Money in bits and bytes 

Inside a Bashundhara apartment, underneath a brass metal chandelier, sit the cryptocurrency mining rigs. 

In the winter, these screenless computers are moved around the corner, where the excess heat they produce helps warm the house. 

Sifat (name changed to protect identity), a young man in his early 30s maintains the mining rigs as he searches for whatever cryptocurrency earns him the most per watt; but it is his trading in the crypto-exchanges that really keeps the endeavour afloat.

During a large part of the day, Sifat is glued to his computer, hoping to multiply his earnings by trading the cryptocurrencies that the mining rigs bring in for others he hopes will grow in value. 

Now that he has over two years of experience, he knows how to spot a 'scam coin' and which forums to trust. Most days, Sifat earns a profit.

One thing however, Sifat knows that if the local law enforcers somehow get an idea of what is happening inside his 1,450 square feet apartment in a sprawling neighbourhood of the capital, he is busted. 

"This is because most of them [law enforcers] do not understand what it is," said an apparently vexed Sifat, "This is the future."

Crypto traders and miners like Sifat are passionate about their rather secretive ventures as it matters to them that people have the ability to conduct their financial affairs without needing the permission of third parties.

"It matters to us because mathematically issued money avoids the corruption that human-fiat created money inherently brings to the fore by default," said Sifat, adding "It also matters to us because we can see a world in which everyone is rich, not necessarily in the sense of worldly possessions, but in the sense of freedom."

Birth of a revolutionary idea

US scholar Langdon Winner once observed that all technologies have their own politics. 

When it comes to cryptocurrency, the politics of its underlying technology, blockchain, are built around distrust – or, as crypto enthusiasts like to call it, "trustlessness."

To understand how this works, imagine the following scenario. The Bangladesh government announces that the next election will be held online. 

Naturally, this upsets Bangladeshis who do not trust the government to count and collect the votes fairly. 

One solution would be to let people run the vote-counting programme on their own computers. 

If everyone's voting programme could be kept in sync without depending on the government body, people could trust this 'distributed ledger' to keep a list of the votes. 

This is the blockchain: a technology that keeps data on many computers synchronised without having to trust a central authority, or even each other.

In 2008, an author with the pseudonym Satoshi Nakamoto published a paper that introduced both the blockchain and a decentralised digital currency built on top of it called Bitcoin. 

The problems that Bitcoin had to solve were: How do new coins get issued without a centralised mint? And how do you prevent people from spending those coins twice? 

Nakamoto solved both problems by having computers on the network compete in an energy-intensive mathematical lottery to determine who gets to add the next 'block' of transactions to the ledger. 

To compensate them for spending that energy, the winning computer is awarded some newly minted currency. This process is called 'mining.'

Bitcoin soon attracted a colourful cadre of early adopters, many of whom became fabulously wealthy as the price went from $22 in 2014, to $800 at the start of 2017, to a peak of $47,000 by the end of January this year. 

A large contingent of the early acolytes were ardent libertarians from the Western countries who saw Bitcoin as a technology that encoded their beliefs.

Firstly, they came for the politics but then stuck around for the profit. 

In 'trustlessness' and 'distributed ledgers,' they saw a way to build a monetary system free from the government control – a goal that gained greater urgency in the aftermath of the massive bank bailouts during the 2008 global financial crisis.

Perhaps no one exemplifies crypto-libertarianism better than Brock Pierce – an American entrepreneur known for his work in the crypto currency industry. 

Pierce started mining Bitcoin in 2009 and went on to reach number nine on Forbes 2018 richest people in cryptocurrency, even as he faced a laundry list of financial and sexual abuse scandals. 

Today, Pierce is working on Puertopia, a crypto-libertarian society built from the rubble of Hurricane Maria that takes advantage of Puerto Rico's sunny weather and unparalleled tax incentives.

Driven by passion, and ideological reason

If the nouveau riche like Pierce are crypto's landed gentry, then small-time miners like Sifat are its subsistence farmers. 

Scattered across the world, some in the countries where mining or trading cryptocurrencies are banned by the government, they put in long hours to keep the mining rigs running, and the hackers at bay. 

Their yield is unpredictable at best and at worst, catastrophic. They may share the same principles as the crypto elite, but they are not making money hand over fist: In fact, they are just barely getting by.

