Cryptocurrency is a growing global phenomenon that is widely adopted in Pakistan. It is a digital currency that is not centrally managed but relies on blockchain technology.
Additionally, cryptocurrency is created and managed through advanced encryption techniques that make it more secure. Mining occurs when transactions are recorded on the blockchain.
Surprisingly, there are over 5,000 cryptocurrencies on the market. The best cryptocurrency investments at the moment are: Bitcoin (BTC), Ethereum (ETH), Binance coin (BNB), Tether (USDT), Cardano, Polkadot (DOT), Ripple (XRP), Litecoin (LTC), Chainlink (LINK)), Dogecoin (DOGE), Basic Attention Token (BAT) and Stellar (XLM).
If you are planning to settle for a number of cryptocurrency investments, there are some important factors to consider. These include transaction speed, associated fees, and the ability to use your cryptocurrency for regular purchases. Do extensive research to know the overall performance of the business, reliability, usability, degree of security, and the number of people investing in cryptocurrency. If there is high level adoption, it has better liquidity.
Enormously, cryptocurrency has become more superior to most traditional physical currencies. Mainly, it’s because it doesn’t require too much infrastructure to operate. Transactions and mining are the main operations of cryptocurrency. Take the example of Bitcoin; it can be stored on a phone, computer or cloud. The advantage of Bitcoin is that it is secure and difficult to tamper with. The creation of Bitcoin is a complex process and therefore it is difficult to manipulate the system. Hence, it is not easy to compromise Bitcoin currency.
There is great potential for cryptocurrency, which will evolve over time. In some countries, cryptocurrency is easily accepted as a store of value, however, it may not be totally ideal for transactions if there are better alternatives. To highlight greater transparency, countries should disclose investments made in cryptocurrencies, as this will help companies to have crypto on their balance sheets. This will be beneficial for countries that deal with crypto assets and do not know how to put them on the books.
Surprisingly, some big companies like Tesla, Paypal, and Mastercard have invested in Bitcoin cryptocurrency because of the benefits it brings. A major benefit of using cryptocurrency is that it makes it easier to pay employees. For example, if you have many remote employees in different parts of the globe, you will need to convert your local currency to dozens of international currencies to pay your employees. Hence, with cryptocurrency, you get instant transactions with minimal fees.
Cryptocurrency has made crowdfunding and capital raising more transparent and allows people to publicly request and seek funds or donations. The total amount of the donation remains open to the public. It is one of the best forms of payment and for business fairness. Another major advantage of cryptocurrency is that it has a significantly lower transaction cost than most traditional methods. However, the success of cryptocurrency depends on the right technology, consumer demand, business champions, and the regulatory environment.
The impact of cryptocurrency can be relayed to the likely financial stability risks that may arise from crypto assets and stablecoins. However, its downside is that crypto-assets lack the key attributes of sovereign currencies. This is why not many people are ready to use it for payment or for making transactions because it has not been fully accepted as a common form. Another major downside to cryptocurrency is that its future depends on the ability to deal with issues like the value of cryptocurrencies, but there is no central authority to keep it running smoothly.
Cryptocurrency is used in over 100+ countries around the world. The main countries that use cryptocurrencies the most are Nigeria, Vietnam, Philippines, Turkey, Peru, Switzerland, China, United States, Germany, and Japan. However, some of the countries that have banned cryptocurrency are Algeria, Bolivia, Ecuador, Bangladesh, Nepal, and Macedonia. In other countries where trade still takes place, there are banks that have banned it. Some of the countries that have issued their digital currency include Dubai (UAE) – Emcash, Venezuela – Petro, Estonia – Estcoin, Russia – Crypytoruble, Sweden – E-Krona, Japan – J-Coin, India, China, United States, Kingdom United, Ecuador, Canada and Israel. The growth of cryptocurrency makes it a better payment method than expected.
If cryptocurrency is fully adopted around the world, it can lead to strong economic growth. For starters, it will lead to an increase in the economic activities that people will engage in. In addition, cryptocurrency does not require too much storage infrastructure and is growing tremendously. Therefore, with the right knowledge, anyone can engage in their business and reduce unemployment rates. Cryptocurrency offers better financial opportunities for countries with unstable banking systems. Some countries do not have access to basic banking services; cryptocurrency can therefore help fill the loan gap, by calculating interest rates and payment schedules. The advantage of cryptocurrency is that it has a variety of applications and programs that help to trade freely across borders.
Additionally, cryptocurrency helps the economy due to its low transaction costs. Hence, it can easily outperform traditional methods, as there will be no need for salaries, invoices or other operational costs. So the money that could be used for infrastructure can also be used in other ways. Digital currency brings transparency to the execution of transactions. Cryptocurrency is helping more entrepreneurs adopt more currencies. It will be easier to do business and trade.
Over time, Pakistan adopted the use of cryptocurrency and it is more and more accepted by the general public. Khyber Pakhtunkhwa is one of the regions that embraced the evolution and use of cryptocurrency. This is foreseen by the government’s plan to build hydropower-powered currency mining farms to capitalize on the cryptocurrency market. It is with the construction of crypto mining farms because of the many investors who approached the government for an investment.
Cryptocurrency mining and trading is widely accepted in the legal gray area in Pakistan. According to web analytics, Finance and Coinbase apps are among the most downloaded apps. However, cryptocurrency is used for crimes such as financing international terrorism, extortion, and ransom. Activist groups easily appeal to their supporters to donate using digital currency. Despite this, in the years to come, cryptocurrency will be fully adopted in most countries around the world.
Cryptocurrency is not only vital, but will be a major player in the Pakistani economy. The major transformation brought about by cryptocurrency and blockchain technology is the exclusion of most mediators from Pakistan’s vast financial system. People embrace cryptocurrency because of its minimal risks; it does not have a defined owner, there is a demand for it, and the main functions of ordinary money are assigned to digital coins. Pakistan is readily embracing cryptocurrencies even with plans to explore a new digital coin – to boost financial inclusion, reduce money laundering and terrorist financing.
Investing is a risky process and should not be rushed. You need to make an investment decision after spending a lot of time researching the investment opportunity. Cryptocurrency is adopted because of its high volatility, 24/7 availability, growing popularity, wide array of assets, and leverage. However, the downside is based on decentralization and higher risks. Using cryptocurrency is a great option if you have all the basics with a high recommendation in your country. Choose the best digital currency that will serve you and your business efficiently.
The growth of cryptocurrency in Pakistan is high with the acceptance of digital currency, mining companies, its own digital coin and government support. However, there is still a need to tackle the crime associated with digital currency. For this, an awareness must be created to ensure that its users do not fall into the hands of malicious people.
E-mail: [email protected]
Twitter: @imranbatada The author is director of the Center for Information and Communication Technologies at the IBA.