07/11/2022

Cryptocurrency & its future: Is Bangladesh falling behind?

There are different types of cryptocurrencies such as: Bitcoin, Litecoin, Ethereum etc. The technology
makes it possible to send money between users without the need for important authorities like banks
and payment methods. It is created electronically, and because of how safe, secure, fixed, and quick it is,
it is currently utilized all over the world. Cryptocurrency transaction is supported by blockchain
technology which is the foundation of a new internet by enabling the distribution but not the
duplication of digital information. Later, it was utilized to launch Bitcoin, the first cryptocurrency. It is
used to cooperatively maintain the database that keeps track of Bitcoin transactions over a worldwide
network of computers. It can be designed to record anything relevant to money transactions. 1

The main problem with cryptocurrency is that only a few countries have formally acknowledged its
transaction. The main idea behind cryptocurrency is that it won’t be regulated by any officials and so
people have full freedom on their financial decisions. The absence of regulations creates unlimited
possibilities & also brings higher risk, making the currency more volatile. Also there are risk of trading
without proper knowledge and the threat of cyber-attack. But among all those chaos; benefits of
cryptocurrency are extraordinary, such as: lower transaction fee with instant & secured transfer,
elimination of fraudulent activities as no third party is present apart from the payer & payee and also
this currency can’t be faked. Also the amount of cryptocurrency such as bitcoin is limited which removes
the possibility of inflation & make this currency economically viable too.

Cryptocurrency is currently illegal in Bangladesh. The warning further said that these currencies do not
comply with “the Foreign Exchange Regulation Act” of 1947, the “Anti-Terrorism Act” of 2009, or “the
Money Laundering Prevention Act” of 2012. Thus, it is illegal to use these currencies in Bangladesh. The
main challenges of introducing cryptocurrency formally are:

 Bangladesh is a developing nation with a low technological illiteracy rate. People has to
comprehend cryptocurrencies if it is to be treated similarly to TK. Because most illiterate
individuals would not be able to grasp cryptocurrency at all.
 The BDT (Bangladeshi currency) and cryptocurrency have similarities. It is up to the central bank
to control the circulation of BDT, including inflation and recession. Cryptocurrency, on the other
hand, is nothing more than a computer algorithm. Therefore, without the use of cutting-edge
technology and professionals, this is not conceivable.
 The workings of cryptocurrencies are quite intricate. For instance, the Central Bank has a variety
of strategies to influence the interest rate and commodity prices, whereas cryptocurrency isn’t
bound to any regulations.
 Cryptocurrency's security system is also weak. Law enforcement organizations all throughout
the world struggle to keep track of criminal actions like hacking and double spending. Therefore,
it will take longer time for this to catch up with technical innovation.

From their peak values in late 2021, cryptocurrency prices have fallen by more than 50%. With the
spread of the global Coronavirus pandemic (COVID-19), the relationship between Bitcoin and the equity

1
https://www.investopedia.com/terms/c/cryptocurrency.asp
market has expanded. To alleviate the economic consequences, large blockchain enterprises such as
Elliptic, Chainalysis, and CipherTrace have indicated that they have cut their workforce or budgets. 2
According to some analysts, prices might decline significantly more before a long-term recovery. The
Biden administration and U.S. government representatives have indicated interest in new crypto rules.
Attempts are being made by lawmakers in Washington, D.C., and other countries to enact rules and
regulations that would make cryptocurrencies safer for investors and less desirable to hackers. Although
cryptocurrency regulation is a contentious issue, many contend that it will benefit both investors and
the sector as a whole. The proposal of stricter regulation of the digital currency sector is supported by
many experts. The overall impression among investors is one of greater uncertainty than normal as they
look for the right course of action. The rate at which the price of bitcoin changes has surpassed
expectations by a wide margin. More regulation can create stability in the unstable cryptocurrency
market. By letting customers use their preferred payment method to make purchases on their gateways,
fintech entities like PayPal and Square are also putting a bet on cryptocurrencies. More widespread
institutional adoption could result in more use-cases for regular consumers there are no guarantees, but
investors with a long term plan may see their value rise over time. For the long run, experts advise
restricting the cryptocurrency holdings to less than 5% of invertor's whole portfolio. Since last
November, the value of Bitcoin has decreased by more than two thirds. Ethereum, another may once
more surpass $4,000 in 2022 and may even reach $12,000 in value. 3 Celebrities, businesses, and even
nations are helping to make cryptocurrency more mainstream than it once was as a specialized financial
instrument. Cryptocurrency will keep moving in the direction of becoming a popular technology with the
help of new breakthroughs in the field.

So it is evident that the popularity of cryptocurrency is rising although it still remains a very risky
investment. Developed countries such as USA are formulating plans to formally introduce
cryptocurrencies as a legal way of transaction & business. So from that prospect, the government of
Bangladesh should also take steps to join the race of digital currency. Being the authoritative body of
monetary & fiscal policy, Bangladesh bank should be the forerunner in this journey. In this aspect, some
of the recommendations for Bangladesh bank are:

 Increase the technological literacy among commoners, create a pool of resourceful investors
with clear idea of the world of cryptocurrency and their mechanism. For that purpose,
Bangladesh bank can offer some courses as well as mandates other banks & Financial institutes
to take steps so that the customers can learn about cryptocurrencies.
 Formulate well defined policies for circulation, transaction and all other factors relevant to
cryptocurrency and their distinction with paper money.
 Organize training sessions for officials so that the regulation process regarding cryptocurrency
can be carried out properly. Create an environment of knowledge & resource sharing.
 The introduced currency should be pegged with a dependable currency such as US dollar so that
the exchange rate stays compatible.
 Take necessary measures to prevent cyber-attacks & strengthens the overall security system.

With one of the largest population of the world, Bangladesh has an unlimited potential for being a
pioneer in the fourth industrial revolution. Cryptocurrency is all its shortcoming seems like the future
medium of transaction. As the mandated vision 2041 which targets to become a developed country by
the year 2041, Bangladesh should take proper initiatives to formally introduce cryptocurrency.

2
https://www.fortunebusinessinsights.com/industry-reports/cryptocurrency-market-100149
3
https://time.com/nextadvisor/investing/cryptocurrency/future-of-cryptocurrency/