Recently, several news reports surfaced claiming that Pakistan, a country currently suffering from a severe economic crisis and political instability, could see its citizens turn to cryptocurrencies. This, the various news media sources said would be because of the nation’s really high rate of inflation.
Although Pakistan may be suffering from one of the highest rates of inflation in its history, there are a number of reasons why the vast majority of Pakistanis will not adopt Bitcoin (BTC) or other cryptocurrencies. First of all, the State Bank of Pakistan (SBP) instructed all local banks in April to stop offering banking services to those who involved in crypto-related activities. Because of this, the country’s only cryptocurrency exchange, UrduBit.com, was also forced to shut down – and a large amount of users’ funds on the exchange have yet to be refunded.
Most Pakistanis Do Not Understand Crypto
Despite the anti-crypto stance that Pakistan’s government has taken, it was widely reported in April and in early May that Pakistani investors were still actively trading and investing in cryptocurrencies. Although this might be true, as local crypto traders increasingly started using peer-to-peer trading platforms such as LocalBitcoins, the fact of the matter is most Pakistanis do not understand the concept behind digital currencies.
Moreover, a general lack of awareness in Pakistan about cryptocurrencies can largely be attributed to nation’s very low and declining literacy rate. In fact, Pakistan’s literacy rate dropped recently from 60 to 58 percent and the actual percentage of people with at least a high school level education is far less.
Rampant Corruption Leading To Low Literacy Rate
The low literacy rate in Pakistan stems from the rampant corruption, which has severely limited the amount of government funds that have been allocated for education for the past few decades. As a result, the average Pakistani, which comprises the majority of the working or lower class, does not know how to use a computer, and perhaps even worse, does not even understand its purpose.
Since Bitcoin (BTC) and other cryptocurrencies are online currencies and require that their users have some level of technical know-how, it would be unrealistic to suggest or argue that most Pakistanis would turn to them, even during extreme economic and political turmoil.
Positive Crypto Developments
However, the fact that Pakistanis might not currently be able to adopt cryptocurrencies does not mean that there are no positive developments whatsoever related to the financial technology in the country. In an interview with Mr. Abu Shaheer, the founder of Pakcoin, a digital currency forked off of Litecoin (LTC), I was told that his main focus is to make cryptocurrencies usable for the common man.
Shaheer noted that he had been working to help make it as simple to accept Pakcoin as transacting through a typical point-of-sales (POS) system. Notably, cell phone users in Pakistan can now pay for talk-time minutes with Pakcoin.
While Shaheer expressed optimism about the future of cryptocurrency in Pakistan during the interview, he did point out and confirm that his local bank had refused to provide him services due to his involvement with cryptocurrencies.
Given the present situation in Pakistan, a more reasonable statement about its current and expected adoption of cryptocurrencies would be that it is not yet ready to embrace them.
Furthermore, even though the Pakistani rupee has depreciated considerably against the USD, and basic living expenses have increased significantly, it is unfortunately more likely that desperate citizens will resort more to criminal behavior than digital currencies.
Pakistan’s recent history of an alarmingly high rate of violent crimes such as extortion, kidnappings, and daily target killings – often by those frustrated with the country’s poor job prospects – attest to this all too likely outcome.
