The Surge | bitcoin

Recent events have caused me to remain inactive and unable to keep my blog posts coming. Pakistan has recently seen good interest in bitcoin and blockchain. So much so that urdubit Pakistans First and only bitcoin trading platform was awarded UBL Innovation Award in Fintech Category at P@sha Annual 2016 awards. Followed by this announcement the company Blockchain Tech(parent company of urdubit) sold 40% of shares to Planet N who plan to collaboratively lead the blockchain development in Pakistan.

As recently as 2 months ago. Blockchain Tech (pvt) Ltd signed a MOU with IBM to collaborate on POC over blockchain based products. The idea is to bring use cases to Pakistan which will improve security in current setups and at the same time bring transparency to the systems.

With people now realizing the potential that bitcoin brings, the demand has grown tremendously. This can be seen by the growing trading volumes of bitcoin in Pakistan on localbitcoins and urdubit . We seen the avg increase to about 60% over a period of just 2 months. This has also increased as new investors now want to take part in trading bitcoin as a commodity. The price increase of btc over recent months from $900 to $1136 (as of this writing), while touching $1295 has also sparked interest in the general populations.

At this stage I would like to re emphasize the fact that bitcoin is still a high volatile market, while the potential as a technology remains limitless it is still a risky investment with a high rate of return. We have recently seen forbes, Washington post, bbc all cover bitcoin as it had reached price parity with gold where 1 oz of gold was equal to 1 bitcoin. The upcoming Winklewoss twins ETF fund is also playing an important factor in price increase. This fund named COIN will be regulated under SEC. If the offering is accepted we should see a heavy injection from new users into crypto currency. The expected date is March 13th, if the fund is not rejected by then then it will most likely go through.

 

A Reply — Bitcoin For The Common Man | bitcoin

With the rise of popularity of bitcoin, new questions new debates and some of the old debates come to forth light. While those who follow me and read my blog, I am sure you already understand the aspects of bitcoin in the current economy. The purpose of this blog post is targeted to those that question bitcoin and how it can benefit them. There is no one way to answer this question. Bitcoin is a software with so many different aspects that covering what it stands for is hard in one blog.  The one thing I however urge everyone to do is watch the Documentary Bitcoin: End of money as we know it. I know many will think that well the title starts with bitcoin so it will be from bitcoins prospective. However what it covers mostly is how money was created what was the vision of money and promissory notes before the rise of what we today know as currency. In addition to this there is tons of information available on creation of paper money, fiat or money if you just google the history of money.

The problem is that most people when they first hear about bitcoin start to question it naturally as I did. The reason for this is very simple we have been bought up in an ecosystem where this is the current norm and we take alot for granted. We dont really understand how things work but put trust in the “system” and just agree that it works.

The history of bitcoin is very close to the history of money. I recently had an interesting session at a company, later he wrote a very informative blog with questions that I believe are necessary to answer, as I believe they dont just belong to him but will be on the mind of everyone in the world. The reason I had to blog about this is because it was just not possible to answer to his queries just in his comments. The original questions will be taken from Mr. Muhammad Faizan blog.

The questions raised:

These are very interesting points and I answered the quite best possible short manner as I could in the comment on his blog. But will post the same answers here:

1. Bitcoin is not anonymous, its decentralized and peer to peer. You can easily trace it with IP and block explorers. How can something be anonymous be tracked on a public ledger?
2. For your particular case and why you would prefer to be paid in bitcoin. You and all the people who currently believe in the current interest based economy is advised to look at this link http://www.nationaldebtclocks.org/ and for Pakistan http://www.nationaldebtclocks.org/debtclock/pakistan so by this standard even your unborn child owes roughly Rs30000 if you consider just the money you owe to international lenders, not to mention you owe roughly 3 times more if you just add the money you owe the local bank.
3. Concept of money which was based on promissory note is no more hence your money does not have value.
4. For a tax abiding law citizen such as yourself and such as myself I am not allowed to spend my money internationally unless its done through expensive means such as credit cards that too at limits placed your current system.
5. Who uses them. I would like to invite you to a freelancer session we plan to do at The Nest I/O which will discus case scenarios where people of Pakistan have had to suffer not having access to international access at the same pay scale as the world. Another case is remittance cheap ones also. Currently banks charge hefty amount for micro transactions, which brings out the beauty of bitcoin. Even eCommerce sites can greatly benefit form this as currently the other options are slow expensive to use in Pakistan and worldwide.
6. Why would you want to get a wallet and why would you need to protect your bitcoins? Well why do you need to protect your cash by depositing in the bank? That is the same reason you would want to protect your bitcoins.

