Pakistani bitcoin exchange Urdubit launched today in an effort to facilitate greater adoption of the digital currency in the region.
The launch aims to usher Pakistan into the wider bitcoin community, as its operators are bullish on the digital currency's potential as a solution to greater geopolitical issues in the area.
For now, Urdubit is focused on bringing liquidity to local bitcoin trading markets and educating newcomers on its promise as a decentralized commodity. Its founding partners, Zain Tariq and Danyal Manzar, are the founder and chief operating officer, respectively, of bitcoin community and advocacy group BitcoinPk.
Manzar told CoinDesk:
"When we started out educating people about the block chain and how it can be used as a payment gateway, we found many people mining bitcoins who did not have any medium to trade them directly into Pakistani rupees."
Urdubit uses the BlinkTrade open-source software and technology, which offers operators a cost-effective way to open bitcoin exchanges without having to hire a developer.
This is BlinkTrade's third client. It also powers digital currency exchanges in Paraguay and Venezuela.
The cloud-based, decentralized nature of the BlinkTrade software enables exchange operators to bring bitcoin liquidity to regions with less active bitcoin trading markets.
Unlike other exchanges, Urdubit offers Instant Deposits technology, which allows users to access their traded bitcoin immediately without having to wait for confirmations.
BlinkTrade head Rodrigo Souza said to CoinDesk:
"Most of the traders leave their bitcoins at exchanges because they don't want to wait for three to six confirmations to trade, and this creates a pot of gold that attracts hackers. It is not good for the exchange operators and not good for the system."
To do this, verified Urdubit users first need to confirm their bitcoin addresses. Once validated, the next transaction from that address will credit the bitcoin into the trader's account, so it is available for him or her to use instantly, with zero confirmation. This way, Souza explained, the trader doesn't have to leave his or her bitcoin sitting statically in any exchange.
Users are unable to withdraw any bitcoins or fiat while a deposit is unconfirmed, in a measure to prevent double spending. In the case of a double spending attack, Souza explained, the trader would lose access to his funds, and the exchange operators will get access to all his account data.
Urdubit charges a 0.75% fee on all trades, and 1% on deposits and withdrawals in Pakistani rupees. Bitcoin deposits are free; there is a 0.0001 BTC miner's fee on withdrawals.
'Money in the new world'
Doing business in Pakistan is heavily influenced by Islamic guidelines, Tariq told CoinDesk; people there are generally motivated by peace but challenged by education.
"We plan to create a platform where people feel safe with the world of bitcoin and hopefully substitute it for trading locally as easily as Pakistani rupees, while giving everyone an opportunity to invest in this commodity," Tariq said.
Michael Sweeney is founder, secretary and treasurer of the Women's Annex Foundation (WAF), a platform that encourages young women to exercise their intellectual freedom through blog-writing and social media and pays them in bitcoin to do so. While most of its operations are based across Afghanistan, it also has a presence in Mexico, Egypt and Pakistan.
Speaking to CoinDesk ahead of the Urdubit launch, Sweeney said the people that WAF has seen use and accept bitcoin in Pakistan are "very entrepreneurial", and that although there aren't any bitcoin exchanges in the region he was aware of at the time of the interview, he's observed that users find ways to use the digital currency through gift or phone cards.
He told CoinDesk:
"It has changed my perception of 'money'. Here in the US, we are so used to the USD being our currency. It creates the basis for accounting, finance, day-to-day groceries. Now I see things in terms of 'value' and 'time spent'. How much time did it take me to earn that new mobile phone or how many years did it take for my house to double in value? That is money in the new world."
"In the US, I have seen the data that 8% of households are unbanked and 25% of households are underbanked," he said. "In developing countries like Pakistan, those numbers can easily flip the other way and the majority of the people are unbanked. [...] Clearly the huge opportunity for bitcoin and its peer-to-peer transactions is in developing countries."
Manzar maintains that Pakistan's geography makes it poised for a successful bitcoin economy. It borders two of the world's fastest growing markets, India and China. China is one of its largest trading partners.
Chinese importers and exporters would benefit from an exchange that allows instant trades and payments in bitcoin without having to worry about dollars, he added, alluding to the country's record-low trade deficit and hence depleted dollar reserves.
"We have to be dependent on loans from the IMF, Asian Development Bank and World Bank. Bitcoin can open the path for Pakistan to bypass dollar-only trade barriers."
Whether the Pakistani government and bitcoin community can foster the digital currency's development well enough and long enough for it to become such an impactful economic force remains to be seen.
"There is only one thing that will give bitcoin value," Sweeney said, "and that is for people to start using bitcoin in their daily lives."
Educating the community
Closing the awareness gap, Tariq suggested, will be one of the first hurdles to overcome not just for Urdubit but for the growth of Pakistan's small but active bitcoin community. Right now it's unconcentrated, and sustained through other means of trust-based, peer-to-peer trading.
"You have to realize that even wealthy Pakistani people fear what they don't understand, and English being second language - it creates a small understanding barrier."
A friend of Tariq that goes by the alias Diablo Raja has been committed to promoting bitcoin in the local language, Urdu. Tariq is also touring the country at the end of the month to teach bitcoin newcomers about its uses and benefits.
"Most people are not aware of the bitcoin economy and think that they might be cheated by someone," Manzar added. "Pakistan has seen a lot of scams in daily life and over the Internet that people fall prey to."
Images via Urdubit