Pakcoin Local Banking Redefined

Pakcoin

Interviewing the first vision of Pakcoin was where NewsBTC Pakistan came into existence. Pakcoin is a bitcoin like currency that is forked from litecoin source, hence its based on scrypt algorithm. The idea presented at the time was that there was transparency required in the current money printing/distribution system by the Central Bank.  Printing of money usually causes elevation of poverty. The developer behind pakcoin known as Abu Shaheer envisions replacing the current mobile banking sector with a decentralised blockchain scrypt based protocol under pakcoin. Currently 4% of Pakistanis have mobile banking access according to recent survey by State Bank of Pakistan. This means most of the transactions take place peer to peer via cash or via mobile banking type shops such as easypaisa, mobicash, upaisa or ubl omni and done CNIC to CNIC. These shops are expensive to use as the charges on transfers are quite high. The system currently in place is an outdated system and is often a problem for networks being down. The blockchain is redefining fintech and Pakistan should not be left behind. While pakcoin still has a long way to go they have accomplished alot since it came into being.

Going from having close to 0 (in August 2015) value per 1 pak it is now at = Rs. 0.5+ (as of this writing) and rising on a daily basis(latest rates can be checked at  http://pakcoin.info/). The network is still very small and not lots of mining going on. However with due time the network should become more secure. The few features introduced recently to bring acceptance to this in Pakistan, is the start of pakcoin tellers (think of these as easypaisa shops where you can buy or sell pakcoins easily for cash). While the idea of pakcoin is local we have seen expats throughout different countries become offering this service, this can inturn target remittance market where people can buy aboard and send them to their loved ones directly over the pakcoin blockhain. The system has a map and anyone can become a teller by simply listing themselves on the global map. The coins can be attained, bought or sold via btc or bitcoin also at exchanges such as novaexchangecrypotpia and yobit(Warning:Do not trade at yobit until wallets are updated). Additionally the coin now offers an online wallet system, mobile wallet (android smartphone) through uberpay wallet app in Google Play Store, a mobile topup service was also recently introduced so you can now use your pakcoins to do mobile topups within Pakistan. Adding these services has also seen pakcoin acceptance increase through Pakistanis, as they can buy or sell them through the exchanges, above mentioned tellers or even through pakcoins own website with jazz cash (formally mobicash).

For pakcoin to grow in Pakistan it is very important for people to understand that it is not just scheme but a truly decentralised way of doing payments or transferring funds which is backed by opensource and supported by dedicated developer who is working hard to bring features built to increase feasibility over time. It can be viewed as a technology that will help shape the future of banking at a local level over blockchain. To general public who are just getting in bitcoin, it is imperative to understand that what bitcoin did for cross board payments, pakcoin is trying to do to local micro finance banks.

Pakcoin is very active on social channels at Facebook  and twitter


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Pakistan has been one of the leading countries in the world receiving remittances. Yet transferring money to Pakistan is often a problem and suspect to high fees.

Bitcoin is one of the solution that presents itself to let Pakistan break free of world regulations and truly become a bitcoin country. The remittance sector of Pakistan has already crossed over $15 Billion per Anum this year. The issue with these huge amounts of incoming funds is that they often come with high fees. This in turn lets foreign companies make lots of money, and lose funds that would have otherwise entered into Pakistan economy. As put in a recent article at Economist  the banking sector earned about Trillion $1.7 in just payments.

Bitcoin cuts out the middle man hence when someone sends you bitcoin it comes directly to you with no middle third party. By receiving this directly and paying someone else it helps in adding a bit more to the reserves while saving money on transfers.

It has been long believed that bitcoin will help developing countries, and a recent report by propakistani states that only 16% Pakistanis own a bank account with mobile banking taking up 4%. Think about now owning a bank by simply using bitcoin you put the entire sector into banking, at the same time giving a chance to alleviate themselves out of poverty by connecting the people to the global economy.

Ethereum has caused quite a buzz in the crypto world. Smart contracts and BaaS services now being offered by Microsoft have got the enthusiasts buzzing on the potential of what blockchain based services could bring.

There are however a few things that smart contracts cant do at present. Something that even eth founder has admitted to. You can argue that these might be limitations of smart contracts, but you have to remember that you dont need to use smart contracts everywhere. In some cases these might be very useful. Please understand that the technology under discussion here is quite new and can be improve and will be improved upon in time. What is to be covered here is why as a business owner or supplier a system such as a smart contract will not be used.(Again this is my opinion).