These were later again questioned which I was sure they would be as the common person just dosent understand why bitcoin was created.  I will answer them to the best of my knowledge under each question. But first a bit of history:

Cyprus: Timeline:
The crash of an economy presented by the system we trust as honest tax payers. Causing banks to close for months.

Pakistan: Timeline:
Sanctions causing hardships to Pakistanis after nuclear tests. I think we all remember this when dollar accounts were freezed and trade was made impossible.

Greece: Timeline:
This is the most recent one where banks closed down because the debit repayment wasent available and people had to lineup everyday to just withdraw 50 euro a day from atm. This was all presented to people who worked an honest living.

#1. I agree that Bitcoin or Bitcoin transaction is certainly not anonymous in its entirety but the owner is! The transaction is only traceable to a private address that the owners can change for every transaction to maintain their privacy. What good it is? No one can tell how much Mr. Satoshi owns but can only guess.
That is exactly the point. If I use my credit card and the servers of the company are hacked (Ashley Madison comes to my mind because it made media headlines ;)) Then everyone can use my credit card and commit frauds putting me under great risk. The transactions are traceable by IP. Infact as I mentioned there are block explorers that let you trace them to the exchange or address they originate from. But it still hides customer data where the anonymity comes in. Each exchange including urdubit does standard KYC so all transactions can be traced. If I ask someone to tell me how much you have in your bank would you want your bank telling me? Satoshi created a peer to peer system he should be rewarded more then he owns. FED created money no one is allowed to even ask how they back it. VISA created virtual money have you ever questioned them how much money they actually own?

To add to that bitcoin network is bigger then Worlds top 500 super computers combined +20% so who would you trust more a company server which has been know to be compromised time and again? or the unbreakable network?

#3. Regarding value, Bitcoin is highly fluctuating currency itself. What value it will have tomorrow? No one can be sure.

Yes you are right. That is why bitcoin is put in line with digital asset and with gold itself and not considered as much as a currency. The price is tied to supply and demand. A current example bitcoin out preformed all assets classes(fiat, physical commodities in 2015). The idea that bitcoin will be worth 0 or alot of money is always there. But it will always be yours no matter what value it has. In case of current financial system you are in debit no matter how much you save up(See above Cyprus, Pakistan and Greece).

#4. The benefits of no-fee or that the payments are cheap right now, I think, is temporary. As per law of diminishing returns, the miners will continue to lose economies of scale and would need to apply fee to offset the cost of verification of the transaction blocks. Who will eventually bear that cost?
Further, the limits currently applied on cards are there to protect interests of all parties. We should not ignore the good side of an established system.

Again right on the money. I love how you answer your points yourself. Bitcoin as we know it is based on supply and demand. If the demand remains and supply diminishes what will happen? If the demand increases and supply still decreases what will happen? Bitcoin is a global phenomenon so its not a company or government supporting it. Its the millions of bitcoinsers no matter if they are enthusiasts or  not, If they use it they become custodians of it and hence saying saying that these millions will one day wakeup and say we dont care about bitcoin and its useless is less likely then a bank or a company or government to go bankrupt. Again see trust in exisiting systems brought to life by the above mentioned crises (Crypus, Pakistan, Greece). Eventually if there are less bitcoins to be mined the cost of bitcoin will go up high causing better returns to miners on lesser network fee. Also bitcoin goes upto 8 decimal places for this very reason to allow micro transaction with near free transfers.

#6. There are serious risks with Bitcoins like there are for paper currencies – even some risks are still unknown and will be visible when there will be wider acceptance of the Bitcoins. We should not consider Bitcoins entirely safe and secure alternative. For a common person Bitcoins is relatively difficult to manage as compared to a bank account or a debit card.

Yes there are risks. But the risks as you can check above where I pointed to the crisis in Cyprus, Pakistan, Greece, also Venenzula and Vietnam (The list it quite long but even USA is in a trillion+dollars in debt.) Whereas you dont even own paper money again see debit cloaks. So having negative balance as opposed to some balance? I think the argument answers for itself.

