Cyrptocurrency in Bangladesh- Should Bangladeshi Bank Implement Blockchain Tech
Co-host and Founder of Bangladeshi Experience
21st May 2019
In this post, Rafy Hossain investigates the current trends of cryptocurrencies and look for the potential implementation of digital currency i.e a cryptocurrency in Bangladesh.
Cryptocurrency in Bangladesh: Why Bangladesh Bank should integrate cryptocurrency in a future of a cashless world?
Let’s start the discussion with what is cryptocurrency. Like any currency, cryptocurrencies can be used to buy goods and services. But unlike other currencies, cryptocurrencies are digital and use cryptography to provide secure online transactions. It’s a form of payment that can be exchanged online for goods or services.
Since it’s digital, there’s no physical coin or bill. So how does it work? Cryptocurrencies work using Blockchain, a decentralized technology spread across many computers that manages and records transactions.
One of the biggest appeals of these technologies is security. Because it’s decentralised, it can be much more secure than traditional payment systems. It’s also useful for making quick payments and the fact that there’s no transaction fees like traditional banks is certainly an added bonus.
According to CoinMarketCap.com, there are over 2200 different cryptocurrencies traded publicly. However, since cryptocurrencies are not insured by the government, you may be in trouble if the digital wallet company you store your cryptocurrency in, is hacked or goes out of business.
Volatility of Cryptocurrency: How it will affect if Cryptocurrency in Bangladesh gets implemented
A cryptocurrency’s value changes from time to time and that attracts a lot of potential investors. But that brings us to another separate discussion regarding stability because it’s a very common rule that for a currency to be accepted worldwide, it needs to be stable. Bitcoin for example, traded at almost $20,000 in December 2018 and then dropped to $3,200 a year later.
This price volatility creates a conundrum. If bitcoins might be worth a lot more in the future, people are less likely to spend and circulate them today, making them less viable as a currency. Why spend bitcoin when it could be worth three times the value next year?
Cryptocurrency in Bangladesh: Existing Legislation
And as for using cryptocurrency in daily life in Bangladesh, a lot of questions must be asked first before quite getting there. Bangladesh is one of the few countries in the world that consider bitcoin and all other types of cryptocurrency as “hostile”. Bangladesh Bank considers bitcoin and other cryptocurrencies as illegal under the Foreign Exchange Regulation Act, 1947, and the Money Laundering Prevention Act, 2012.
How blockchain technology or cryptocurrency will affect the currency regulation in Bangladesh
But recent times showed us the importance of banking from online. When Bangladesh was in lockdown, thousands of RMG workers walked to the capital city and nearby districts from faraway destinations just so they could collect their salaries in person. An incident like this points out that the traditional way of doing things is getting outdated.
Even with a significant increase in the number of private banks in Bangladesh, a large percentage of the population still maintains a cash-only lifestyle. Cryptocurrency may be a potential solution to this. Before even going into the technical bits, think of all the trees that would be saved if the economy shifts to a cashless future. On the other hand though, cryptocurrencies like Bitcoins need to be mined with advanced computers which requires a lot of energy. Bitcoin mining in China has increased their carbon footprint tremendously and this is something to certainly keep in mind moving forward.
Cities like San Francisco, New York, London and many others already have restaurants, bars, bakeries and merchants accepting cryptocurrency. But is Bangladesh ready for it? Not quite because the infrastructure for it is not there yet. But if supported by the government and citizens alike, there’s no reason why Bangladesh can’t integrate cryptocurrencies and try transform into digital Bangladesh.
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