Block chain technology is the latest buzzword, ending itself both to get–tich-quick schemes, and to both new financial instruments, in particular, new form of currency, which takes a step further from modern fiat currency, which itself was a new form of currency, replacing the ge okd gold standard only in the 20th century. It was thus positive that Prime Minister Shehbaz Sharif took a meeting on this with relevant ministers in attendance, along with three CEOs of international data mining and asset tokenization companies. The present fiat currency is no longer blacked by physical gold or silver, but by the strength of the entire economy. Thus the dollar could no longer be exchanged for a particular mount of gold, but represented a value placed by market forces on the goods and services that it produces. Similarly, block chain technology goes a step beyond physical dollars, and records virtual dollars, in cyberspace. One of the characteristics of this new instrument is that it breaks the monopoly of the state over money. The state had monopolized specie first, with monopoly over minting coins, and now a monopoly over printing money. However, there has been no monopoly over ‘mining’ for e-coins. Central banks want to start issuing the virtual versions of their currencies as soon as possible.
Pakistan is also taking an interest in this new type of money, and the setting up of a Crypto Council was the first visible sign of a number of backroom efforts, especially at the State Bank of Pakistan. One of the problems with cryptocurrency is that money launderers, drug dealers and other criminals might use it to put their profits beyond the reach of law enforcement. Another problem is the need for vast amounts of computing power, and electricity. The latter is a particularly big hurdle for a country that, like Pakistan, suffers power shortages.
One of the problems of fit currency was that it itself became a commodity. That itself has created many issues. There is every sign that the same commodification is happening with crypto currency. While it is heartening that Pakistan has a PM who is aware the world is changing (witness his support of solarization), there is need to beware of fraud. Apart from criminals using cryptocurrencies to squirrel way their ill-gotten gains, there is also direct fraud being reported. The state must be very careful, especially where money is concerned.
