2021, the year of the institutionalization of Bitcoin as legal tender
The year 2021 is full of revelations for cryptocurrencies. Recognized for the first time as the legal tender of a sovereign state, El Salvador, with others wishing to take a similar path, Bitcoin (BTC) continues to increase its influence beyond exchange platforms.
People in countries with fragile economies or volatile currencies look with a positive eye on an asset that they consider to be more trustworthy than their national currency.
Bitcoin is then seen as an anti-inflation remedy, where some Westerners, who live in a kind of monetary paradise (stable and “trusted” currencies, minimal inflation), despise this same Bitcoin, which is only seen as a speculative asset.
Among the territories where cryptocurrencies are growing exponentially, Iraq and the Kurdistan region are among those that we did not necessarily expect.
👉 To go further – Bank Of America optimistic about the adoption of Bitcoin in El Salvador
Cryptocurrencies in Iraq and Kurdistan, a real craze strewn with pitfalls
For nearly twenty years, Iraq and Kurdistan, a territory shared between four countries (Iraq, Iran, Turkey and Syria), have lived in chronic instability, both security and economic.
Yet one man, Abdurrahman Bapir, believed in the power of cryptocurrency in his home region. Bapir is an Iraqi Kurd, graduated from King’s College London. He is known for having, in 2017, founded Kurdcoin, the first and currently only exchange platform for the Iraqi and Kurdish market.
Little helped by the general situation in the region, the use of cryptocurrencies in Iraq and Kurdistan has also suffered from the strictest regulation.
In 2017, the year Kurdcoin was created, the government-backed Central Bank of Iraq banned the use of digital assets. This year, it is the turn of the regional government of Kurdistan to ban exchange platforms from exercising on its territory.
Despite the region’s general instability and a de facto ban, cryptocurrencies have emerged in territory that is hostile to them. UK-based Kurdcoin is the driving force behind this success, claiming thousands of customers.
While this latter figure may seem low, it is on the contrary important for the region, where understanding of the issue of digital assets is close to nil.
👉 On the same subject – The President of Argentina is considering the adoption of Bitcoin (BTC)
Separating the wheat from the chaff, an additional difficulty to consider
The inconsistent legal framework has not helped cryptocurrencies gain a foothold in Iraq and Kurdistan. Between, on the one hand, a ban on use by the central bank alone and, on the other hand, the ban on exercise for the only exchange platforms in Kurdistan alone, difficult to differentiate what is legal of the forbidden.
Above all, the country’s economy being what it is, the population, often poor, wanted to touch this El Dorado represented by cryptocurrencies. However, to exercise, some have played the black market card, using unscrupulous stratagems.
Iraq and Kurdistan have not escaped the sad scams polluting the universe of crypto-assets. Ponzi schemes, disappearances of assets, frauds of all kinds: thousands of locals have been victims of scams from abroad, causing tens of millions of dollars to disappear.
Some might say that the regulator is the sprinkler in history: by wanting to ban cryptocurrencies and exchange platforms, because they are supposedly used to facilitate fraud, it is the real fraudsters who have won the first game.
Because no, the government could not prevent the enthusiasm of the population towards digital assets.
The potentially bright future of cryptocurrencies in Iraq and Kurdistan
Today, Kurdcoin offers a legal offer alongside counterfeiters and fights both against them and against the authorities.
The Kurds and Iraqis mostly suffer from a lack of financial literacy, much more than in the West. For cryptocurrencies, ignorance is multiplied by ten, which is associated with the government and civil society.
Despite this blackboard, why is optimism in order? According to Abdurrahman Bapir, every day sees the number of Kurdcoin users and transactions increase in the region. The interest is real and the insecurity at all levels presented upstream can only help the emergence of a crypto-economy.
Of the 40 million Iraqis, 60% are under 25. However, all the examples in Latin America, Africa and even the West, show that it is young people who are mainly interested in cryptocurrencies.
There are 37 million mobile phone subscriptions and 75% of the population has Internet access. Despite the underdeveloped digital payment industry, many young Iraqis know how to shop online and even pay for subscriptions in cryptocurrency.
Importantly, less than one in ten Iraqi adults have a bank account. Of the 90% of unbanked, how many have now switched to digital assets? To date, the exact answer to this question is impossible.
Still, many businesses are starting to use cryptocurrencies, which offer an alternative to the classic woolen socks, still very common in Iraq.
All social strata are affected: the rich add digital assets to their wallets, the poor have access to a market that banks deny them. In other words, the use of cryptocurrencies is spreading in Iraq and Kurdistan, more and more quickly.
Nothing seems to be able to stop this march forward, no matter what the government thinks. To see if the next few months will confirm this trend.
👉 On the same theme – Bitcoin: why is it more popular in Africa than in the rest of the world?
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About the author: Benjamin Allouch
Lawyer specializing in digital law and personal data. He quickly became interested in bitcoin and blockchain technology, and founded the blog bitcoin-blockchain.fr. He is interested in the emergence of blockchain law and the legal consequences of this technology.
All articles by Benjamin Allouch.