I am not a Financial Advisor. This has just been my experience and what I have learnt dabbling in the market for a few years.
Bitcoin. Ethereum. Litecoin. All terms that have been booming in popularity after a certain plague. But what are they and how do these “intangible currencies” factor in a country that is riddled with taxation and has a rapidly decreasing currency?
Given to the internet in 2008, Bitcoin (BTC) was launched as an alternative to regular currencies. The code provided to everyone as Open Source, allowing it to traverse the depths of the net without any boundaries.
Creator unknown as of the date of writing, BTC started off at a measly estimated $0.0008, which is next to nothing even for a Sri Lankan.
However, it is theorized that the supposed creator of BTC, Satoshi Nakamoto, made off with nearly 1 Million BTC, before handing over complete control to Gavin Andresen.
At the current value, Nakamoto controls nearly $52 Billion in BTC, which is 2/3rds the GDP of Sri Lanka. One anonymous man or group of people, controls a net worth that is almost the GDP of a small nation, as a result of their creation.
While this sounds like a “get rich” scheme, BTC is a long term form of gambling. Any kind of Crypto is a gamble. Dabbling in Crypto could result in you having your tea and buns at Shangri-La’s Bakery each evening, or would force you to share your dinner each night with a dog on the road in Maradana. Alongside the volatility that comes with BTC-USD trading, it’s even more volatile with LKR.
Crypto in Sri Lanka
But, if we can look aside the volatility, we as people should not depend on one base. Cash is controlled by institutions and other entities.
Introduced for that very factor. Bitcoin is theorized to be a reply to the 2008 crash, when Wall Street purposely took the market to the edge and pushed it over for their own profit.
Our financial stability should not be controlled by anyone in a suit, and having stakes in Crypto reduces or nearly eliminates external control over our money, and gives control to us, the rightful owners.
Going further, Crypto here can take a big chunk out of what we all dislike, more money going into the corrupt big boys. Crypto reduces or nearly evades over-taxation, which is the highest income source for politicians here.
Looking at the price discrepancies between vehicle pricing overseas and here, the biggest factor is taxation. Vehicle Permits were brought in to let people who were close to the politicians to avoid the tax imposed on cars.
Mobility and Cryptocurrency
Although Tesla is the first bigwig to be an early adopter of Crypto in the Mobility/Automobile sector, quite a lot of smaller car dealers in first world countries have been accepting Crypto as payment for their sales. However, Tesla started a big boom in pushing Crypto, alongside Elon Musk and his explosive tweets.
Crypto promises anonymity and security over old school cash. Implementing this in certain specific local sectors, such as EV Charge Points, can reduce the price per KW charged to the customer, as paying via Crypto eliminates the need for any middlemen in the payment process.
The most vital tipping strength would be in directly purchasing vehicles from dealers overseas by using Crypto. This takes out the middleman, LKR. The main concern here is keeping our money out of certain pockets.
If you’re not the car owning type, and more of the taxi hiring type, then it could do you a solid by further reducing the fares for you, while increasing income for the driver.
How? Well, as mentioned previously, payment gateway surcharges, and on top of that, reduced taxes due to the anonymity. Uber, redirects their card payments through their HQ in Sweden, and then back down to the driver in Lanka. This, obviously, has multiple surcharges due to the flow of cash.
Uber takes 25% of a surcharge, while Crypto based Taxi services take a much less cut of the Drivers fare.
If we could increase the amount of EVs being driven as taxis, and implement Crypto as a form of payments at charge points alongside payments for rides. The avoidance of surcharges could end up in a noticeable price reduction for riders and a higher income for riders.
Crypto; the Advantages.
COVID-19 also greatly accelerated the use of contactless payment, and what better replacement for LKR is Crypto. Why? For starters, it’s completely global. You can send and receive money from and to anyone with a Crypto address around the world.
Security. Privacy. All these terms are rights taken as a joke by conglomerates who we give our data to. The argument that “If you’re worried about your data, don’t use the internet” is a sham. The internet has become a vital necessity in everyday life. Therefore the providers of these functions in the internet must respect our data, but they do not.
Crypto takes away all security and privacy concerns that come with data provision to the companies, or even any external parties. Afraid of your credit card information being captured when you make an online payment? Crypto wallets eliminates any issues that come with online payments. This come with the complete anonymity provided by Crypto.
Proceeding with Crypto locally
However, a big hurdle would be adapting a population that are already used to a precursor of modern payment methods; cash. With Sri Lankans, a big factor that pushes people towards newer things are discounts, offers or anything that reduces their product price. I’ve had people who are 99% tech illiterate, register and use Frimi and Solo due to their offers when initially introduced.
Money and savings will be a big Crypto push for people to use it regularly in day to day transactions. If we can initiate proceedings to implement Crypto, we will be ready to go when Crypto goes past its’ volatility phase. When it becomes stable, we are ready to use it at that time.
As usual, our Government is extremely backwards when it comes to Crypto, Crypto Support and any Companies utilizing Crypto here. Initial Coin Offerings (ICOs) are not allowed by law here either. This is due to aforementioned control over our own money. The Government does not like us having our own control. Therefore, they follow the Sino method of “We do not support it, nor do we allow it”. CBSL has clearly mentioned that they will not declare Crypto legal in Sri Lanka.
Crypto and other virtual wallets not based on older currencies are the future. If Sri Lanka is to ensure financial progress and stability, we must keep up. Efforts to implement Crypto must be done and made mainstream.