Tracing The Growth Of Bitcoin In Pakistan
Bitcoin is currently banned by the State Bank of Pakistan and it’s illegal for businesses, banks and other entities to trade bitcoin in the jurisdiction of Islamic Republic of Pakistan.
But Pakistan is the world’s fourth-largest country by population, and about 50 percent of the population is between the ages of 15 and 40, and only about 4 percent is over the age of 65. So, bitcoin adoption in Pakistan is increasing at a fast pace, even though it’s banned by the State Bank of Pakistan. Many freelancers working in tech industries from Pakistan get paid in bitcoin. Which brings more liquidity in the country.
And there has been regulatory progress from one region of the country, which will lead the government to invest its own funds into bitcoin mining farms.
This combination makes Pakistan one of the most interesting regions in the world when it comes to Bitcoin adoption, regulation and the mining industry.
Bitcoin Trading In Pakistan
The daily volumes of trades are increasing in Pakistan despite the government’s ban on bitcoin and other cryptocurrencies.
Bitcoin is being traded heavily on peer-to-peer exchanges like Paxful and LocalBitcoins in Pakistan. Other chunks of trades are happening in social media groups and online communities where freelancers sell their bitcoin in exchange for cash-to-money exchangers who later sell it on a 5 percent to 10 percent premium.
Bitcoin is currently not accepted anywhere in Pakistan as a medium of exchange. There is not a single regulated, centralized bitcoin exchange operating in Pakistan where people can buy, sell or trade bitcoin. So it’s a bit difficult and risky for freelancers to convert it into cash.
The Bitcoin Mining Industry In Pakistan
The Bitcoin and cryptocurrency mining industry in Pakistan was thriving until April 2018 when the government put a ban on trading and mining cryptocurrencies in the country.
But the mining industry in Pakistan is increasing steadily despite the fact that the government has been shutting down mining farms since this ban was enacted. Ultimately, that ban led to an increase in the number of people operating bitcoin miners at home, most of which using mining pools like ViaBTC, Braiins and Slush Pool to mine bitcoin and other cryptocurrencies.
On December 2, 2020, the Provincial Assembly of Khyber Pakhtunkhwa (KPK), one of the country’s four provinces, passed a resolution on legalizing cryptocurrencies and bitcoin mining. Earlier this year, KPK approved the use of government funds to mine bitcoin. Local outlet BOL News reported that KPK’s government will set up two bitcoin mining farms.
“[KPK Information Technology Advisor Ziaullah Bangash] said that the government feels that Pakistan should not lag behind in the field of digital currency mining,” according to the report. “He said that the first step has been taken by the [KPK] government and other provinces would follow suit.”
Private sectors and investors will surely set up new mining farms in the near future with the mining industry now legalized in at least one province of the country.
Still, Bitcoin miners could face one hurdle there. There’s been a power shortage in Pakistan for years and regular power shutdowns are a normal thing in the country. Even in large cities like Lahore and Karachi, it does not surprise anyone if the power goes off for several hours.
Electricity is cheap in Pakistan, but power generation from hydro turbines on a small scale in the northern part of Pakistan is easier and more cost effective to leverage and could help prospective miners avoid shutdowns.
Bitcoin Education And Scam Avoidance In Pakistan
Due to minimal education and misguided regulations, the crypto scam rate in Pakistan — like in other developing countries — is higher than in developed nations, which makes it an easy market for scammers to operate in.
People promoted many scam projects leading up to and during the 2017 bitcoin bull run, which became the biggest factor in the country’s bitcoin and cryptocurrency ban. Scam projects like OneCoin have been sold to people in Pakistan as investment opportunities to make quick profits in short periods. The people behind those projects were mostly Pakistani-British nationals who funded the projects and scammed millions from those who invested their money, only to find out later that the company ceased to exist.
This is why the core factor for the success of Bitcoin in Pakistan for the future is ensuring that people get the right education about this new technology, as many still believe that Bitcoin is a scam and some kind of “get rich quick” scheme.
To this end, the Bitcoin Association of Pakistan aims to educate people and businesses about this new asset class and how these things are changing the world for good.
Still, I am afraid that cryptocurrency scammers will target the country once again, as it is becoming legal to mine and trade cryptocurrencies in Pakistan. The government should actively track those bad players down and strictly regulate the issuances and promotion of new cryptocurrencies in the region. This would hopefully eliminate fraudsters and pave the way for continued adoption of Bitcoin.
This is a guest post by Farooq Ahmed. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or BitcoinLinux.