Trading platforms have always been active for equities, debts, commodities, and even contracts like forwards and swaps. But did you imagine having an open and legal platform to trade Cryptocurrency which has always been traded in the shadow of VPN in India? CoinDCX has made this dream of crypto enthusiasts come true.
Cryptocurrency is a digital asset that is designed as a medium of exchange. There is basically no paper money or a physical form of the coin and it is typically not issued by a central authority. While people in India are still educating themselves about this new digital currency, Neeraj Khandelwal and Sumit Gupta build a life for themselves by launching and creating CoinDCX, India’s largest cryptocurrency exchange platform today. The crypto exchange platform aims to become a global getaway for cryptocurrencies by offering various financial products and services that are backed by industry-leading security processes and insurance protection. Keep reading to know more about how CoinDCX is changing the way people perceive crypto!
Bitcoin was all over the Indian news since early 2017. The entire trading ecosystem was extensively trading in other securities but this was the time when Bitcoin became the new fad for the young traders. Complimenting the ongoing trends and Sumit’s extensive interest in the field, he decided to take up Crypto to ideate for his new startup. The first concept that Sumit learned was around “distributed ledger technology”. This led them to the very idea of CoinDCX that has brought all the cryptos on one platform. The initial idea, however, was to put together multiple decentralized trading marketplaces and cryptocurrencies, and create a marketplace which uses cryptocurrency as the medium of exchange.
With Neeraj Khandelwal, he focused on bridging the market gap between the new emerging blockchain-driven technology and its consumers. During the market research, they observed that the traders of cryptocurrencies didn’t have a single trading network thus, even though they could track thousands of crypto trades every second. In April 2018, the IIT-Bombay duo launched CoinDCX.
Background- The Dynamic Duo
Sumit Gupta (Co-founder CoinDCX), a young boy from Kota landed at IIT Bombay to pursue his dreams. During his stay at IIT, he happened to come across a class for cryptocurrency. This is when he discovered his undeniable interest in cryptocurrency which turned into CoinDCX later.
Let’s see how.
He got placed at Sony Japan and had to leave India. But after gaining significant expertise and knowledge about how corporations worked, he decided to come back to India to start something of his own. After moving back to India, Sumit started his own startup pursuing his long-awaited urge to pursue entrepreneurship. But unfortunately had to shut it down. During these difficult times, Neeraj (Co-founder CoinDCX) became his backbone and stood by him and pushed him to learn from others and grow. And as they reconnected, their shared passion for crypto gave rise to the idea of CoinDCX which they successfully launched in April of 2018 from Neeraj’s flat in Bombay. They had savings that would sustain them for 3 months, so they started recruiting people at low pay. Since this was a niche market, the journey was set to be rocky and difficult, but the two friends were determined to chase their passion and dream and started the company after borrowing money from their families. Initially bootstrapped, CoinDCX has now raised 3 rounds of funding and evolved into this massive venture and now there is no looking back hereafter.
How does CoinDCX work?
CoinDCX aims to allow people to exchange and invest in cryptocurrency easily and conveniently. As stated in their mission statement, they aim to enable global financial inclusion of people around the world with a crypto-based financial service and decentralize financial services accessible to the common people. They plan to achieve this by providing a platform that ensures a smooth and continuous flow of resources internationally. They offer quick, reliable, and effortless experience to their users along with a variety of industry-first services which attracts potential customers and enables them to trade with exchange liquidity easily.
The products offered include DCXInsta, its fiat-to-crypto product, allowing users to buy and sell cryptocurrencies with INR instantly; DCXtrade, a spot trading product providing access to over 500 markets; DCXMargin, a margin trading product that provides 6x leverage on over 200 crypto coins; as well as DCXFutures, its futures trading product with up to 15x leverage, near-negligible maker and taker fees.
Their Business Model
The business model of CoinDCX is designed to provide a one-stop to trade all cryptocurrency instruments available in about 500 markets. Any transaction or exchange on CoinDCX incurs a transaction fee. These fees include deposit fees (charged on exchanging currencies), withdrawal fees, trading commissions (0.01%), and listing fees and are responsible for the earnings of CoinDCX.
Their integrated services allow the users to convert INR to Cryptos and vice-versa with DCXinsta, earn by lending their holdings with DCXlend, and leverage trades with DCXmargin. Their integrated liquidity aggregation model is patented and serves as a unique selling point and allows users access to liquidity from the world’s leading cryptocurrency exchanges. This has contributed to its success and growth largely, however, the market for cryptocurrency is growing every day and it poses new competitive challenges for CoinDCX.
Competitive Challenges Faced by CoinDCX
As the fad of cryptocurrency and its awareness increases in India, the market is starting to become more and more competitive every day. The market is continuously growing and evolving and is one of the new favorites of the startup ecosystem, hence, CoinDCX faces strong competition from companies like Coinbase, UPHOLD, Binance, Poloniex, LocalBitcoins, Bittrex, etc. who provide similar services of cryptocurrency exchanges like it. However, CoinDCX has adopted various strategies and products to create differentiation and unique selling point to build a brand name and awareness in the minds of people including its users and non-users to gain a competitive advantage.