Now talking about the ease of use. First of all credit cards are the worst way you can buy bitcoins. And the common question for a guy is why should I even buy bitcoin to begin with. Well they are cheaper to transact with when doing cross boarder payments(credit cards charge market USD rates plus 3% in Pakistan as we are talking with Pakistans prospective). You dont always have to buy bitcoins. You can render your services and ask for bitcoin payments or a salary based in bitcoin. You can hold it instead of gold, remember its a commodity also. Imagine what you could buy with Rs20000 in 2014 and what you could buy today with bitcoin if you had 1 btc instead of Rs20000 (which was roughly $200 and today is valued over $400). Freelancers and White hat security experts can get paid internationally. The local eCommerce websites can tap international markets by accepting bitcoin as its not prone to charge backs and fraudulent use of credit cards etc. Right now remittance is costing Pakistan around 3% to 5%(if you didnt use bitcoin) extra and the lower the amount sent the more in fees incurred to senders in international banking fees.

As for talking about managing bitcoins as compared to banks or debit cards makes me think you have never actually used bitcoin. A simple app is all thats required to use bitcoin.

A case for micro donations. Imagine anyone sending donation to anyone. This of the current corrupt NGOs(not of all of them are bad) but think of the donor money that is spent in maintaining an NGO to help the poor as opposed to getting the funds directly to poor at ground level.

Lastly I would like to close out this by saying, “Yes” bitcoin is still difficult to use and secure if you are looking to run it as a decentralized setup but isn’t that where yours and our services should make it easier for the user to use? Isn’t that what banking did with fiat system? If there was no Commercial banking and only central banking then you would have to take your funds directly abroad and pay someone right? Fiat has been around for ages and bitcoin is only as old as 2009 and already challenging the age old system currently in place.

Lastly I would just like to add 2 points that I think everyone should understand and question himself.

  1. If its your money shouldnt you be able to use it like you want? boarderless instant and without barriers?
  2. Panama papers is a prime example which proves that it wasent bitcoin that was used but our current trusted systems.

The Success Of Bitcoin Is You | bitcoin success

Bitcoin has been rising from USA to China to Pakistan. People are now beginning to realize its potential. Bitcoin is predicted to become a reserve currency(7th) by 2030 if the current trends continue. However I view bitcoin as the one and only true reserve currency. We have to understand that bitcoin is the only one of its kind from the other list of fiat dominated currencies that can truly be accepted anywhere and by anyone for anything. These options are further developed with the advent of OpenBaazar type services also.

Realization of the potential of a free economy has seen price of bitcoin rise steadily. in addition to this we now see the companies like steam even starting to accept bitcoin. For 3rd world countries its an even better opportunity as capital controls and strict banking requirements make it difficult to have access to proper credit card or debit card services. It makes it easier for people to use bitcoin as a sort of a prepaid system of making payments.

Today Japan is debating on accepting bitcoin as a proper currency which can be a huge step and a leg up on the competition. Bitcoin has caused a rise in the fintech revolution and no country wants to really ban it. They realize that the potential is there and they see that is bound to happen. How long will it take for true realizing is only a matter of time.

The Banking In Bitcoin | Bitcoin Banking

The rise of bitcoin has seen banks scrambling to implement blockchain technology into their current system. The underlining tech may truly be revolutionary, but thats not where the banking ends. I have posted a blog before referring to where the banks got it wrong. Banks and bitcoin is at war, so as it seems. The idea presented by satoshi nakamoto in my personal opinion was more on decentralization which was backed by a truly remarkable software in the form of bitcoin/blockchain that we see today.

Banking & Bitcoin:

A few things that have had confused me earlier or maybe I misinterpreted, was that bitcoin is a replacement of banks. The thing I have now come to realize is that bitcoin is really not the replacement of banking. But infact is a replacement for the current fiat currency as we have come to know it. Fiat as we know is governed and controlled by countries its accepted in. That is also why it holds value and is constantly exchanged back and forth with bitcoin. Why I say this is because I believe banking has so many more aspects to it then we as tech enthusiasts forget to see or realize.

