As per the news reports, the Indian Government May Take Strict Action Against Bitcoin Trading in India. How it can impact the cryptocurrency ecosystem. After China and India, the other countries may take similar action as it will be easy for them?
Although India is a huge potential market for Bitcoin, at the current time not a lot of Bitcoin trading is conducted there compared to the global average. For example, total global volume on LocalBitcoins for the week ending October 28th was 9316 BTC traded. The total in India over this same week was 109.
You can check these stats out for yourself at:
Of course, these numbers are just an indication. It may be that a lot more trading is conducted on the centralized Indian exchanges, such as UnoCoin and ZebPay. My guess is that total Indian volume represents 1% or less of global Bitcoin trade at this time.
Given the above, I believe that if India were to ban Bitcoin trading, it would have little effect on Bitcoin itself. Of course, it would have a major effect on Indian Bitcoin traders and exchanges, so let’s hope this doesn’t happen! I also doubt whether any such ban would do anything besides stifle the development of the crypto-financial sector in India and create a blackmarket for bitcoins, greatly raising their price due to the increased legal risks involved in trading them.
Other countries may indeed ban bitcoin but, as others such as Japan (and I believe Australia), have legalised Bitcoin, the result will be to drive innovation to Bitcoin-friendly countries. While governments can make it very difficult for regular citizens to use Bitcoin, the long-term effect of this may be to lose future economic competitiveness to nations which allow Bitcoin.