification number used to roll out some government welfare programs and schemes. 1.2 billion people — almost 90% of India’s population — have signed up for digital IDs in less than a decade.

- Unified Payments Interface (UPI) is a new layer in India's retail payment system that provides near real-time money transfer services to bank customers. UPI is India's dominant payment mechanism, with 4.6 billion transactions worth 8.26 billion rupees (about $101.8 billion) in mid-December 2021.

- The third paperless layer of the stack allows for the digitization of official documents and information, reducing paper-based bureaucracy and increasing efficiency and integrity.

- No aspect of India Stack is completely unique. Yet its comprehensiveness succeeds in building a more inclusive digital economy, bottom-up.

• In 2020, India's National Stock Exchange overtook America's CME Group Inc to become the world's largest derivatives exchange by volume. In 2019, trading volume on Indian exchanges rose 58% to about 6 billion derivatives contracts.

background introduction

background introduction

During the second half of the 20th century, many Asian countries experienced rapid economic development, while India lagged behind. This is largely due to the country's protectionist, over-regulatory and socialist policies and licensing regime. The licensing system is a complex system of licenses and rules that are necessary to start and operate a company in India. The restrictions include certain licenses for starting new businesses and increasing production capacity, and specific certain licenses for hiring and firing workers.

Imports are effectively shut down due to high tariffs, limited import restrictions, and outright bans on specific items. By the 1980s, India had one of the highest tariffs in the world.

These tariffs and other restrictions have resulted in one of the world's largest countries remaining a globally excluded market, deprived of meaningful economic growth, natural competition, and foreign investment.

The effects of the licensing system have plagued India well into the 21st century. Due to the high cost of providing banking and financial services, the high cost of compliance and "know yourself", and the fact that almost 400 million Indians lack any form of personal identification document, only about 35% in 2011 according to World Bank estimates of Indian adults have a bank account.

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Digital India - the foundation of Web3

A mature, interoperable digital infrastructure creates opportunities for new digital products, services and conveniences that would have been unthinkable in the traditional cash-based real economy. These core technologies include

1) Internet, broadband

2) Mobile telecommunications and digital communication suites, including applications

3) Data center and network

4) Enterprise portals, platforms, systems and software

5) Cloud services and software

6) Operational security, user identity and data encryption

7) API and integration

the Internet

the Internet

Covid-19 lockdowns and a push for rural internet development have led to an increase in internet penetration in recent years and India has caught up with the OECD average, according to the World Bank. In 2021, the proportion of Indians using the Internet will exceed 60% for the first time, and it is likely to continue to rise.

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mobile/smart phone

India has the second largest number of smartphone users in the world, and there is a lot of scope to deepen smartphone penetration across the country.

According to a report by KPMG and the Mobile Phone and Electronics Association of India, India will have 820 million smartphone users by 2022. In the second quarter of 2021, domestic smartphone sales in India exceeded 33 million units, an increase of 82.3% in two years. The outlook for digital adoption in India is good as it is expected to add 300-400 million mobile subscribers in the next decade.

The launch of Reliance Jio in 2016 caused a ripple effect in the telecom industry, contributing to the recent growth of the Indian mobile phone market. Jio's data pricing was heavily discounted in the market at the time, which greatly accelerated data consumption in India.

Jio's launch was an immediate success, claiming a world-record 16 million subscribers in its first month - September 2016 - by promising a year of free high-speed internet. Jio's market moves catalyzed an era of cheap data prices in India, as rivals were forced to slash rates in order to compete. Increased consumer demand for affordable high-speed data has seen Jio's subscriber base quadruple in 4 years.

As a result, data consumption in India has grown from an average of 400MB per user per month on Jio data plans before to 11GB later. Today, the global average price per 1GB of data is $5.09. In India, 1GB of data costs $0.09.

