Nischal Shetty has made a name for himself in India.
I'm probably one of those first-generation entrepreneurs in crypto.
In the first half of 2021 alone, his crypto business has grown more than 12x to become
the country’s largest digital currency exchange.
If you were to consider the beginning of 2020, it would be, I think, 15-18 times.
Sending his crypto token soaring.
1x to 2x growth I was expecting.
But I think it grew by 7, 8x or 10x at one point.
That was crazy.
Now he’s set his sights on making WazirX India’s first billion-dollar crypto unicorn.
So how does a coder from Mumbai do it?
WazirX is a cryptocurrency platform from India that allows users to buy, sell and trade popular
virtual coins such as Bitcoin, Ethereum, Ripple and Litecoin.
Founded in March 2018 by then 32-year-old coder Nischal Shetty, the company has capitalized
on the rising tide of retail traders investing in cryptocurrencies.
Less than two years after its launch, WazirX was acquired by Binance, the world’s largest
crypto exchange, for an estimated $5-10 million.
Then, in April 2021, the WRX crypto token temporarily reached a billion-dollar valuation.
But while Nischal is a tech entrepreneur through and through, the millennial’s foray into
cryptocurrency was initially inspired by a rebellion against big tech.
There’s always a reason why someone gets into crypto.
As a young boy growing up in Mumbai, Nischal was fascinated by computers.
He went on to study computer science in Mangalore city in the southwestern region of India.
But when he began experimenting with coding alongside his day job as a software engineer,
he quickly became frustrated with the dominance of western tech giants.
My first start-up was all about social media management.
So, if you had your Twitter account, your Instagram account, you could manage it from
a single place.
While the app, later renamed Crowdfire, took off, Nischal and his co-founders Sameer Mhatre
and Siddharth Menon, could see the landscape was changing.
By 2017, social media companies were becoming more restrictive with their APIs, or
application programming interfaces, making it harder for third-party developers to synch up their apps.
Nischal decided it was time to change tact.
Twitter, Instagram, Facebook, they started monetizing.
And they decided to change the rules of their development ecosystem and that affected my
start-up because you had to cut down quite a few features that were creating revenues
for us but that was not seen as the right features by these networks.
And this is what led me to the whole decentralized ecosystem.
Because if you look at crypto and blockchain, as a developer when you build something,
no-one’s going to come and tell you you cannot do something.
It’s a decentralized ecosystem, there’s no owner behind it.
The timing coincided with a boon in cryptocurrencies, in particular bitcoin.
So, in 2018, he created WazirX as a platform to make digital currency trading more accessible.
I tried to buy bitcoin myself in India and I realized there was a large gap in the way
international exchanges operated versus the way Indian exchanges operated.
It took me about a week to buy my first bitcoin in 2017, and by the time I bought that,
the price had already shot up. And that was frustrating.
And I realized that while I could build a blockchain project, someone has to first solve
the problem of onboarding people onto the decentralized ecosystem.
The crypto exchanges are the gateway or the ramps.
And, with that, we decided we should build an exchange focused on the Indian ecosystem.
Where other platforms faltered under a ban by the Reserve Bank of India on crypto-related
payments, WazirX quickly pivoted, acting as a third-party custodian between buyers and sellers.
That savvy shift paid off and the following year, in November 2019, the company was acquired
by Binance, the world’s largest crypto exchange, as it made its first foray into the Indian market.
While it started as an investment discussion, we soon realized that our goals aligned.
Binance is that one company which has grown really fast in a very short period of time,
despite all the regulatory uncertainties globally.
So apart from money, what I saw was how do you learn how to hyperscale, especially in crypto.
That was the biggest highlight that led this discussion from financing to acquisition.
Today, WazirX claims its registered users have quadrupled in the 2nd quarter of 2021
to hit 6.5 million users while trading volume in June reached $6.2 billion.
This explosive growth comes as retail and institutional investors piled in.
We’ve signed up more users in the last four, five months than we have in the last three years.
That’s been how rapid the growth has been.
Cryptocurrencies have recorded a meteoric rise over the past year, capping out
at a total market capitalization of over $2.5 trillion in May.
In India, it is predominantly led by the retail investors, and it contributes to
close to 5 to 6 percent of overall market capitalization.
That’s Ganesh Vasudevan, research director at IDC Financial Insights.
He explained more.
There is a novelty and a fad associated with it, and that is quite tempting for investors.
There is a convenience involved in it.
The exchange platforms which have come out with the applications seem to be extremely
convenient and super-efficient.
Nevertheless, the industry has been facing increasing pressure internationally as authorities
weigh concerns that it could be aiding tax evasion and criminal activity.
In June, WazirX owner Binance was banned from undertaking any regulated activity in the
U.K. in the latest sign of a growing crackdown on the global cryptocurrency market.
They're indecisive how to treat this asset, whether it is a currency or a commodity or
any other asset category.
WazirX, for its part, has been caught in the midst of a continuing crypto debate among
Indian authorities, leading Nischal to team up with other exchanges to jointly engage
the country's top financial decision makers.
Where is regulation headed, only time will tell us.
But the good thing is India usually follows what most of the large economies globally
follow.
And when we look at the U.S., the EU region, the kind of direction they’re taking, which
is one of regulation rather than a ban, I think that makes us more hopeful that India
will follow a similar approach.
Especially with the pandemic and the lockdown that has happened here, I think it’s going
to take some time.
But it’s definitely going to regulation rather than a complete ban or a negative atmosphere
for the product here.
All this as the environmental impact of cryptocurrency mining comes under renewed scrutiny.
It is estimated that the mining of bitcoin alone consumes more than 60 terawatt-hours
of electricity per year, more than the annual consumption of electricity in countries such
as Switzerland and Singapore.
Once the focus is brought into the efficiency or the climate impact, there are going to
be efforts to optimize that space.
Still, Nischal says there’s plenty of scope for the industry to empower people in countries
like his own.
In June, WazirX became South Asia’s first marketplace for non-fungible tokens (NFTs)
in a bid to help creators across India trade digital assets such as artwork and music.
If you look at the history of India, one of the largest reasons for our rapid economic
progress has been software.
Now, if you look at crypto, crypto is an extension of that whole software ecosystem, so India
completely understands that we cannot miss this opportunity.
Today, you have investors coming in, you have VC funds, you have start-ups being created,
I think all of this is adding to a very positive outlook.
With all that at play, the future path for WazirX, and crypto more broadly, is set to be bumpy.
But after the ups and downs Nischal has weathered over recent years, he says he’s ready for an exciting ride.
Our mission has been to make crypto accessible to everyone in India, and I think we are still
very early in that.
We’ve reached six-and-a-half million users, the industry has about 15 million people.
But I believe India has the potential to get 100 million people into crypto and our journey
has just started.