[ad_1]
Did the recent #cryptocrash pivot bitcoin and other cryptocurrencies into Pakistan’s financial spotlight? Or was it Waqar Zakas’ outrageous YouTube proclamations that did it?
It was neither.
Cryptocurrencies have attracted Pakistan’s astute investing community for at least the past five years and some start-ups have gone so far as to offer:
Mine their own currencies Invest in bitcoin and other crypto on behalf of the public Accept crypto-based transactions.
Today, with a population of over 220 million and foreign exchange reserves totaling over $ 16 million, according to Reuters, what’s standing in the way?
Money Laundering Issues The anonymity of cryptocurrency transactions – considered one of the biggest assets – is also the biggest issue. Central banks are reluctant to include cryptocurrency in the mainstream fiat fold because transactions can be done anonymously through nodes and as a result large unreported sums of money can change hands without any of the parties are forced to disclose their identity or other details – contributing to one of the biggest problems facing Pakistan’s financial front: money laundering.
It also erodes the protection normally afforded to investors through traditional banking channels through KYC (Know Your Customer) and AML policies. Rumor has it that hawala operators are helping local crypto traders through offshore wallets. And although Pakistan’s data protection laws are still very recent, in other markets, exercising the right to be forgotten could present serious problems for victims of leaked counterparty cryptocurrency.
Mainstream Commerce Incentives The average investor profile and investment motivations of Pakistanis present an interesting paradox in the global crypto game. According to the State Bank of Pakistan (SBP), in 2020, around 21.3% of the Pakistani population had access to banking services. This figure is derived from the number of bank accounts, possibly the overrepresentative (one person can have multiple accounts). When nearly 80% of the population meets their financial needs through unregulated, undocumented and unsophisticated channels, how do you create a market for cryptocurrencies? Would there still be a toy for those at the top with virtually no runoff?
Not Well Understood You might think the difference between blockchain, bitcoin, and cryptocurrency would be well understood by the most sophisticated financial minds in Pakistan. Not so. Even in February 2021, an article on terrorist financing used digital currency and cryptocurrency interchangeably. For many people, blockchain, bitcoin, and crypto mean the same thing. Parties quick to describe virtual currencies as illegal have not done their homework – and the SBP is ambiguous on the matter, citing caution but not the ban.
Speculation The technology behind cryptocurrency is also often misunderstood. Speculators believe that, like fiat money, cryptos exist in abundance. Not so. They are expensive and environmentally unfriendly to operate, limiting the volume of cryptocurrencies around the world. This explains why cryptocoins are not accessible to everyone and why speculation has such a powerful effect on its value. Even before Elon Musk’s episode, traders were used to dramatic drops and crashes, with values exceeding $ 60,000 per bitcoin at one point. As fascinating as these trends are, they discourage investors looking for stable and sustainable returns.
Despite this, attitudes towards cryptocurrency are changing in Pakistan. Commercial banks and techpreneurs have launched programs to promote financial literacy (including conceptual understanding of cryptography and digital finance). The broadening of the national financial profile has also helped. Between 2020 and 2021, the promotion of home businesses, female entrepreneurship and new niches have added to the diversity of financial products pushing the boundaries of traditional finance.
Pakistan’s growing participation in global service exports (especially through freelance work platforms) encourages citizens to come up with their own alternatives to PayPal and other global payment channels that are inaccessible to Pakistan. The March 2021 News suggested that two hydropower-powered pilot mining farms should be built at KPK to increase Pakistan’s participation in the global virtual capital market. In the same month, it was also reported that the government was developing a new digital currency policy, aimed at addressing concerns about the legality of crypto in Pakistan, investor protection, as well as accessibility for low-income segments. returned.
Whatever the outcome, one thing is for sure. The thrill of the trading room, once limited to the stock market, has indeed migrated to our screens.
Nayyara Rahman is an award-winning researcher and author. His areas of interest are technology and business ethics, business transparency and process improvement. Nayyara Rahman’s work in integrating marketing and technology aims to make organizations more efficient, accountable and transparent. She is currently working at Arturo Labs.
[ad_2]
picture credit