Is Bitcoin A Solution to Pakistan’s Fintech Woes?

by Danyal Manzar

In a fast moving world, technology is needed that can keep up. The financial sector has been crawling when it comes to adopting technology and Pakistan has remained an afterthought as far as the latest advances and adoption even in that. Part of the reason is the way the governments handles the financial sector in Pakistan. Often it causes entrepreneurs to stay away from this sector. Fintech is now a space that is being redefined on the backbone of bitcoin and its underlying technology known as blockchain so it’s high time we take a serious look at its potential in our country.

What’s Blockchain?

Blockchain is simply the public ledger on which all bitcoin ownership is recorded. This is one of the more broad topics which is hard to cover in length of just one article. With smart contracts, programmable blockchains, blockchains storing encrypted data or providing cloud storage are now making it possible for multiple use cases. The important thing to note here is that at heart it’s just a ledger that is maintained through software which can be written to and verified only by miners.

Mining Bitcoins

Touching this subject is very important as bitcoin is built around mining. Mining is done by people who actually record ownership in the btc ledger or blockchain.  Getting into detail of how it exactly works will exceed the length of this post. However there are a few questions that do arise of like when will mining stop or end. The simple answer to that is never. Bitcoin’s distribution was setup in such a way that there will only be 21million max minable bitcoins. These are awarded to the miners who secure the network for their efforts.

Read more: Bitcoin and the Future of Money

So each time a block is mined the miner currently gets a 25.x reward plus miners fee(x = miners fee or transaction fee that one pays to change ownership of the bitcoin or send or receive bitcoins in simple terms). Since roughly 16+million coins are already mined most people think that mining will come to an end. However that’s not the case.

If we consider simple economics and advancement in technology the cost of producing better mining asics to mine bitcoins are developed as fast as the rewards are going down. In addition to this, the lesser supply of bitcoins increase the cost of buying it. Which continues to make it possible to mine it. The block reward ending is over 120+years (roughly) away, as bitcoin block reward halves every 4 years keeping the supply and demand in check.

The Potential of Bitcoin in Fintech

A term that is now being commonly being used in space where tech companies are try to revolutionize the entire financial sector by combining bitcoin and blockchain technologies to the banking sector.  Why is this so important and why is the current banking not adequate? Is a question that many might ask. The problem is many of us don’t understand banking properly and hence don’t realize how important this space can be to the banks.

Currently moving money in conventional systems is a problem for banks. Not only do banks have to maintain huge data, but also use redundant systems such as swift to tackle most wirings or for opening letter of credits (popularly referred to as LC’s). Swift is a messaging system which is used by banks and was founded Brussels in 1973. It is the premier system currently used by most major banks and is very cumbersome to use.

Bitcoin blockchain can verify and time stamp documentation and raises interesting possibilities

Banks have seen bitcoin as a challenge and have initially been reluctant to adopt it. If adopted properly, it can be a game changer for bitcoin and the banks as they will be able to make transactions happen easily and faster then anything before this possible with the added advantage of security provided by the most secure network in the world and completely verifiable on the public ledger. I try to cover the banking in bitcoin in more detail here.

In addition to this, a common problem in Pakistan stands of notary public services, land records verifications. Bitcoin blockchain can be easily used for verifying documentation now and easily be used for time stamping the documents. In this regard a few companies have sprung up offering to provide certification and documents of authenticity and ownership of diamonds also.

While the Pakistan banking sector tries to catch up on older technology, the world banking services are being replaced by fintech industry tackling the problems of faster value movement with blockchain and much lower cost. We can refer to this as uberization of the financial sector and the current fiat (paper money) sector.

Services that were often only in the hand of the rich are now being tackled with relative ease with bitcoin at its heart. Smart contracts is another sector that the world is now looking into and support from Microsoft in this sector has opened up more possibilities. IBM is another company supporting blockchain technologies in addition to many banks that are now partnered up under the name of R3 consortium.

Bitcoin and Pakistan

Pakistan has been an afterthought for payment processors. Plus its becoming harder to send money to Pakistan from abroad especially if the transaction are on a smaller scale( Also know as micro transactions). Companies like Paypal, due to regulations tend to stay away from Pakistan. Similarly, there are no similar gateways that help Pakistan to establish and provide services to the world.

Even with absence of such services, Pakistan still ranks the 3rd largest freelance community producer in the world. From writers, editors, security experts to software houses, we tend to produce some top notch talent. Paypal currently does roughly $379 million in payments daily and has been around since roughly 1998 (was named

Even in the absence of financial infrastructure, Pakistan ranks as the 3rd largest freelancing country in the world

On the other hand we see bitcoin entering in 2009, has now reached around $219 million in daily transaction. The leg up that bitcoin has on any such services is that it is able to move freely from system to system or mobile to mobile or printed on paper and given by hand to another party with relative ease and no central third party involvement. Pakistan needs to adopt this tech as soon as possible. Commonwealth has pushed member nations to really look into this space to help resolve lots of financial problems.

Recently we have also been hearing about a cryptocoin working on similar fork of bitcoin named Pakcoin covered by NewsBTC Pakistan. The belief is that similar coins can replace traditional paper notes and be accountable and yet save millions if not billions in reprinting and printing of paper money cost to the national enquirer. An additional benefit to the underbanked will be that it will be much cheaper than traditional services such as easypaisa, upaisa, mobicash etc. And seeing the success of these services cryptocurrencies and bitcoin is primed for its replacement.

Pakistan already has had financial disruption in the form of Easypaisa and similar services. Can Bitcoin be next?

To see the rise of bitcoin in Pakistan we don’t need to look to far back as the numbers have been on the rise. Urdubit a client to client trading platform (the only one of its kind in Pakistan) has seen roughly 130+ bitcoins traded monthly. The peer to peer system known as localbitcoins has seen numbers rise to to about 150+ btc per month also. The world is moving towards this sector, and its only a matter of time that Pakistan will be forced to join those who lead. I do hope that this time we decide to lead and not follow.

Danyal is a businessman by profession, a crypto enthusiasts by night. He loves everything that is blockchain and bitcoin, currently co-founder at Urdubit