The ubiquity of smartphones and cheap data plans presents a golden opportunity for businesses to capitalize on the massive user base that is just starting to enter the digital economy. Netflix has capitalized on this unique market environment by offering Indians a mobile-only plan for the first time in the company's history.

Homegrown cryptocurrency companies in India have also taken advantage of this opportunity. CoinSwitch Kuber, a Bengaluru-based global cryptocurrency exchange aggregator and trading platform, has executed a mobile-first strategy, with all its traffic now coming from mobile devices.

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APIs：India Stack

Organizations developing digital applications can benefit from a comprehensive, well-supported technology stack. For India's government, corporates, start-ups and independent developers, a novel, shared technology stack - IndiaStack - has been developed to meet the unprecedented challenge of moving more than 1 billion citizens into the digital age within a generation.

The exponential growth of Internet and mobile users in India has driven the rapid adoption of IndiaStack. Due to the accelerated growth of digital consumers, digital marketplaces such as online banking and e-commerce have increased in size and activity.

IndiaStack provides an open source API suite that provides a common platform for private and public sector software development across India. Specifically, by creating a standardized framework for compliant and collaborative development, IndiaStack's suite of open APIs serves as critical infrastructure to accelerate the digital connectivity of over a billion Indians.

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Identity and Authentication

IndiaStack democratizes access to digital identities by connecting biometric digital identities issued by India's unique Identification Authority (known as Aadhaar) with Indian residents after the verification process. Aadhaar is used as a recognition tool and a facilitator of authentication. This unique ID provides people with a digital identity that enables them to provide proof of identity anytime, anywhere without having to carry any physical documents.

Unlike driving licenses or voter registration cards, Aadhaar cards were not created with any specific purpose in mind. Instead, it's a generally accepted government-issued card that can be used for a variety of purposes.

Banks and financial institutions accept Aadhar as a valid source for KYC and authentication documents such as proof of address or national identity card. Indians also use Aadhar to get government services and benefits like distributions from pension funds.

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Payment - UPI

Unified Payments Interface (UPI) is a system that can aggregate multiple bank accounts (of participating banks) into one mobile app, allowing users to access multiple banking and payment functions under one hood.

As in many other countries, Covid-19 has forced many Indian consumers to go online, accelerating the use of cashless payments. During this period, UPI payments surpassed all other payment methods to become the dominant payment mechanism, reaching Rs 7.3 billion ($9.9 billion) by 2021.

The growth of UPI coincides with the massive rise of e-tailing (B2C), which is enough to explain its value.

UPI has ushered in a revolution in online payments and mobile banking in the Indian market. It’s worth noting that while many digital payment platforms are dominated by middle- and upper-class users in most countries, UPI’s high penetration growth has been driven by previously unbanked individuals, and even roadside kirana shops (small Stores, usually with just one street or block of regular customers) also accept digital payments.

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CBDCs in India

In 2017, a high-level inter-ministerial committee recommended the introduction of a Central Bank of India Digital Currency (CBDC).

In July 2021, the Reserve Bank of India (RBI) held a webinar to discuss the benefits and risks of CDBC and draw conclusions. “The introduction of a CBDC has the potential to bring significant benefits, such as reduced reliance on cash, higher taxes due to lower transaction costs, and reduced settlement risk. The introduction of a CBDC may provide a more robust, efficient, trusted, regulated and fiat-based Currency payment options."

In her budget speech for 2022-2023, Finance Minister Nirmala Sitharaman announced that India will have its own official digital currency within the next year or two, and went on to mention that the introduction of CBDC will greatly boost India’s digital economy. A digital rupee could mirror the current functionality of e-wallets run by private companies while becoming an official sovereign-backed currency.

what does it all mean

In recent years, IndiaStack has continued to develop and develop more functions, forming a suite whose value is greater than the sum of its parts. The digital infrastructure base India has built has greatly improved financial inclusion indicators.