  1. Expensive:
  2. Risky
  3. No Legal Binding

Expensive:
From a sellers prospective I have to buy eth which is a token on the ethereum blockchain to put into the smart contract. This has to be valued at the same amount as the user putting in for the purchase. What that does is basically double the cost of the seller. Lets say I want to sell a candle costing $1 or Pkr 105, I have to buy eth worth Rs 1 or $1 and put it as a bond. This increases my cost and puts me at double the risk. Now as a retailer I have to not only send the item but have to put additional funds in place to back that. While in a perfect world this would make sense. Not only that if the seller just marks the item as sent and doesnt actually send it, it will put the buyer and seller funds both at risk. If the buyer decides to cheat he can simply implement that he never received the product to begin with. So from a business stand point of view my cost is doubled to operate while the rewards tend to stay pretty much same. One thing that can be used here is time bound contracts.

Risky:
The smart contracts are not that smart yet, so the receiver is required to mark in a certain period of time that he/she received the proper item or not. Yes he has put equivalent amount at risk by locking that in a time bound contract but if the buyer receives the item and decides to mark that he did not receive the item or he received a bad item and wants a full refund it will put the seller at great risk. This also causes the seller short of his item and his funds are now stuck, which in-turns put the buyer at a very strong bargaining point even if the seller did everything right. This can also play bad for the seller suppose the seller sent a bad product, or didnt ship at all, now the refund is a problem since either both can lose funds without actually receiving anything.

Legal Binding:
Since no government officially supports smart contracts, they have no legal binding. This is one area where smart contracts can shine. Contracts, partnerships, verifications are all areas that smart contracts can live by. For this to be successful in today’s world, it will be required for law to accept this as legal.

These issues are highly dependent on human nature and also exist in current system. However the aspect that there are trusted third parties that can resolve the issues based on facts and figures makes smart contracts not so feasible YET.

Enter Open Bazaar:
Personally I view openbazaar as more complete system. One thing that it offers is to provide a source of income while also giving the services of escrow agents. Where neutral third parties can become moderators of trade without even knowing they are mods. The only time these mods come into play is when a dispute occurs and to solve this dispute they are paid. I believe open bazaar has the potential to replace the current smart contract visions by ethereum and many other such coins/smart contracts tokens. As it helps develop a system which with current set-ups maybe more feasible. The cost for the sellers is good, additionally even if you put contracts on open bazaar not sure if that is possible right now can be enforced my neutral third party that can act with without vested interest, with viewable facts provided by both parties. I believe right now open bazaar has the potential to be a true decentralized platform for buying and selling goods as well as services that people envision with smart contracts.

Bitcoin Pakistan
Buying and selling bitcoin in Pakistan often a problem. We are often asked for trusted ways for trading btc to pkr securely and at the best rates possible. In this article I will cover the better options in Pakistan on how to buy or sell your bitcoins easily and securely. We will cover each option in detail and the merits and demerits of the method. Punjab, especially Lahore, Faisalabad, Islamabad, Rawalpindi seem to be the hot bed for bitcoin trading. I would like to cover all options including those of international options. However do take note that we will cover mostly local methods and not talk about btc to usd much as that is the most expensive unless you are looking to trade with higher volumes in dollar.

Urdubit:

This is a order booked based bitcoin trading platform where you can securely buy bitcoins and sell them at your own rates. This is one of the best methods as its the only known local exchange in Pakistan. It has been around since oct 2014 and done over 1000 btc in trade volume as of this writing. The best part of this exchange is that you are dealing with a great support team while being assured that your funds are not going to an exchanger directly. Since the platform is online and fully automated you dont have to wait for exchanger to send you bitcoins. Once you deposit funds you are free to buy or sell as many times and all bitcoin deposits and withdrawals are fully automated.

Localbitcoins:

Some people dont like going through lengthy AML/KYC policy thats where localbitcoins comes into action. It supports a peer to peer model with escrow options. Its one of the oldest peer to peer platforms. Its based on reputation system so you will know who is trusted exchanger by user reviews.  Again its a bit risky based on the fact that some exchangers have still been able to scam after building trust with clients then doing off localbitcoins trade. The fees here is also the highest in my view. As localbitcons charges 1% fee to both buyer and seller. Then the trade or ad poster also charges anywhere from 3% to 10% in addtional fee.

