After India, will Pakistan become another important Bitcoin hub?

Pakistan is currently the world's seventh most populous country with approximately 202 million residents. Currently, the country has many factors in place to accelerate Bitcoin adoption. As previously reported, Pakistan's parliament plans to abolish banknotes, and domestic Bitcoin trading volume has increased by 400%. Bitcoin.com recently discussed with Danyal Manzar, co-founder of Urdubit, Pakistan's first and largest Bitcoin exchange.

A large free market, but lack of payment solutions

Despite not being able to use PayPal, Pakistan still ranks among the top countries for freelance outsourced workers. In fact, “Pakistan ranks third in freelancer websites,” Manzar told Bitcoin.com. According to the New York Times, an estimated 10,000 IT graduates enter the job market in Pakistan each year.

Manzar described remittances as a “very big market” in Pakistan as well. He said:

“The remittance industry generates revenue of around $20 billion a year. Given the lack of jobs in Pakistan, the main sources of remittances are the UAE and Saudi Arabia, followed by Western countries.”

Despite a lack of jobs, Pakistan has been modernizing in recent years. Rapid lifestyle changes, technological innovation, and increased broadband access have all contributed to a rise in the number of freelancers in Pakistan. However, Manzar said that “there have been problems with the payments industry,” adding:

“Given that the job market in Pakistan will remain limited, we see some freelancers turning to Bitcoin as there is no PayPal and proper payment processors available here.”

Broadband consumption is growing rapidly

Mobile broadband use is growing rapidly in Pakistan, which the World Bank describes as leading the way in financial digitization in South Asia, with 6% of adults in the country having a mobile account, compared to the South Asian average of less than 2.6%.

According to the Pakistan Telecommunication Authority (PTA), the country had 29.53 million 3G/4G subscribers as of June 2016, compared to 14.60 million in July 2015. The total number of broadband users increased by 92% from 16.88 million to 32.41 million.

The World Bank also pointed out that currently about 100 million Pakistani adults do not have bank accounts and cannot access formal financial services. Only 13% of adults have formal bank accounts, and 27.5 million adults said that they are too far away from financial institutions, which prevents them from opening bank accounts.

With a large unbanked population, no PayPal, a large freelance industry, a significant remittance destination, and so many people subscribing to high-speed mobile accounts, Bitcoin could find a huge market in Pakistan.

Bitcoin Market in Pakistan

Manzar said that Bitcoin is admittedly still a new industry in Pakistan, but it is growing very quickly, noting that the country has very low banking penetration and limited POS terminals.

“Bitcoin provides a cross-border payment system as well as a local payment solution at a lower cost.”

Manzar’s Urdubit is a real-time Bitcoin exchange that uses the blinktrade engine. According to Coinhills, Urdubit’s trading volume has been steadily rising over the past few weeks and is the country’s top Bitcoin exchange, with daily trading volume twice that of Localbitcoin. He said:

"Our market share accounts for one-third of the entire market."

If what Manzar said is true, Pakistan’s daily Bitcoin trading volume is about 40 BTC, ranking 27th in the global Bitcoin trading market.

However, he also admitted that not many stores currently accept Bitcoin. Online, the situation is better, and many websites in the country have begun to accept Bitcoin as a payment method because the payment is faster and there are no chargebacks. Manzar pointed out:

“We think it’s only a matter of time before Pakistan becomes another major Bitcoin user after India.”

Meanwhile, Manzar said the Pakistani government “still has no position on Bitcoin.” Urdubit has received approval from the State Bank of Pakistan, the country’s central bank. Manzar said:

“The Central Bank of Pakistan considers Bitcoin to be a commodity, not a currency.”