According to a report by the Bank for International Settlements"image description"

Source: Bank for International Settlements

IndiaStack has also had a positive impact on the private sector. APIs and digitization have greatly increased the output and innovation of Indian software companies. IndiaStack's vast ecosystem has significantly lowered the barriers to entry for various digital industry subsets. Beneficiaries include existing financial intermediaries, as well as established software companies and new fintech startups. Fintech startups emerged as major players such as Paytm, BharatPe, PayNearby and Setu.

Setu is a software startup whose founders hail from India Stack. The company provides a set of plug-and-play APIs for financial products, providing developers with a sandbox in which to test their applications. International players are also jumping at the opportunity, such as Walmart, which now owns PhonePe, the market leader in UPI transactions, through its acquisition of Indian e-commerce giant Flipkart.

India has benefited greatly from the synergies and economic opportunities created by its technological development. In fact, there is an argument that, given IndiaStack's interconnected"pipeline"India's recent leaps in financial inclusion and digitization have outpaced even developed countries, which, while possessing advanced banking and technology infrastructure, are often institutionally siled and lack cohesive industry-level integration.

At present, although IndiaStack does not directly integrate cryptocurrencies and does not have DeFi technology, we believe that it can be incorporated into digital payments to improve KYC capabilities.

In the words of Balaji Srinivasan,"Making new forms of debt and equity financing accessible to everyone in India, connecting them to global pools of crypto capital. Doing so will help fill a financing gap of more than $250 billion for micro, small and medium-sized enterprises, give start-ups access to the burgeoning Internet of Finance, and allow remote workers and remitters to pay quickly.

Source: https://balajis.com/add-crypto-to-indiastack/

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The Awakening of Web3 in India

Recently, Chainalysis estimated that India has the second-highest cryptocurrency adoption rate in the world when adjusted for per capita purchasing power parity and internet usage population, based on considerable transaction volumes on peer-to-peer platforms.

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More than 15 million retail crypto investors are Indian

1) According to CoinSwitch data, as of August 2021, the average age of cryptocurrency investors in India is 24 years old. In addition, more than 65% of users will choose cryptocurrencies as their first choice for investment in addition to traditional bank fixed deposits.

2) In 2021, the account registration of users in second- and third-tier cities has boosted the user base growth of many CEX companies by more than 2,000%.

The participation rate of Web3 in India is still only 7.5%, however, like NFTs, gaming are mainstream catalysts, coupled with favorable regulations, these are promising signals for the growth of Web3 awareness share in India.

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Bollywood's breakthrough NFTs

Over the past few months, quite a few Indian celebrities have stopped collecting official NFTs. Amitabh Bachchan, a well-known NFT fan, auctioned his first collection in November 2021, and Salman Khan also announced in October that he would cooperate with the NFT market Bollycoin.

Startup WazirX launched its NFT platform in April 2021, selecting 15 creators from 15,000 applications received. So far, there are about 1,000 artists and 400 collectors, and there are nearly 20,000 artists on the queue list.

From July to October 2021, WazirX's native NFT platform recorded sales worth over $400,000, and is expected to reach seven-figure revenue in 2021.

In sports, Faze Technologies has signed a partnership agreement with the International Cricket Council (ICC) to create exclusive digital collectibles (using NFTs) for cricket through FanCraze.

Cricket Foundation (the first cryptocurrency ecosystem dedicated to the sport), co-founded by former cricketers Parthiv Patel and Pruthvi Rao. The foundation launched an NFT marketplace for cricket in October 2021: CricketCrazy.

The NFT craze has revolutionized sports, Bollywood, and other creative industries, democratizing the exhibition process by offering sports personalities, celebrities, and creators the opportunity to offer collectibles and artwork directly to independent collectors.

Many Indian artists have shown different content and styles on Foundation, Opensea, Rarible, Kalamint and other NFT platforms.

In addition, various NFT events were held in 2021, the most important being NFT Kochi on December 18, 2021 in the coastal city of Kochi, the commercial capital of Kerala, India.

secondary titlehttps://twitter.com/SinoGlobalCap/status/1473319708963536896.

