Why Kurdistan Needs Bitcoin…

Orient Research

Published in

Coinmonks

9 min readFeb 20, 2022

Exploring potential use cases of Bitcoin in Kurdistan

What is Bitcoin?

Bitcoin is a decentralized cryptocurrency founded in 2009 by ‘Satoshi Nakamoto’ in wake of the financial crisis. It was created due to a lack of trust in the current global financial system and aimed to give people control of their financial destiny as opposed to relying on governments and central banks. It is currently the world’s largest cryptocurrency with a market cap of over $700 billion.

Bitcoin allows people to control their own finance and limits the control of their government’s currency. With bitcoin, there is no central bank, nor a single administrator. Transactions are verified by network nodes through cryptographic technology and are recorded on a public ledger — the blockchain. Bitcoin’s position as a currency is often debated, as it is not widely used as currency, but rather as a store of value, just like gold.

In recent years, due to Bitcoin’s drastic price increase, it has often been viewed as a ‘get rich quick scheme’, and people have been reluctant to welcome it. However, the adoption and understanding of Bitcoin are slowly increasing and are likely to continue to do so. With the increase of understanding and regulation, it is likely that Bitcoin will cement its place as a credible investment within the global financial sphere.

But who needs Bitcoin?

Countries that have dangerous and authoritarian governments need Bitcoin the most. In stable countries, although current adoption levels may suggest otherwise, Bitcoin is not as vital as it is in developing countries. This is due to the instability and the higher likelihood of currency devaluation.

Afghanistan: Women Paid in Bitcoin

For example, in Afghanistan, where women have almost no freedom and are not allowed to work. In response to this, a blogging/social media startup is paying approximately 2,000 of their staff in Bitcoin. Not only are the women able to work and gain valuable skills but they are also being paid a great amount — earning nearly the average yearly salary in one month.

Closer to home….

In Turkey, the government cannot be trusted by most Turks, never mind the Kurds. The ruling AKP party has constantly been stripping citizens of their civil liberties and freedoms. The Turkish Lira has also been devaluing; what was once a relatively stable currency has lost nearly six times its value in the last 10 years. Due to the incompetent government, citizens of Turkey are becoming poorer — through no fault of their own. If one had decided to invest their Turkish Lira into bitcoin, rather than see it devalue drastically, they would have become wealthy. Obviously, this would have required incredible foresight, however, it still exemplifies bitcoins potential to help out the small man. If Turkish citizens now choose to invest a portion of their savings into Bitcoin (infrastructure permitting), they are mitigating themselves from the high risk of the further demise of the Turkish Lira.

Beyond Bitcoin: Cryptocurrency For International Payments

Currently, there is a significant Kurdish diaspora who regularly send money to their relatives in Kurdistan via international payment systems such as Western Union. These payment systems are both inefficient and expensive. Cryptocurrency has the potential to disrupt this industry and be a potential solution to the problem. Cryptocurrency transactions are much cheaper and faster than conventional payments. However, as of yet, there is no established reliable cryptocurrency suitable for widespread use. In addition, Kurdistan lacks the infrastructure and technological literacy to utilize these payments (so do most countries in fact). That said, in the future, it is highly likely that with an increased understanding of cryptocurrency and the required infrastructure, diaspora Kurds will opt to send payments via cryptocurrency rather than the currently available outdated methods.

Barriers to access

On June 25th, 2020, The High Council of Fatwa in Iraqi Kurdistan ruled that the use of cryptocurrency is haram due to its lack of government support or regulation. The council argued it is akin to gambling, rather than currency. They maintained that as currency is usually issued by a central bank and is government regulated, then as cryptocurrency is neither of these, it is prohibited. This Fatwa will likely prevent religious Kurds from engaging in cryptocurrency usage. Although, as both Bitcoin and cryptocurrency grow and their use cases are tested and proven, cryptocurrency will become more accepted and regulated, therefore the Islamic stance on it may change.

In Summer 2021, Bako Faisal, who referred to himself as the CEO of Praetorian Group International (PRI) ran a cryptocurrency fraud scheme from an office in Erbil. He defrauded 3,000 people for a total of approximately $40 million USD. PGI has now shut down and Faisal has allegedly fled to the UK. Occurrences such as this demonstrate the danger of investing in unregulated investments. Even if Bitcoin and cryptocurrency have practical use cases in Kurdistan, it will be incredibly difficult to develop the trust levels required to increase adoption. On the contrary, investment scams happen in regulated investments, from real estate to equities — scams are not limited to cryptocurrency. However, the perception that bitcoin is at best dangerous, and at worst a scam, has been all but solidified and it is unlikely this will change anytime soon.