Banks offer banking. Yes they are controlled and centralized but arent all the services that are being built on bitcoin the same? We see banks as a place to hold our money, isnt that what bitcoin wallet services such as bitgo or coinbase or mobile wallets doing the same? with the blockchain becoming bigger and bigger its harder to run the full bitcoin qt clients.

Then we look at services such as btcjam and bitfinex which offering loans and buying btc on leverage opportunities. Does that not fall into the space of a loan by a bank? I think they are very similar in nature. Banks now offer you running finance, or loans on interest where as these companies are doing the same.

Remittance is a hot topic in bitcoin. Bitcoin remittance has been talked about, and service have been built upon it. There are just too many to list here with each one operating in their requisite country of operation. While all try to take bitcoin out of the forefront they are built on buying and selling btc for consumers. This model has seen some success but not on a worldwide grand scale as of yet. If bitcoin remittance is broken down into its basics it basically offering what banks do with wire transfers to your loved ones in any country.

One more aspect that I would like to talk about here is escrow service, I guess you can compare that to Letter of credit as the banks call it. Basically its a guarantee  that once a service is tendered the liability of payment lies in the hand of a bank (third party). If we consider a bank a third party then there are many escrow agents working as these third parties to make this happen.

I believe bitcoin is a replacement for currency and not banking. Banks need to understand this and so do the crypto followers. The services that were being offered by banks once are now being offered by individuals who are mimicking the services of banking, one sector at a time. While its not a bad thing, I believe that banking is being revolutionized with the coming of bitcoin and it will be in the best interests of banks to realize that now then later.

Where The Banks Got It Wrong | Bank Bitcoin

In 2015 we saw numerous banks turning to blockchain the underlining technology of bitcoin to drive customer base away from btc and improve their own system in the process. An example was laid out where it was stated that Bank Of America alone uses more electricity then the entire bitcoin network combined. It was popular believe that the “beauty of bitcoin lies in blockchain”, I for one was sold on this. But the more you understand bitcoin the more you realize thats not the case, and the more you fall in love with the whole concept of bitcoin.

Many might disagree with me on this statement. While I am not saying that blockchain and bitcoin are revolutionary, all I am saying is that its not just the tech that makes bitcoin or btc special, its the underlining principle of the bitcoin that makes it the most disruptive tech in the fintech space.

The idea as purposed by satoshi nakamoto was loosely based on on torrent software where you would share your bitcoin via peer to peer system where you would not require central auditing or confirming authority. Now lets think about this for a minute. Decentralization and the open source nature of bitcoin is what make it so special. An  example is the recent development disagreement by the core developers where 2 developers purposed a fork of bitcoin XT. That saw the prices of bitcoin plunge to lows of around $150. While many thought that proposal was destroying bitcoin, I believed it was making btc stronger by displaying that no one has control over bitcoin. In the end it will be the people who will decide what is good for the network and not any one entity.

The banking sector was of the belief that its the blockchain tech that drives bitcoin, and without understanding the true nature of why decentralization is important they jumped on the blockchain wagon releasing their own chains and coins in the process. I think bitcoin and banks can live in harmony, how you may ask is very hard to answer. For one I think banks can use bitcoin as a settlement product within their networks. Think of bitcoin as Mastercard or Visacard. When the concept was brought forward banks went a head started incorporating these into their systems rather then coming up with their own individual cards. There is alot to cover of how btc and bank can live in peace then this one article, but the idea can be be implemented in ways that banks haven’t imagined yet. I think time will only improve our understanding of what bitcoin is and how it will shape the future of fintech.

The Launch – Paybill | Bill Payment

Its getting easier faster and better to use bitcoin in Pakistan. Now Paybill has gone live after the advent of topup24 going live with instant mobile topups or easyload to any mobile network in Pakistan. Paybill plans to make bill payments a breeze no matter where you are fast and instantly. Now you can simply enter your consumer number/account number and a mobile number to pay your bill instantly and receive instant sms for confirmation of bill payment by the bill payee company.

As I have mentioned before its very important for people to start using bitcoin and not just trading in it to realize the true potential of btc. With this vision, eCommerce sites such as http://www.yourstore.pk and http://www.sakamaonline.com also came online accepting bitcoin in Pakistan. We are on trying very hard to convince big name brand names to start accepting this and create a ripple effect in our ecosystem.