India's gaming industry

According to a report by accounting firm KPMG, the number of online gamers in India has grown from about 250 million in 2018 to about 400 million by mid-2020, and the value of the industry is expected to triple to $3.9 billion by 2025 .

More than 50% of India's population is under the age of 25, and players in this age group account for 60% of the country's gamers (https://www.investindia.gov.in/team-india-blogs/rise-indian-gaming-industry-tekken-ludo-king）。

1) Currently mobile gaming is dominating the Indian gaming industry. The current total market value of the Indian game industry is 1.6 billion US dollars, and mobile games account for more than 90% of the market share. It is expected that the total market value will rise to 3.9 billion US dollars in 2025.

2) Axie Infinity's "Scholarship" has been extended to the whole of India and there are almost 350 verified "students" on the Axie India discord server. In fact, Axie has indeed been a game-changer for many Indians, and it has positively impacted the lives of many players during Covid-19.

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fantasy sports

According to Ficci-EY's "Playing by new rules" report, fantasy sports in India grew 24% in 2020 despite the absence of major sporting events due to COVID-19 restrictions.

The increase mainly came against the backdrop of the 13th season of IPL (Indian Premier League) cricket taking place in the last quarter of 2020, much to the delight of fans. The fantasy sports user base is currently at 100 million and is expected to reach 150 million by the next IPL.

A key factor behind the recent growth in transaction-based games (those that involve payments as opposed to monetized advertising or certain in-app purchases) has been the growth of India's digital payments ecosystem.

Fantasy sports are both popular and controversial in India. In August 2021, India's Supreme Court rejected an appeal against the Rajasthan High Court's judgment, ruling that the popular online cricket betting fantasy game "Dream 11" is a game of skill and not gambling. The ruling helped raise awareness of the legality of fantasy sports, encouraging more sports fans to join in.

According to the ruling by the Supreme Court of India, games of chance, in which the outcome of the game is heavily influenced by random outcomes, are considered illegal, while games of skill, in which the outcome is mainly determined by the mental skills of the players, are mostly considered legal.

The ruling clarified the characterization, brought more clarity to the fantasy sports industry, and fueled rapid growth in the industry's market. According to an analysis by Ficci-EY, the Indian fantasy sports industry is expected to reach $2.5 billion by 2022.

According to the recent Business of Fantasy Sports report jointly released by the Federation of Indian Fantasy Sports (FIFS) and KPMG, the total revenue of fantasy sports operators in fiscal year 2020 was about 2.4 billion rupees (US$340.47 million). ), which was about 9.2 billion rupees (131.64 million U.S. dollars) in fiscal year 2019, an increase of about 3 times year-on-year.

This has opened the floodgates in India where multiple platforms like MPL, Zapak and Criplay are gaining users on a massive scale. With the support of current and former players of the Indian national cricket team, more blockchain-related fantasy platforms are being built and supported.

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Crypto Workshop - Desi Developers and the Democratization of Talent

India's economic development is increasingly linked to the country's technological output, primarily in the software and engineering industries. With an army of 5.8 million developers, according to GitHub estimates, the second largest in the world, India has a reputation for cheap and quality software production.

According to a report by UNESCO, India produces about 2.7 million STEM (science, technology, engineering and mathematics) graduates every year, almost four times that of the United States (about 700,000).

Although Unesco does not release data for China, the World Economic Forum said in 2016 that China actually produced 4.7 million STEM graduates a year, which would exceed the 2018 figure India had reported earlier, by a wide margin. However, according to the (US) National Science Foundation, China's classification of engineering and science fields is quite broad, resulting in a lack of comparability in its data. According to US government agency statistics in 2014, China has about 1.6 million science and engineering graduates (per year).

