The inevitability of crypto in Iraq

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Cryptocurrency was born out of a financial crisis. It was a proposal for a solution to the problems caused by and inherent in the global banking system as well as in centralized authorities.

Satoshi Nakamoto’s vision, as laid out in the Bitcoin white paper, was in some ways too good to be true at the time. The idea of ​​a decentralized peer-to-peer digital currency was so obscure that without an elite of geeks who knew the real value of this technology, it would have been rejected. Early adoption has remained slow until more people realize the promises of crypto and its underlying blockchain technology.

Abdurrahman Bapir is the founder of Kurdcoin, the first and largest crypto broker in Iraq. He is a Masters student in Middle Eastern Politics and Economics at Kings College London.

CoinDesk’s Crypto State: Middle East virtual event will take place on August 11.

Related: There is still time to mend the congress crypto-fiscal mess

More than a decade after the appearance of bitcoin, the adoption of cryptocurrency shows that the technology is in the early stages of the revolution in finance and the world, offering solutions to the unbanked and to the bankers. Nowhere is this more exposed than in Iraq, which has now for the first time become a bridge that connects the unbanked in Iraq to the international economy in an otherwise financially disconnected part of the world.

However, the widespread adoption of crypto in Iraq has encountered a host of hurdles that both crypto users and businesses face.

In early 2017, when my team and I had just launched Kurdcoin as the first and only cryptocurrency brokerage in Iraq and the Kurdistan region, the number of people who knew and used cryptocurrencies numbered in the tens. and by the hundreds. Since then, the country’s community has grown exponentially.

Over the past four years, we have directly provided services to thousands of customers, and there are many Iraqi Telegram and Facebook peer-to-peer business groups with thousands of members. The use cases for crypto have also increased.

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Related: Middle East Crypto Adoption Will Come From Unstable Nations

One of the main obstacles to blockchain adoption in Iraq has been the authorities’ persistent hostile attitude towards cryptocurrencies without exception. During the 2017 bull run, the Iraqi Central Bank issued a statement banning the use of cryptocurrencies – a position that has remained unchanged to this day. Likewise, earlier this year, the Interior Ministry of the Kurdistan Regional Government issued a statement warning all exchange and money transfer offices to stop trading cryptocurrencies, otherwise they will be subject to of legal proceedings.

The ban on digital currencies and the lack of a coherent regulatory framework has come at a cost both to users and to the local economy, as it has forced people to seek out crypto investment opportunities in a sort of black market without accountability or regulatory oversight.

Thousands of people have fallen victim to crypto scams, Ponzi schemes, and other forms of fraud. Tens, if not hundreds of millions of dollars of people’s money have been stolen by foreign agents or companies posing as legitimate companies that must be paid in crypto. This slowly drained liquidity from the economy and mainly from already economically struggling regions.

Less than a month ago, for example, the website of a company calling itself Praetorian Group International, or PGI, disappeared and its team fled with at least $ 40 million in investor money. . This is just the latest in a series of multi-million dollar Ponzi schemes that turn crypto dreams into nightmares.

A vicious cycle is created in which the government bans crypto because it is used for fraudulent purposes, and fraudsters manage to keep using it because it is unregulated. The only way to break this cycle is to introduce a bill to regulate digital currencies and require all crypto companies to be registered.

Another limitation in Iraq is a general lack of knowledge about cryptocurrencies and blockchain technology within government and society in general. At the government level, this ignorance has led him to view cryptocurrencies in a completely negative light and primarily as a means of money laundering, fraud and online hacking.

A Deloitte report on Iraq underscored this concern, stating that “instead of pushing cryptocurrencies to the periphery of financial systems, central banks and other regulators as well as market authorities must take a lead role. plan in their generalization “.

At a societal level, the problem of general financial and crypto illiteracy means that people make poor uninformed financial and investment decisions and are unable to use cryptocurrencies to their full potential. If ever cryptocurrency is featured in prime time on Kurdish satellite channels, hosts and attendees often show a disappointing lack of knowledge, to the point that some of them don’t know the difference between a scam. local and bitcoin.

We have tried to alleviate some of these challenges by pushing for regulation through large law firms, increasing knowledge about cryptocurrencies, and raising awareness of crypto scams and risks to create a better environment. for crypto users in the country.

Additionally, major exchanges like Binance, Crypto.com, and Coinbase do not provide services in Iraq.

Despite these obstacles, the use of cryptocurrency in the country is steadily increasing. Who can deny the potential of the largely untapped market?

The Iraqi population of over 40 million is predominantly young, over 60% of whom are under 25. There are over 37 million mobile phone subscriptions and Internet penetration is over 75%. Although e-commerce, online banking, and digital payments are still major underdeveloped sectors, many young people pay for their online purchases and subscriptions with crypto.

Likewise, the Iraqi population is largely unbanked, with less than one in 10 adults having a bank account. Many seem to have turned to crypto as an alternative both for investment and as a store of value, as it is better and safer in many ways than storing money at home. Ignoring authorities’ warnings, businesses are also starting to use cryptocurrency to transfer money both within and outside the country, and high net worth businesses and individuals are adding crypto to their wallets. investment.

Despite a number of challenges, the massive adoption of crypto in Iraq seems inevitable due to the financial opportunities, ease of use of crypto for payments, and other applications. And it happens fast.

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