Should Bangladesh be sleeping on crypto?
I recently spent three days in Miami, Florida, from April 6 to 9, attending the Bitcoin Conference 2022. As a crypto currency enthusiast and advocate of many years, this was a dream come true for me. From investors like Cathie Wood, Peter Thiel and Michael Saylor and politicians such as US Senator Cynthia Lummis, there were over 20,000 attendees from all over the world with one common purpose: To discuss the present and future of Bitcoin.
As a Bangladeshi, I was a minority. I felt both proud and sad at the same time. While I was fortunate enough to have been able to spend more than a thousand dollars to attend the conference and listen to industry experts talk about this bleeding edge technology, the people back in my home country are not so fortunate. Bitcoin and all cryptocurrencies remain illegal in Bangladesh till date.
In March 2020, the ICT Division of Bangladesh published a detailed paper on blockchain technology. The paper highlighted many advantages of blockchains in different sectors such as agriculture, commerce, finance and supply chain. It also touched on the topic of how public blockchains such as Bitcoin can promote technological innovation. In my opinion, a blockchain without a public network is similar to a computer without an internet connection. An open, permissionless blockchain with an underlying hard asset like Bitcoin is critical for secure peer-to-peer transactions.
I will highlight a few real-world examples of how Bitcoin and cryptocurrency adoption can help Bangladesh. The first thing that comes to mind is crypto remittance. In 2020 alone, El Salvador received nearly USD 6 billion in remittances, which accounted for about 23 percent of its GDP. El Salvador, a nation in Central America, has made Bitcoin its legal tender alongside the USD. However, we do need to make Bitcoin a legal tender for this to happen. We need open, accessible policies which enable the use of digital assets. Globally, sending remittances costs an average of 6.3 percent of the amount sent. In 2021, Bangladesh received over USD 22 billion in remittance. Using a superior technology, such as Bitcoin's lightning network, remittance fees can be lowered to one percent or less. Even if a small percentage of users adopt this technology, a few hundred million dollars could be directly added to the forex inflows of Bangladesh. The inflows would go directly to the families of hard toiling migrant workers, who should not have to waste their hard-earned labour on fees to companies like Western Union.
During the current war between Russia and Ukraine, a few key advantages of blockchain technology were demonstrated. While old-world critics argued that Russia could somehow use Bitcoin to illegally trade bypassing sanctions, it was witnessed that it's much easier to control crypto movement on exchanges than barrels of oil traded over cash. On the other end of the battlefront, Ukrainians received donations of over USD 60 million in cryptocurrencies. As Senator Lummis confirmed from her exchanges with Ukrainians, they would rather receive donations in crypto over US dollars, mainly because of the speed of transaction. It takes minutes for someone to receive Bitcoin or USD Coin (USDC), as opposed to the four to five business days it takes for a wire transfer to be completed. Ukrainians simply do not have the luxury to wait that long for the money to arrive.
In the case of a natural disaster in Bangladesh, for instance, many expats like myself will want to help out. However, our help may need to wait days if left to the ancient SWIFT system, while human lives are at risk.
In the US, bipartisan political discussions are taking place regarding the future regulations around Bitcoin and cryptocurrencies. El Salvador started a movement of political game theory on how countries will adapt to and regulate this emerging technology. For the US, Bitcoin is a commodity. If Bitcoin is indeed a commodity, why does the Bangladesh Bank have overlying regulations on how it can be managed? The US remains the economic centre of our planet, mainly because of how adoptive it was of the internet all those decades ago. As per adoption curves, Bitcoin rivals the internet itself. While cautious might have been the way to go so far, does Bangladesh really want to be left behind on the technological adoption curve?
As Satoshi Nakamoto, the pseudonymous person or persons who developed Bitcoin, had said on the white paper, "It might make sense just to get some in case it catches on."
Tamim Sujat is an electrical engineer residing in Toronto, Canada.