Notably, students at most of the most prestigious schools in the US (i.e. the Ivy League) have fewer students in STEM majors, especially computer science majors. And India's most prestigious institutions, especially IITs and IIMs, are largely STEM-focused, characterized by notoriously cut-throat competition, rigorous curricula, and extremely difficult entrance exams. These high standards foster an environment of excellence and create an ideal recruiting base for technology-based startups.

Indians have had a substantial impact on leadership and innovation in Silicon Valley.

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Source: 2021 Silicon Valley Software Engineering Talent Report

Web3 caters to the abundance of Gen Z talent in India by offering a wealth of opportunities. The democratization of talent and the global scale of blockchain development has normalized agreements with elite global developer teams, attracting many ambitious Indian students.

Top programs like Bangalore IIIT, Hyderabad IIIT, Kerala IIITM, etc. already offer comprehensive courses on blockchain architecture and Web3 protocol design. Students and faculty at these institutions tend to have high basic technical skills, which provides them with a good foundation for transitioning to Web3 development.

The high standards and rigorous curriculum of IITs are considered world-class both in India and abroad, which makes these institutions the preferred places for companies to recruit young talents. Bright young students who are considering their own careers are bound to find the prospect of a highly utilitarian and unrivaled earning potential in the Web3 industry.

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India's unicorns

1) According to Observer Research Foundation, there are more than 350 blockchain startups operating in India.

2) India's traditional startup ecosystem will produce an average of three unicorns per month in 2021, bringing the national total to a record 81.

3) According to the report of Hurun India, India has become an ideal habitat for unicorns, and its global ranking has risen to the third place.

4) India's first Web3 unicorn is CoinDC (https://qz.com/india/2046046/how-coindcx-became-indias-first-cryptocurrency-unicorn/), which will be released in 2021. CoinDCX, a cryptocurrency exchange and the first blockchain company in India to break the 10-figure mark, is focused on onboarding consumers at scale and smartly executing a retail-centric business model – which is reflected in on its $1.1 billion valuation.

5) This impressive growth has been backed by over $630 million in investments specifically targeting Indian blockchain companies.

6) According to NASSCOM data, the amount of institutional investment has also grown to more than 25 million US dollars, and dozens of banks, asset management companies, and insurance companies participated in the early fundraising of Web3.

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Polygon: Desi Crypto's masterpiece

The predecessor of Polygon is Matic. Matic is a workhorse in Ethereum scaling, founded in 2017 by Jaynti Kanani, Sandeep Nailwal, Anurag Arjun, and Serbian programmer and entrepreneur Mihailo Bjelic. As India's flagship Web3 ecosystem, Polygon's legacy cannot be underestimated.

In January 2021, India's Ministry of Electronics and Information Technology released a draft national strategy for blockchain products in India. The report predicts that at least one business created using blockchain technology globally will be worth $10 billion by 2022, but India’s own Polygon crossed the $10 billion valuation mark in mid-2021 alone.

Polygon is also taking a huge risk in building a standalone L1 ecosystem, as its team operates almost entirely in India's uncertain regulatory environment. On the organizational front, Polygon aims to differentiate itself from other companies by actively assisting projects within the Matic ecosystem to grow, kick-start the broader Indian Web3 momentum.

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Polygon's Empire: Expanding Beyond L1

business development:Mergers and acquisitions:

Mergers and acquisitions:Polygon's acquisition of Hermez Network in 2021 solidifies Polygon's ambition to implement a comprehensive on-chain solution for all Ethereum scaling technologies. Shortly after, it announced Polygon Miden, an EVM-compatible convolution powered by zk-STARKs. To date, Polygon has spent more than $1 billion on the development of zero-knowledge technology.

Partnerships:secondary title

Polygon studio

Polygon Studio is a targeted initiative to provide contributors to the development of Polygon's game vitality and NFT ecosystem. Polygon's initiative supports and provides infrastructure for blockchain game builders, as well as grants to attract artists and investors to its NFT ecosystem.

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Regulatory Environment - Timeline

Before we talk about the regulatory environment, it is important to note that cryptocurrencies have never been banned by law in India, nor has it been illegal to hold cryptocurrencies at any time.

