Can Cryptocurrency Work in Pakistan?

The 21st century ushered in the era of Facebook, 4G, Bluetooth and even the Google Driverless Car; it also brought with it new technological innovation in the financial sector. With the advent of fintech aka financial technologies, came cryptocurrencies like bitcoins which are becoming more and more popular in the world. Everyone has heard of bitcoins but few people seem to know what it really is. What are these bitcoins and more importantly, can they be used in Pakistan? And is bitcoin the future of currency in Pakistan?

A bitcoin is a digital asset that was invented in 2009 by a programmer or a group of programmers going by the name of Satoshi Nakamoto. Bitcoin uses a peer-to-peer (P2P) network and transactions can take place directly without using a middleman. Bitcoin is used as a unit of account and all the bitcoin transactions are recorded in a shared public ledger called the “blockchain” which authenticates each transaction.

“The first misconception is that Bitcoin is a currency or virtual currency,” says Hassan Siddiqui, a bitcoin trader in Pakistan. “In Pakistan, we have decided to put it under the same category as gold, which is a commodity. Strictly speaking, this is wrong because it exists for real and can be spent to purchase goods and services. Bitcoin is a new concept because it is not just a currency, commodity and technology, but a combination of all three.”

Bitcoin is, simply put, a decentralised currency without a central bank or a federal reserve. “This is a bit like gold, if you think about it,” says Siddique. “Gold can be used as a medium of exchange for goods and services but it is not necessarily easy to buy weekly groceries with gold coins, is it?”

Bitcoins are “mined” just like gold, but instead of gold diggers they make use of powerful computers to solve complex algorithms in order to create a Bitcoin. These bitcoins are created at a steady pace and the whole process is designed so that it is inflation-free. The monetary policy set by Satoshi Nakamoto stated that there would only ever be 21 million bitcoins in total. Right now there are approximately 12.5 bitcoins per block that are being produced every ten minutes until 2020. This number will keep on halving until 21 million bitcoins have been issued sometime in 2110-2140.

Read more: Building Pakistan’s First Truly Digital Cash Experience

“Bitcoins run on the internet and use state-of-the-art cryptography to ensure secure and instantaneous transactions, opening up hundreds of new avenues thanks to the Blockchain technology,” says Siddique. Since bitcoins is a currency without borders, it is a much more viable option for making small or large payments, because it is fast and cuts down on a number of user fees.

According to Hassan Siddique, this is why bitcoins are a good option for freelancers in Pakistan. In recent years Pakistan has become the third highest user of, a global crowdsourcing marketplace website with more than 20 million users, trailing behind only the United States and India. Freelancing accounts for a billion dollar industry in the world and Pakistan’s freelancing future looks bright.

However, there are high costs associated with freelancing since the business model of popular freelancing platforms is based on fees. Both the freelancer and the client are charged separately after a project is completed. The freelancer can end up paying a significant chunk of the income earned during the project. Just converting the international payment into spendable Pakistani Rupees would involve having a number of disbursements such as bank fees, activation fees, exchange rate fees, escrow fees, withdrawal fees, freelancer fees and so on. The costs are endless.

Siddique claims that by using bitcoins, it would not only lower the cost of bringing their earnings back home but it can also increase their income by 2 percent to 5 percent.

In 2013, a lot of mainstream websites such as WordPress, OkCupid, TigerDirect,, Expedia, Newegg, Dell and Microsoft began accepting bitcoins as payment. Barclays became the first bank in the United Kingdom to accept bitcoins, and even allowed customers to make charitable donations using bitcoins.

However, the question remains: How would you be able to spend your hard earned money using bitcoins in Pakistan?
Today, most merchants all around the world, let alone Pakistan, still don’t accept bitcoins for retail transactions. China banned buying or selling goods and services with e-money in 2009. Bitcoins are also illegal in other countries of the world including Bangladesh, Ecuador and Bolivia.

Currently, one bitcoin sells for $639. A week later it might go down to $400 or even rise to $1000. The buying power of bitcoins fluctuates wildly, and unless this currency become more widely accepted in the near future it is unlikely that it would be stabilized anytime soon.

Bitcoins are commonly used for criminal purposes in dark net markets that have transactions involving drugs, weapons, forged documents and cyber-arms among others. There are other disadvantages associated with bitcoins. Since bitcoins have no borders, it is difficult to control the currency. There are no safeguards for financial institutions and no transparency to users. There is also bitcoin related malware.

Bitcoins can be stored online but they can also be stored in an online wallet that is accessible by a private key. Theft can occur if a third party gets access to either the wallet or the private key. Bitcoin machines also exist but since they are not like traditional ATM’s, they charge exorbitant fees.

From the banking sector in Pakistan, people seem more interested in the blockchain technology behind bitcoin rather than the e-money itself. Danyal Manzar, the CEO of UrduBit, one of the leading Bitcoin exchanges in Pakistan says, “We really have to open our minds and think of the revolution it brings. I think all countries including Pakistan should be open to this idea as it [the Blockchain technology] can bring about endless possibilities in RTGs, cross border settlement, clearing on a distributed verifiable ledger and a clearing switch. And this is just the tip of the iceberg.”

However, Muhammad Ashraf, Executive Director at the State Bank of Punjab, has already said that it not looking to legalize cryptocurrencies like bitcoins in Pakistan anytime soon. “Pakistan will learn from the experience of other countries before we consider the possibility of adopting some of the cryptocurrency technologies,” says Shahid Hafeez Kardar, ex-Governor of the State Bank of Pakistan.

The world seems to be embracing new and more efficient financial services that are now being offered. Fintech companies such as Finja have already arrived in Pakistan and more financial technologies such as mobile banking and digital wallets like the ones Apple and Google have are being developed all around the world. Whether there is a future for financial technologies such as bitcoins in Pakistan, however, remains to be seen.


More Posts

Send Us A Message

Join the Upcoming Belt and Road Connect Expo: Secure Your Tickets Now for the May 2024 Event.