Bitcoin is currently banned by the Provincial Bank of Pakistan and it is illegal for businesses, banks and other entities to trade bitcoin in the jurisdiction of the Islamic Republic of Pakistan.
But Pakistan is the world’s fourth largest country by population, with about 50 per cent of the population aged 15 to 40, and only about 4 per cent over 65. Therefore, the adoption of bitcoin in Pakistan is increasing at a rapid pace, albeit banned by the Provincial Bank of Pakistan. Many freelancers working in technology industries from Pakistan are 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 in bitcoin mining farms.
This combination makes Pakistan one of the most interesting regions in the world in terms of adoption, regulation of Bitcoin and the mining industry.
Bitcoin Trading In Pakistan
Daily volumes of trades are increasing in Pakistan despite the government’s ban on bitcoin and other cryptocurrencies.
Bitcoin is heavily traded on peer-to-peer exchanges like Paxful and LocalBitcoins in Pakistan. Other chunks of trades occur in social media groups and online communities where freelancers sell their bitcoin in exchange for money-for-money exchangers who later sell it at a 5 percent to 10 percent premium.
Bitcoin is currently not accepted anywhere in Pakistan as a medium of exchange. There is no single centralized, controlled bitcoin exchange operating in Pakistan where people can buy, sell or trade bitcoin. So it is a bit difficult and risky for freelancers to turn it into cash.
The Bitcoin Mining Industry In Pakistan
The Bitcoin and cryptocurrency mining industry in Pakistan was booming until April 2018 when the government imposed a ban on the trading and mining of cryptocurrencies in the country.
But the mining industry in Pakistan is steadily increasing despite the fact that the government has been closing mining farms since this ban was enacted. That ban eventually led to an increase in the number of people operating bitcoin miners at home, most of them using mining pits 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 four provinces of the country, passing a resolution on the legalization of cryptocurrencies and bitcoin mining. Earlier this year, KPK approved the use from government funds to mining bitcoin. Local outlet BOL News reported that the KPK government will set up two bitcoin mining farms.
“[KPK Information Technology Advisor Ziaullah Bangash] he said the government felt that Pakistan should not lag behind in digital currency mining, ”according to the report. “He said the first step had been taken by the [KPK] the government and other provinces would follow the same. ”
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 obstacle there. There has been a shortage of power in Pakistan for years and regular power closures are the norm in the country. Even in big cities like Lahore and Karachi, it comes as no surprise to anyone if the power goes off for several hours.
Electricity is cheap in Pakistan, but power generation from small-scale hydro turbines in the northern part of Pakistan is easier and more cost effective to trigger and could help potential miners avoid closure.
Bitcoin Education And Avoiding Scam In Pakistan
Due to minimal education and erroneous regulations, the crypto scam rate in Pakistan – as 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 embargo. Scam projects like OneCoin have been sold to people in Pakistan as quick-to-profit investment opportunities in short periods. The people behind those projects were mostly Pakistani-British citizens who funded the projects and scammed millions from those who invested their money, only to find out later that the company had ceased to exist.
This is why the core factor for Bitcoin’s future success in Pakistan is to ensure that people are properly educated about this new technology, as many still believe that Bitcoin is a fraud and some kind of “become get rich fast ”.
To this end, the Bitcoin Society 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 fear that cryptocurrency scammers will once again target the country, as it becomes legal for mining and trading cryptocurrencies in Pakistan. The government should actively track down those evil players and regulate publications and promote new cryptocurrencies in the region. Hopefully this would eliminate fraudsters and pave the way for the continued adoption of Bitcoin.
This is a guest post by Farooq Ahmed. The views expressed are entirely of their own opinion and do not necessarily reflect the views of BTC Inc or Bitcoin Magazine.