Bitcoin

In the US, the Federal Reserve has shifted towards a more accommodative monetary policy, signaling a ‘pivot’ from its previous stance. Meanwhile, the People’s Bank of China has implemented a targeted stimulus package, including interest rate cuts, a reduction in the reserve requirement ratio for banks, and a 500 billion yuan initiative to finance institutional stock purchases. Additionally, 300 billion yuan has been allocated to support corporate stock buyback programs. The Bank of Japan continues its policy of maintaining negative interest rates, while the European Central Bank is also moving towards lowering rates to stimulate the economy.

Global liquidity, which refers to the total amount of cash and other liquid assets in the global financial system, is rapidly approaching $100 trillion. Bitcoin has shown a strong correlation with global liquidity, with its price movements closely tracking shifts in the availability of liquid assets. As global liquidity expands or contracts, Bitcoin's price tends to move in the same direction.

Question: Is Bitcoin a global monetary alternative? Answer: Yes, it holds that potential. First, Bitcoin operates on a decentralized blockchain – no central bank, no government. Second, transactions on the Bitcoin network are resistant to censorship, making it incredibly difficult for authorities to block or reverse. Third, the Bitcoin protocol ensures a capped supply of 21 million coins, protecting it from inflation and central bank manipulation. In an era of currency overprinting and massive liquidity injections, Bitcoin offers an alternative to the existing global monetary system, an alternative anchored in scarcity.

Imagine this: 23 per cent of the world’s population – 1.8 billion people – are millennials (born 1981-1996), while an additional 32 per cent belongs to Gen Z (born 1996-2010). Together, they make up more than half of humanity. This is a demographic born into a world of smartphones, social media, and digital innovation. They are the most likely to embrace digital solutions, and at the forefront of this revolution is Bitcoin. As the first native digital currency, Bitcoin appeals to their sense of decentralization, autonomy, and financial freedom – positioning it perfectly at the top of the adoption curve for the next generation of financial systems. The future of money may just lie in the hands of these digital pioneers.

Bitcoin is a store of value. Bitcoin has limited supply. Bitcoin's decentralised blockchain technology and strong cryptographic algorithms make it secure. During periods of economic uncertainty or inflation, investors seek refuge in Bitcoin as a hedge. Bitcoin is highly fungible, meaning that one Bitcoin is equivalent to another, regardless of its origin or transaction history. Bitcoin is easy to use and trade. Bitcoin can be divided into smaller units called satoshis, allowing for flexible transactions and pricing. Bitcoin can be easily stored and transferred digitally. Bitcoin is not subject to physical wear and tear or corrosion, unlike traditional forms of money.

On October 7, the UAE made a groundbreaking move by exempting all crypto transactions from value-added tax (VAT), propelling the nation into the forefront of the global crypto revolution. This bold step not only legitimizes the virtual assets sector but positions the UAE to become the new global capital of cryptocurrency. With over $35 billion in institutional crypto investments since June 2022, the UAE is laying the foundation for a new era in digital finance.

South Korea has managed to attract $18 billion in cryptocurrency investments, while India has garnered $7 billion. Brazil, Turkey, and Nigeria have each secured $4 billion. Meanwhile, El Salvador has made a bold move by adopting Bitcoin as legal tender. Paraguay is developing regulatory frameworks for cryptocurrencies, and Argentina and Indonesia are focusing on regulating cryptocurrency exchanges. India is showing signs of a more favourable stance towards cryptocurrencies. Malta is becoming a ‘Blockchain Island’. The Philippines, Thailand, and Vietnam have established regulatory guidelines for the industry.

The question is: will Pakistan seize this transformative moment, adapt to the evolving digital landscape, and secure its share of the trillion-dollar digital economy, or risk being left behind in the digital dust?

The writer is a columnist based in Islamabad. He tweets/posts @saleemfarrukh and can be reached at: farrukh15@hotmail.com