Every now and then, a technological revolution approaches that provides almost every country in the world an equal playing field. No matter how big or small a country is, it always has the opportunity to leap ahead. Of late, the unique opportunity available to every country is jumping on the bandwagon known as cryptocurrencies. Pakistan has opted to miss the train as the State Bank of Pakistan has officially put a prohibition on dealing in virtual currencies/tokens in 2018.
Exchange of valuables in the form of money and funds has been an essential process since time immemorial. It only makes a difference in how the ways have changed through human history. A new method of exchange has taken shape as technology boomed its way over time. Cryptocurrency is a digital medium of exchange that is used for financial transactions in business, and drives blockchain technology to achieve transparency, immutability, and decentralization.
Converting conventional funding systems to Bitcoins is basically a sort of currency created in the year 2009 that includes all functions such as transaction processing and verification that needs to be enabled by the network. These Bitcoins are digitally created through the process of mining and also need very efficient and powerful computers to unravel crunch numbers and algorithms. Huge companies such as Expedia, eBay, and Microsoft use cryptocurrency as they will certainly become the future in the next ten years.
The corona virus epidemic has accelerated digital currency as the economy needs a payment instrument with which we can make payments quickly, inexpensively and without unnecessary intermediaries such as Visa or Mastercard. Virtual forms of currency are regularly used by people because of faster transfers and ways of work. Therefore, credit and debit transfers are necessary to make payments.
China is already testing its “digital yuan” with the USA, Great Britain, France, South Korea and other countries working on similar steps too. Already 20% of 66 central banks reported that they are likely to issue a CBDC within the next six years. With all of this action behind the scenes, earlier this year, a Pakistan bank announced the utilization of blockchain for international remittances from Malaysia.
The State Bank of Pakistan (SBP) is considering the launch of a digital currency and make its services “fully digitized and technology equipped” by the year 2025- 2030. The former finance minister Asad Umer said, “It is our government’s policy to encourage the use of e-commerce amongst public through awareness campaigns to promote a culture of e-commerce, which supports electronic business transactions at national, regional and international levels.”
Financial innovation has led to the development of innovative payment systems and digital currencies. Easypaisa launched in 2009 has become Pakistan’s largest mobile banking service with a vast network of more than 70,000 merchants located across the country. Besides this, mobile-wallets e.g. JazzCash, Zong Pay Max, Keenu wallet, UPaisa, UBL Omni, etc. options have popped up during the past few years. These services offer anything from online transactions to quick and easy transfers using NFC to online bill payments and much more.
The National Highway Authority has made M-Tag registration compulsory for all vehicles. This is being done for motorists’ convenience and a free flow of traffic through the entrance and exit points by paying the toll plaza through online payment and scanning of tokens. The government has gone for a uniform policy where all motorists on motorways, irrespective of their vehicle type are required to have an M-Tag.
Pakistan plans to implement a licensing system for electronic money institutions as a way to regulate digital currencies. These regulations will help combating money laundering and terrorism financing and help in the management of digital currency throughout the country. Governor of SBP, Reza Baqir said, “this strategy lays out a road map and action plan for Pakistan to have a modern and robust digital payments network.” Moving to online or electronic payments will stimulate trade and provide a welcome boost to the nation’s economy by creating new jobs and an increase to Pakistan’s GDP.
At present, Pakistan has online banking and payment system but lacks an official stance on digital cryptocurrency because when it comes to developing countries, a lot of people do not have access to banks especially in remote areas and rely mostly on wire money and bank transfers. Bitcoins are digital currencies that are not printed, are increasingly being used by businessmen, and are decentralized, which means that no institution controls it.