The Selling Point
One of the important aspects that attract people to CoinDCX is their charges. The crypto exchange platform charges a low fee of 0.1 percent takers and makers fee. Moreover, the platform has services like DCXmargin, DCXfutures and DCXstake which are not available in most Indian crypto apps, making them stand out to the potential users along with having about 200 cryptos listed on the exchange. The crypto exchange platform continues to grow and evolve while hustling through the rules and regulations for cryptocurrency in India. They continue to adopt new strategies and develop new products to achieve their aims and help stimulate crypto adoption by people in India.
CoinDCX has adopted several unique strategies to capture its target audience (mainly the millennials and Gen-Zs) and raise awareness about cryptocurrencies in India. These strategies to capture their target markets are broken down as follows:
Create a Safe Environment for Trading:
This strategy is focused on influencing the existing pliers in the trading market but are hesitant to enter crypto trading. The focus of the startup is on the mass adoption of crypto trading in India along with increasing access to global liquidity in India. Hence, creating a safe environment for both the traders and investors in the general trading arena leading to mass adoption of crypto trading.
The next strategies are focused on instilling the pre-required information, tips, and tactics to trade. The main aim is to promote the education of blockchain-driven technology and multiple cryptocurrencies with varied features. Awareness is key as there are many myths and misconceptions that exist in the ecosystem despite support from the government and the industry at large.
Social Media Marketing:
Their main target audience is millennials and Gen Zs. They launched a digital campaign called “#BitcoinLiyaKya” on various social media platforms to raise awareness and introduce cryptocurrencies like Bitcoin through a humorous story-telling approach as the latest necessary investment. This will help in reaching and attracting the target market of millennials and Gen-Zs and also older generations that may be hesitant to invest in cryptocurrency. The campaign is currently live on YouTube, Facebook, LinkedIn, Instagram, and Twitter. They are even using influencers to reach out to larger audiences.
The Umbrella Strategy:
Umbrella strategy usually means that a startup is providing various products under a big umbrella so, to attract customers, they have launched various products under the umbrella of crypto trading like margin trading, future contract, fiat-to-crypto conversions, etc to make transactions and investment easier and faster. This will help in attracting customers and increasing the adoption of cryptocurrencies in India which is their ultimate goal.
Risk mitigation through Strategic Alliance
CoinDCX announced in May 2021 that they are partnering with leading blockchain provider Coinfirm to incorporate their AML platform to ensure the strengthening of the crypto economy and trading. This will ensure that CoinDCX is in compliance with the Financial Action Task Force’s Recommendations, other international and national regulations, whilst countering cybercrime focal points such as darknet marketplaces. This will help in enhancing their security infrastructure and eliminating security concerns among their investors.
With this partnership, CoinDCX makes its way through the hurdles of bans, rules, and regulations that are set by the authorities both nationally and internationally.
The Tussle with RBI over Crypto
CoinDCX was just getting started when the Reserve Bank of India put a ban on banks to stop trading with crypto companies. This resulted in them losing their investors and they had to completely change their strategy to survive. They worked hard every day to keep the business from falling apart and managed to get an office. But after the ban was reversed, their investors came back and things started to look up for the crypto company. Even today, the crypto market and companies like CoinDCX in India continue to struggle as new problems are posted every day due to rules and regulations established by the RBI. But the company has successfully managed to survive and emerged successfully over the course of its operation.
The Sweet Success- Revenue & Growth
Despite the RBI bans and rules and regulations, after 3 years of struggle to survive and grow, CoinDCX is India’s largest and safest platform to exchange and trade digital currency today. While the pandemic posed various problems and hindered the development of various startups, CoinDCX grew with their team tripling from 30 to 90 last year in 2020 and they continue to recruit and hire employees to build their team. Hence, the startup continues to grow and the two friends continue to chase their dreams. As reported the trading volume hit about $0.5 billion per month from April 2020, crossing $1 billion in January 2021 and $1.5 billion in April 2021.
Their funding stands at about $19.4 million presently with approximately $13.9 million raised in the latest funding round with investments from various companies like DG, Jump Capital, Uncorrelated Ventures, Coinbase Ventures, Polychain Capital, Mehta Ventures, and Alex Pack. The company had raised $3 million in March 2020 backed by Polychain Capital, Bain Ventures, and Bitmex. In May 2020 they raised $2.5 million from various companies including Coinbase Ventures, the investment arm of San Francisco-based cryptocurrency trading platform, Coinbase.
Future Plans of the Cryptocurrency Platforms
The cryptocurrency exchange platform aims to use its funding to develop cutting-edge innovative products and services to drive and increase crypto adoption in India. The funds raised will help to develop a Bitcoin and Crypto Investment app, making it easier and safer for users to trade cryptocurrencies. The company aims to get about 50 million Indians into the crypto market and has even launched campaigns like “#BitcoinLiyaKya” as explained above to achieve their goals.