Local Exchangers On Facebook:

This is most risky way in my opinion. Most these exchangers dont even have a face on their profiles and scam alot. The ones that are trusted are selling at really high prices. This is again a slow method as you have to wait for the exchanger to send you the bitcoins. Be extremely careful here.

MyCelium App:

I love this app. Its a android mobile wallet with builtin feature to post trades. The problem here is the same as the above as this is again peer to peer model it becomes a bit risky.

International Exchanges:

I will update the list that supports Pakistan here soon. But while this is the best way to get bitcoins fast it is also very expensive. Since you have to follow AML/KYC then buy usd from local market and use your local usd account to wire dollars to international exchanges to eventually be able to purchase or buy bitcoins. Again selling is the same problem you have sell then wire back to your local usd account. The wiring cost is alot so only do this if you are looking to wire atleast $5000 and above.

An advise is to search Bitcoin Pakistan and on facebook and join all possible groups of such names to keep yourself posted on information and happening of bitcoin in Pakistan and abroad.

Pakistan:

A country with the 6th largest population in the world, has suffered due to bad decisions at the leadership level. With the country now facing a tough task to return a loan of about $50 billion in 2016 with 46% to be paid in USD is facing a default like situation.

We take lots of things granted. Banking is no exception. People just know it works and it should work. I believe this is also how bitcoin should be. In due time people will realize the power of bitcoin and the bank-less transaction system on which services similar to current banking will be built. The industry will play out on its own. But till then how do you really secure your investment from bad policies that can land you in a Greece like situation.

Freelancers:

Pakistan produces the 3rd largest freelance community in the world. We have seen people from freelance content writers to bloggers or top class programmers or security experts. The reason bitcoin can help is that its really difficult for them to get paid since paypal does not exist in Pakistan. Even if paypal was there it would still be very costly. Services such as payoneer have tried to fill the gap left by paypal but still seem very expensive. As compared to this bitcoin is transferred over with just a fee of 0.0001btc per transaction which in this day and age is chump change. And really shows its true colour when you have to do micro transactions. This makes it easy for anyone to receive this commodity or digital asset on their mobile, desktop or even on a piece of paper.

Remittance:

One thing when we talk bitcoin is about remittance, the reason for this is that Pakistan is on the receiving end of about $15+ billion every year in just remittance. But again ways to get this get people to pay higher cost for slower means. In addition to this it becomes harder to send small amounts of funds, it also becomes very costly.

Payment:

Success of EasyPaisa, Upaisa, Mobicash and UBL Omni
A country with majority of population below poverty, and uneducated with limited banking has seen success of expensive retail micro banks in the form of easypaisa, upaisa, mobiecash and UBL Omni, have already laid the foundation of mobile banking. Bitcoin is primed for internet and best source to keep things open on a public ledger. It doesnt matter how bitcoin works as all the people need to know is that, it works. Transferring bitcoins buying selling them via localbitcoins, on facebook or at exchanges or trading platforms such as urdubit has been building the eco system in Pakistan and making it easy for everyone to buy and sell.

Store Of Value:

At times people dont realize this but bitcoin or btc will always be yours no matter how much its worth. Due to current way the financial system works in the World, pretty much all countries are running on loan from either IMF, Asian development bank, world bank etc. Who are in turn taking loans from Federal Reserve, which control the printing of USD and has the power to print as much as it wants. This builds an ecosystem that is being controlled by just a few. With bitcoin and buying it you eliminate the need for this system. This also helps you use bitcoin as gold a store of your assets.  While we dont recommend anyone to buy or sell bitcoins the choice is totally yours.

Validation:

The technology and power behind bitcoin is helping people store contracts on the blockchain. Since bitcoin blockchain is the strongest in the world it makes it extremely hard for anyone to hack or really make it feasible to hack the network. As with current situation we often see dispute on land records that are kept in paper ledgers and usually cause deaths on dispute over ownership. It will be great to see these problems fixed by registries that are done on the blockchain.

Conclusion:

As mentioned earlier bitcoin or btc solves lots of problems that may exist not only in Pakistan but also through out the world and especially 3rd world countries. The poor the country the lesser education the lesser access to proper accountability or banking the more likely the country will benefit from integration of such services. No wonder commonwealth recently started pushing member states to really look into bitcoin and its usage.