Earlier this year Pakistan banned the country’s banks from working with Bitcoin and cryptocurrencies. While this resulted in the country’s first Bitcoin exchange Urdubit shutting down, people have continued to use cryptocurrencies.
There are currently 57 people in Pakistan buying and selling Bitcoin, according to trading platform LocalBitcoins.
Now a coming economic crisis will mean people in Pakistan are pushed away from fiat currency and the local rupee, and towards alternative options — including Bitcoin and cryptocurrencies.
Former cricketer Imran Khan has declared victory for his Pakistan Tehreek-e-Insaf (PTI) party and he will now almost certainly become the country’s prime minister.
At the top of Khan’s to-do-list is managing Pakistan’s struggling economy. The rupee has repeatedly fallen against the dollar this year and foreign currency reserves are running low.
“Whichever party wins Pakistan’s upcoming general election will take over an economy on the brink of a balance of payments crisis. Growth is likely to slow sharply regardless of who wins Wednesday’s election,” Gareth Leather, senior Asia economist at Capital Economics, told Market Watch.
Many analysts are forecasting that Pakistan could need to turn once again to the International Monetary Fund for another bailout.
Meanwhile, the country is imposing rules on those wishing to get money out of the country.
Earlier this week Pakistan’s central bank increased the amount of red tape needed to access dollars, according to a Bloomberg report.
Similar, though far more stringent, moves pushed people in Iran towards Bitcoin earlier this year as a way of moving money out of the country.
“People are turning to cryptocurrency as an investment, but slower than the western world as the literacy rate is lower here and its a totally new phenomenon for them,” said Abu Shaheer, the founder of Pakistan-based cryptocurrency Pakcoin.
“Some are using it as alternative means of payments,” Shaheer added. “Most people using cryptocurrencies are day or short-term traders finding investment opportunities in crypto and are growing in number.”