Tumkur-based Bitcoin service provider Unocoin, whose offerings include trading, merchant processing and storage of the digital currency, has raised $250,000 (Rs 1.52 crore) in funding from SecondMarket founder Barry Silbert's Bitcoin Opportunity Corp. According to the company, this is the largest investment in India's Bitcoin space to date.
The funds will be invested in scaling up Unocoin and its marketing efforts, as well as for regulatory compliance and security expenditures.
"This is Bitcoin Opportunity Corp's first investment in India's fast growing Bitcoin ecosystem. As Bitcoin awareness and adoption in the country continues to accelerate, I'm confident that the Unocoin team will be successful in building one of the largest, most important Bitcoin companies in India," said Silbert.
Bitcoin Opportunity Corp has invested in over thirty digital currency companies including BitPay, CoinBase, Circle, Xapo, BitPagos, BitPesa and Volabit, apart from Unocoin.
Unocoin claims that it enables users to buy Bitcoin by paying Indian currency from any online bank or through NEFT/RTGS easily. Those who sell the digital currency will receive the value in Indian rupees to their bank accounts. The service can be used on any desktop, laptop, tablet or mobile phone by logging in through any browser.
The startup was founded by the duo of Sathvik Vishwanath (managing director) and Vikram Nikkam (head - global business development) in December 2013. While the company was in trial mode for the first few months, it went into full production in February this year.
For those who don't already know, Bitcoin is a digital currency and payment network which uses open-source and peer-to-peer technology to operate with no central authority or banks. Management of the transactions and the issuing of Bitcoins are carried out collectively by the network.
"Unocoin is dedicated to bringing the advantages of Bitcoin and its technology to India to enable people to seamlessly transfer monetary value at minimal cost. A good part of the investment will be spent on scaling up Unocoin and its marketing efforts, while another part will be used towards regulatory compliance and security expenditures." said Vishwanath.
"We are also focused on helping small and medium businesses, freelancers and merchants accept Bitcoin for their products and services. To be able to successfully accomplish this in a country of 1.2 billion people, we need the support of the best in business," added Nikkam.
One of the many socio-economic challenges that India faces is reaching the unbanked demographic which accounts for 40 per cent of the country's urban population and 61 per cent of the rural population. According to the company, Bitcoin technology has the potential to provide sustainable solutions and smarter financial options to all sectors.
In December last year, the Reserve Bank of India (RBI) had cautioned the users, holders and traders of virtual currencies (including Bitcoins), about the potential financial, operational, legal, customer protection and security related risks. Within a month of that, some Bitcoin traders who had suspended operations had resumed operations on a trial basis. These included companies like BitQuick and Unocoin.
However, RBI governor Raghuram Rajan expressed concerns over the regulation of Bitcoin, mentioning that the virtual nature of the currency raises questions about how its value would be governed. While declining to share details of RBI's future course of action on Bitcoin, Rajan said investors and users should exercise caution before using Bitcoin as a consistent means of exchange.
(Edited by Joby Puthuparampil Johnson)