In both Iraq and Turkey, bitcoin is banned. Yet, the whole point of bitcoin is that it is decentralized and contrary to the interest of governments. It is in the interests of both Turkey and Iraq to ban bitcoin, as they want to continue to keep their citizens enslaved through the use of their respective fiat currencies. In the short term, the banning of bitcoin will likely act as a barrier to adoption, but in the long run, it will not. Furthermore, If a government wants to limit its citizen’s freedoms by banning bitcoin, then the chances are, the citizens probably need bitcoin!

In Iraqi Kurdistan, unlike Turkish Kurdistan, the currency is relatively strong, mainly due to the country’s wealth of oil reserves. As discussed earlier, when a currency is weak and is likely to further weaken, is when the biggest opportunities for Bitcoin arise. As the Iraqi dinar is relatively strong and is not anticipated to devalue anytime soon, it limits the likelihood of bitcoin adoption. Conversely, Turkish Kurdistan has an authoritarian government and a weak currency so the need for bitcoin there is higher, however, the region severely lacks infrastructure. In Turkis Kurdistan, most Kurds live in poverty and under oppression, barely enjoying basic rights. So, as their basic human needs are hardly being met, their financial position (and Bitcoin) will probably be the last of their priorities.

Kurdistan’s Advantages

Many people in the Kurdistan region are unbanked. For example, in Iraq, less than 1 in 10 people have a bank account, with similar figures in Iran, Syria, and Turkey. At first glance, this may seem like a disadvantage. However, we believe it is much more likely to be an advantage — an opportunity for Bitcoin. Obtaining a bank account can often be difficult, it requires the right documents and identification, as well as mountains of paperwork. Conversely, a bitcoin wallet requires none of that and can be created in a matter of minutes. Also, as shown in Afghanistan, bitcoin has helped facilitate economic access for the marginalized and oppressed, who don’t have the luxury of access to banking.

In addition, Kurdistan has a young population with a median age of 20.5 years. Statistics show that young people are the most likely to use cryptocurrency. Kurdistan’s young population can only serve as an advantage in aiding the region’s cryptocurrency adoption. We expect as infrastructure improves, young people will be at the forefront of bringing bitcoin to Kurdistan.

Crypto Kurds: People of Note

Abdurrahman Bapir is the founder of Kurdcoin, the first and biggest cryptocurrency exchange in Iraq and Kurdistan.

Dadvan Yousuf is Switzerland’s youngest millionaire. Yousuf was born in Iraqi Kurdistan and arrived in Switzerland as a refugee aged three years old. He first invested in bitcoin when he was just eleven and became a millionaire at age 17 and cashed in on some of his fortunes in 2020. He is now CEO of the Dohrnii Foundation, which oversees the development of cryptocurrency software.

Ghass Mo is a Syrian developer living in Iraqi Kurdistan who gets paid in Bitcoin for working on open-source crypto projects. He left Syria in his early 20s due to the civil war in Syria. Mo said that working on Bitcoin in the last few years has changed his life and he has benefited greatly from online learning platforms such as Udemy.

Amir Taaki is the founder of DarkMarket, OpenBazaar, and Dark Wallet. He is a British Iranian Kurd who fought with the YPG against ISIS. He was featured in Forbes’ “Top 30 under 30 entrepreneurs” list in 2014. His creation Dark Wallet was an attempt at providing its users with the ultimate financial and personal privacy. He also worked with the group Rojava The Plan, which worked on multiple projects, both technological and non-technological, to advance Rojava’s decentralized economy.

What does the future hold?

We strongly believe that Kurdistan is a great location for Bitcoin adoption due to the region’s instability and the lack of trustworthy governments. However, the severe lack of infrastructure is likely to hinder this, mostly in Iran, Syria, and Turkey.

Out of all the regions, Iraqi Kurdistan is the most likely to have the highest bitcoin adoption in the coming years due to its better infrastructure. However, the strong Iraqi dinar and the relatively stable Kurdish Regional Government (KRG) are likely to limit the demand for Bitcoin.

In addition, the amount of money inefficiently entering Kurdistan through international payment services like Western Union will increase the need for alternative payment methods, and in the future, it is highly probable that a cryptocurrency will enter and dominate this space.

Overall, bitcoin and cryptocurrency, in general, are long-term projects and it is unlikely that we will see mainstream adoption anytime soon. However, as Kurds cannot trust their governments and they do not even have a state of their own, then, as technology, financial literacy, and infrastructure continue to grow, we believe there is a high likelihood that bitcoin will be adopted by the people of Kurdistan.

Do you think Bitcoin has a home in Kurdistan? Let us know in the comments section below.