Cryptocurrencies in Pakistan: My gripes and concerns

Ethereum, Bitcoin and Dogecoin. These are words that are gaining traction with each passing day and the sky seems the limit for them. In November 2021, the price of 1 Bitcoin peaked at 11,315,080 Pakistani Rupees, with its current value at 10,474,052 rupees still an awe-inspiring one. I have friends who have ventured deep into the crypto world in a bid to make easy fortunes. I, however, have decided to never enter the crypto world. The question, hence, is that why I chose to do so when the crypto market seems “easy gains”?

Cryptocurrency is basically a digital currency that is decentralized, meaning that there is no government control over it. This decentralization is the first thing that worries me. Governments have existed since long for the purpose of serving citizens and ensuring a good life for all. Fiscal affairs is one key aspect of every government. By removing that aspect, cryptocurrencies are effectively making users uncovered and vulnerable against powerful forces. Any transactions and frauds won’t warrant any sort of government action and shall result in helplessness for victims of such acts.

Adding to the decentralization is the high risk of fraud. Online scams and hacking have become far easier to commit than traditional force-reliant robberies. Add to it the fact that the majority of people are not very educated with regards to technology and one can see the risks. The first Cryptocurrency was launched in 2009, meaning that they haven’t been in existence for even 2 decades. Such a short time frame has meant that most people are unaware of the intricacies involved and are clueless about the dark secrets of cryptocurrencies. This effectively means that clever people can hack systems and get that information or pose as “IT helpdesk” and attain the “key” from confused and naïve customers the way credit card information is stolen. By the time the poor person realizes their folly, it is too late.

Perhaps my biggest concern with regards to all the Bitcoins and Ethereums is the price volatility. As stated at the start, Bitcoin’s price has fallen by almost Rs. 3.5 million in less than 2 years. The price of Bitcoin in 2009 was around 8 Paisa, an amount that seems nonexistent in the face of its current valuation. No other commodity has seen a 10 million times increase in its value in those 14 years. Moreover, this price is highly susceptible to external factors. While an argument could be made that exchange rates, gold and oil prices are also at risk of external factors, there is a difference between them and cryptocurrencies. One of those 2 has price fluctuations due to wars and political conflict while the other is affected by an Elon Musk tweet. The fact that one can invest millions of hard-earned money into cryptocurrencies and wake up to its value being halved due to a tweet or trend is a very frightening prospect.

I believe these fundamental fault lines in cryptocurrencies will hinder its mass acceptance. Until it is made scam-free and its price volatility is reduced, it will remain nothing more than an elitist activity and a modern form of gambling. It is a shame that the original aim of Satoshi Nakamoto, founder of Bitcoin, was lost in this mess of money-making.

About the Author: Muhammad Abdul Wasay is an esports-fan who failed to make it to the competitive scenario. He now plys his trade in the worlds of civil engineering and content writing, hoping to either host Pakistan’s esports success or document it.