Pakistan has multiple avenues available to participate in the Bitcoin revolution. It is imperative to involve these important stakeholders in all top-level cryptocurrency discussions. Furthermore, the Financial Action Task Force has called on the government to better regulate the cryptocurrency industry. China and the International Monetary Fund (IMF) have both leveled criticism against the technology. The Bitcoin ecosystem is not without risks. Pakistan should begin work on seamlessly connecting Raast to the Bitcoin ecosystem. We suggest the federal committee overseeing cryptocurrency to invite fintech players such as Strike to understand the benefits of this solution. Specifically, Bitcoin’s Layer 2 protocol (Lighting Network) enables transfer of micropayments on a real-time basis with minimal fees. Bitcoin’s monetary network provides a comprehensive solution to this problem. However, international payment remittance remains a clunky process with high fees and lengthy settlement periods. All evidence points to a flourishing local remittance ecosystem.
The State Bank of Pakistan has prioritized the rollout of Raast, a new instant payment system. If bitcoin prices continue to rise as per our expectations, this is another avenue for the federal government to generate massive revenues. Bitcoin mining farms should be set up near power plants to minimize any transmission losses. It is our suggestion that the federal government take advantage of this superb timing. Finally, Pakistan now possesses surplus electric generation capacity relative to demand. Next, the shutdown of Chinese miners has resulted in secondhand mining equipment flooding the market at considerably reduced prices. Firstly, the recent reduction in the network’s hash rate makes it economically attractive to begin mining operations immediately. The “great mining migration” has presented Pakistan with a time-sensitive investment opportunity. In summary, the cryptocurrency economy has the potential to raise masses out of poverty by providing employment. All productive citizens would boost the local economy from their earnings and contribute to the tax base.
Government investment toward skills upgrade and setting up basic cryptocurrency infrastructure will be returned to the economy in the form of budding entrepreneurs, developers and product managers. We may not be too far from a future state where the best candidates for the role are recruited, regardless of their physical location. In a post–COVID-19 world, remote work is quickly becoming the new normal.
A bitcoin ETF trading on the Pakistan Stock Exchange will offer an attractive investment for local stock market investors desperate for diversified exposure.īlockchain and smart contract software developers are on their way to becoming prized assets in this new decade of cryptocurrency. A fully regulated national cryptocurrency exchange should be introduced with incentives to entice domestic participation. Movement between the Bitcoin ecosystem and traditional financial institutions needs to be a low-cost and frictionless endeavor. We suggest the State Bank of Pakistan and securities regulator open up access to this asset class for all Pakistani investors. These unmatched returns will provide prosperity across investing households, boost the local economy in the form of additional demand and generate tax on capital gains. Using the internet and a smartphone, here lies an opportunity for the average Pakistani investor to plug into the world’s best performing asset over the past decade. The upside scenario can have a positive material impact on the state of the country’s asset reserve balance. Before the price of bitcoin goes beyond the country’s affordability threshold, we propose the State Bank of Pakistan start by converting up to 5% of their sovereign gold reserves (approximately $180 million) into this asset. Our team believes bitcoin is primed to outperform traditional assets moving forward.
Pakistan has several ways to benefit from the Bitcoin ecosystem.