Pakistan is already the 3rd largest freelance work force producer in the world if they start accepting bitcoins with the absence of payment gateways such as Paypal. A Software with value such as btc can help them overtake a gap left by such service. While services such as Paynoeer and Perfect Money have tried their level best fill this gap but the issue is that these services are expensive and not easy. Hopefully one day we will see bitcoin raise to a level it was envisioned by Satoshsi Nakamoto.

What and Why? | Bitcoin Pakistan

I figured it was time to update and give some information on what excatly is bitcoin and blockchain to my fellow country men. This is my view of what it is and why it is. Please realize that bitcoin in my opinon was created to make money truly yours. Currently all financial systems work through centralized banking, anyone living in Pakistan already know the problem with the control the banks have right now on our accounts. The idea is what I believe was in the head of satoshi that led to the creation of the first true peer to peer (similary to torrent) type currency known as btc or bitcoin. He laid the foundationg of an opensource ledger(database) for the general public where every entry was single entry and could not be removed.  But all the ledger was synced with the other users running the software on the network. This software was known as a wallet which can be considered like a bank account of sort for the comman man. While you can have many wallat addresses in a single wallet it resides in public ledger. This is also why it is important to backup the wallet.dat file of your wallet if you have the full software running. There are now online wallets and paper wallets you can also store your bitcoins on online exchanges or bitcoin trading platforms. Do remember if you lose your wallet on your pc or paper wallet for any reason its gone forever. I believe that bitcoin is still in its infancey and has a long way to go, think about how internet came about:
There was Fax–> Bullitin Board Service or BBS–> email –>internet
It took it a long time, it wasent an overnight revolution. Similarly bitcoin is very new. While it has captured a huge market it still has a long way to go. There are benifits of the blockchain and bitcoin as both are being innovated upon. Some companies are working on blockchain(ledger, or database) such as voip (p2p) coins such as korecoin and viorcoin then there rare coins such as bay, blk etc that support smart contrants and p2p markets. Then there is the ripple gateway that is trying to replace the current swift system.

Then there are services that belive in bitcoin itself and are using its financial power to change the way we bank or use money today. Think about the fact that you own one currency that works throughout the world you dont have to worry about Pakistani ruppee price fluctuating aganist the USD (this is an example) as PKR is not accepted everywhere in the world. It is a true boarderless curreny that I believe is brining people closer together. The launch of https://www.coinpip.com is one such gateway which lets companies pay their developers anywhere in the world. Its a singaporian startup that is doing alot of work in this feild. They take the bitcoin out of picture but use bitcoin in the backend. Then there are exchanges and atms and user acceptance poping up everywhere around the world, such as microsoft, dell, paypal, namescheap, overstock etc. There are physicall vendors in Pakistan too. There is a shop in Gunjarawallla, a petrol pump/ gas station in Karachi, then http://www.paybill.io where you can pay your bills for Malaysia and Pakistan and also do mobile topups, or easy loads http://www.a2zlawn.com that are accepting bitcoins for payment,  you can also check http://www.coinmap.org for a few other locations that accept bitcoins.

I have also witnessed the power of bitcoin recently and how user to user interaction increases adoption.  I was contacted by a person who wanted to buy stuff from a vendor in another country wanted to learn about bitcoin and how it could benifit him. After consultations with us he wanted to give it a go. But his vendor was also fearfull of the price fluctions and how bitcoin could be risky as he believed it cant be real. The user here after consultation convinced his vendor that he would be taking this risk so there was no worries at his end. The first transation they did took all in all 15 mins and the cash was transfered in the vendors bank account while saving the payee money as compared to if he had used a credit card or wiretransfer. When the vendor saw this his response was: “This is really very easy, will you make more payments like this?” This is what I believe money should be, a truely boarderless medium with worldwide acceptance. The bad policies of some countries have left them in poverty, this doesnt mean that that the citizen of that country should not even have control over their funds/money and acceptablity etc. If the currency is truely boaderless he doesnt have to worry about local exchangers even.

I do believe this is only the begining of the future what the future holds, can only be witnessed in time. I do believe there is a need for one global international currency even the world powers such as china, russia and UN want this. There is an interesting article that was put out back in 2009 http://www.telegraph.co.uk/finance/currency/6152204/UN-wants-new-global-currency-to-replace-dollar.html and I think bitcoin is the answer for that.