2013–2017: The Phantom Threat

Indian law initially recognized the existence of cryptocurrencies through a circular issued by the Reserve Bank of India. The notices informed “users, holders and traders” of the dangers that cryptocurrency difficulties have posed to them. Other than that, not much activity.

2018: RBI strikes back

Following the initial circular, the Reserve Bank of India issued a statement on April 5, 2018 ordering all its regulated entities (banks, non-bank financial companies and payment system service providers) to cease dealing in virtual currencies and cease offering Services for such transactions or settlements.

In addition, any regulated entity currently providing such services must cease these activities within three months of the date of the notice. In 2018, a writ petition was filed against RBI notification.

2020: A New Hope

On March 4, 2020, the Supreme Court of India ruled in favor of the permissionless Web3 ecosystem in Internet and Mobile Association of India v. Reserve Bank of India. The verdict is an important predictor of public sector recognition of the strategic and economic value of cryptocurrencies.

2020 also saw the launch of Blockchain: The India Strategy, the first of a two-part draft strategy document.

According to the strategy document, blockchain technology can be used to improve business and governance processes. The strategy document recognizes cryptocurrencies as a unique asset class that can represent network ownership (such as shares in a company) and serve as a fundamental unit of value exchange.

2021: The Rise of Regulation

In January 2021, India’s Ministry of Electronics and Information Technology released the continuation of the National Strategy on Blockchain document, more than a year after the release of the first strategy document. The ambiguity of tokens, lack of know-your-customer (KYC) norms, failure to incorporate digital signature frameworks, and lack of adequate data protection provisions have all been highlighted as regulatory loopholes in legacy systems.

The strategy continuation lists a range of potential blockchain applications in the national interest, including logistics, supply chain management, identity management, e-voting, IoT device management and security, microfinance for self-help groups (SHGs), and more.

In early January, the Reserve Bank of India released a book entitled Payments and Settlement Systems in India, Journey in the Second Decade of the Millennium 2010-2020, Journey in the Second Decade of the Millennium 2010–2020) booklet.

The pamphlet defines a CBDC as “a digital form of fiat currency denominated in a sovereign currency and central bank liability that appears on the central bank’s balance sheet. It is in the form of electronic money that can be exchanged with similar denominations of cash and traditional central bank deposits for exchange or exchange”.

The Ministry of Corporate Affairs of India issued a notification dated 24 March 2021 amending the Third Schedule to the Companies Act, 2013. Schedule Three sets out how a business must generate an income statement and balance sheet to file with the government. The updated Schedule III requires Indian companies to report the following information:

1. Profits or losses involving cryptocurrency transactions;

2. The amount of currency held at the reporting date;

3. Deposits or advances provided by anyone for trading or investing in cryptocurrencies.

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The Current State of Regulation: A Prudent Approach

in conclusion

https://twitter.com/SinoGlobalCap/status/1488818279036694528。

in conclusion

India is full of opportunities and it is only a matter of time before India becomes a major international center for blockchain development.

India's domestic digitally embracing consumer base, digital infrastructure, strong skilled workforce, support for cryptocurrencies at the local and state levels, and cheap data rates will help it take hold in the cryptocurrency space, as it has demonstrated since the 1990s. Levels of growth and innovation unprecedented since the late 1990s and the rise of the Internet.

India's market is open by providing enough incentives to businesses and companies to expand their business. Driven by its innovation, quality and talent, Indian cryptocurrency startups and businesses are generating massive waves of funding and investments, adding value to the cryptocurrency ecosystem every year.

As the decade progresses, Indian startups will be a major source of development and volatility in the cryptocurrency space. In some cases, their brilliance would overshadow some of the current overlords. With these factors and the changing attitude of the Indian government towards the crypto industry, China Global Capital (Sino Global Capital) is very bullish on cryptocurrencies in India.