The small Himalayan kingdom of Bhutan has long been known for its commitment to environmental conservation, cultural preservation, and “gross national happiness.” However, as the country seeks to boost its economy and provide jobs for its young and growing population, it is turning to a new and unconventional tool: cryptocurrency.
Bhutan, like many developing nations, faces significant challenges in creating sustainable economic growth. The country’s main industries are agriculture and tourism, which are vulnerable to external shocks such as climate change, natural disasters, and political instability. In addition, Bhutan’s small size and landlocked location limit its options for export-oriented development. The government has attempted to diversify the economy by investing in hydropower and construction projects, but these require significant upfront investments and long-term planning.
Enter cryptocurrency, a decentralized digital currency that uses cryptography to secure transactions and control the creation of new units. While still relatively new and controversial, cryptocurrencysuch as Bitcoin and Ethereum offer several advantages over traditional forms of currency and investment. For Bhutan, the key attraction is the potential for rapid growth and global reach.
One of the main advantages of cryptocurrency is that it allows for faster and cheaper cross-border transactions. Bhutan’s limited access to international markets has long been a hurdle for businesses looking to export or import goods and services. By accepting cryptocurrencies, Bhutanese businesses can bypass the high fees, slow processing times, and currency exchange rates associated with traditional banking systems. This can make it easier for Bhutanese entrepreneurs to sell their products and services to customers overseas, as well as for foreign investors to fund start-ups and infrastructure projects within the country.
Cryptocurrency also offers greater transparency and security than traditional banking systems. Transactions are recorded on a decentralized digital ledger called the blockchain, which is immutable and tamper-proof. This makes it more difficult for fraudsters and corrupt officials to manipulate financial records or embezzle funds. For a country like Bhutan, where corruption is a persistent problem, cryptocurrency could help to create a more accountable and trustworthy financial system.
Another benefit of cryptocurrency is the potential for initial coin offerings (ICOs), a form of crowdfunding in which start-ups sell digital tokens to investors in exchange for capital. ICOs have become a popular way for tech companies to raise money without going through traditional venture capital channels. Bhutanese start-ups could use ICOs to raise funds for innovative projects, such as renewable energy or eco-tourism ventures.
Of course, cryptocurrency is not a panacea for Bhutan’s economic challenges. The emerging market is highly volatile and unpredictable, with prices fluctuating wildly from day to day. Cryptocurrency is also a relatively new concept that many Bhutanese may not fully understand or trust. This creates a risk of fraud and scams, as well as potential backlash from regulators and politicians who view cryptocurrency as a threat to national sovereignty or financial stability.
Nevertheless, the Bhutanese government is taking steps to embrace cryptocurrency and blockchain technology. In 2018, the Royal Monetary Authority of Bhutan issued a warning against buying, selling, or trading Bitcoin and other cryptocurrencies, citing concerns over investor protection and potential financial mismanagement. However, the government also recognized the potential for blockchain technology to transform the country’s financial sector. In July 2018, the government signed a memorandum of understanding (MoU) with a blockchain company, Druk Digital, to explore the potential of blockchain in areas such as remittances, supply chain management, and identity verification.
Conclusion
The concept of cryptocurrency is still relatively new, controversial and misunderstood, but countries such as Bhutan are taking tentative steps to embrace this technology. The Bhutanese government is aware of the financial benefits of cryptocurrency and plans to explore this technology further, but it must move carefully to avoid potential scams and negative effects on its economy. If Bhutan can successfully implement cryptocurrency, it could serve as an example to other developing countries looking to find innovative solutions to their economic challenges.
Bhutan, a Himalayan kingdom known for its focus on gross national happiness, is turning to new-age businesses to drive growth and returns. Druk Holding & Investments (DHI), the state-owned commercial holding company, is set to pitch to investors to raise up to $500m for a new crypto mining business, partnering with Singaporean group Bitdeer. Bhutan’s bet on crypto follows other countries like El Salvador, despite the sector being hit by sell-offs, contagions and scandals. Ujjwal Deep Dahal, CEO of DHI, suggests that the move will accelerate innovation in the country’s predominantly rural economy, which remains primarily reliant on the export of hydropower to India.
DHI’s commitment to new technologies extends beyond crypto, with the holding company exploring a project to deploy drones in the power sector. The company is also collaborating with the Singaporean government and the United Nations Economic and Social Commission for Asia and the Pacific to develop a national platform for sustainable, cross-border trade.
Mellerud, a bitcoin mining analyst based in Norway, has suggested that Bhutan could potentially become the biggest bitcoin miner per capita in the world, though he also suggests that raising $500m in a bear market for a crypto mining operation may be overly ambitious given the recent instability in the industry.
Despite concerns over cryptocurrency, Bhutan’s DHI remains optimistic about the potential of these industries, believing that they will provide platforms to solve problems and create a diverse portfolio of investments. Bhutan’s core portfolio remains focused on its main telecom, power, and aviation companies, and the country has averaged 7.5% annual growth since the 1980s, according to the World Bank. High-end tourism remains important for Bhutan, with visitors paying a $200-a-day levy.