"To be frank, I started as I had learned that one can make quick money in crypto trading. I thought of taking it as a gig. Once I began, I realised how liberating the experience is," said Sifat.

He has now made crypto his whole life for ideological reasons, not financial ones. Sifat is one of the true believers in the principles around which crypto is formed.

"Money is evil; the fiat money even more so. Do you know over 97% of the money in the world actually has no value? It is just numbers and papers. It is all made up," said Sifat.

There was a time, of course, when all paper money was backed by gold – the era of the gold standard. 

Tracing the history of this gold standard and its demise ultimately led us to one man – US President Richard Nixon – the man who untethered the cord linking currencies to gold; the man who sold the world fiat money.

Fiat money is government-issued currency that is not backed by a physical commodity, such as gold or silver, but rather by the government that issued it. 

The value of fiat money is derived from the relationship between supply and demand and the stability of the issuing government, rather than the worth of a commodity backing.

Most modern paper currencies are fiat currencies, including the US dollar, the euro, and other major global currencies.

The laws of supply and demand apply to money. The more money we have in circulation, the less the currency is worth. 

Our money supply has rapidly increased over the past century due to banks across the world printing massive amounts of money.

"Our hard-earned money is essentially stolen through a hidden inflation tax," said Sifat, "Inflation is the increase in the supply of money and credit. It is often wrongly defined as the general rise in the price of goods and services. But higher prices are actually a direct consequence of inflation since increasing the supply of money decreases the purchasing power of the currency."

"But in cryptocurrencies, you do not have that scope. Because to get a new crypto in circulation, you have to use computing power to compete against other computers to solve complex math problems, with that effort rewarded with bits of cryptocurrencies."

"This is like gold. You actually have to mine it from earth to have it in circulation. There is no other way around it," added Sifat.

Against the laws  

Australia based Bangladeshi Economist Tanvir Ahmed Siddiqui however begs to differ about Sifat's take on cryptocurrency. 

To him, money is a store of value, a unit of account and a medium of exchange and to be a really good currency, it needs to be durable, portable, divisible, uniform, limited in supply and acceptable.

"How do cryptocurrencies measure up against these requirements? They are clearly neither a store of value nor a good unit of account, as their vast swings in price show," he said.

Tanvir said cryptocurrencies are not a good medium of exchange, because law-abiding people and businesses do not want to own assets that are, "by virtue of their anonymity, ideal for criminals, terrorists and money launderers."

"While an individual cryptocurrency can be limited in supply, the aggregate supply is infinite. As of January this year, there were more than 2,500 cryptocurrencies. There could just as easily be 1.5 million," said Tanvir.

"Besides, many governments across the world do not acknowledge cryptocurrency as an alternative to fiat money. Bangladesh government is one of those governments," he added.

Bangladesh Bank has prohibited the dealing of virtual currencies or cryptocurrencies (such as Bitcoin, Ethereum, Ripple, Litecoin) by two cautionary notices issued in 2014 and 2017. 

These two cautionary notices connoted that transactions of virtual currencies are not supported by the Act of 1947, the Money Laundering Prevention Act, 2012, or the Anti-Terrorism Act, 2009 and banks are to refrain from making such transactions.

In 2019, in a circular, Bangladesh Bank directed banks to take safeguards against illegitimate online payment through international cards, it termed the purchase of cryptocurrencies as an illegitimate online payment. 

Transacting with Bitcoin or any other crypto-currency is punishable by up to 12 years in jail now in Bangladesh.

Until recently, a similar sort of prohibition was enforced in neighbouring India by its central bank, the Reserve Bank of India (RBI). 

In 2018, RBI banned cryptocurrencies stating, inter alia, all entities regulated by RBI are not to deal in virtual currencies including bitcoin or cryptocurrencies. 

However, in a historic judgment passed on March 4, 2020, the Supreme Court of India has lifted the ban on cryptocurrencies transactions in India. 

In the case of Internet And Mobile Association vs. RBI, India's Apex Court held, amongst other issues, that the RBI had failed to provide enough empirical data to demonstrate that virtual currencies had any adverse impact on the traditional economy and found a total ban on trading in virtual currencies to be disproportionate and excessive. 

Resultantly, the ban of RBI has been quashed and India has added one more badge on its shoulder of digitalisation and globalisation.

"The language of existing laws in Bangladesh does not help the cause of popularising cryptocurrencies in the country," said Mizanur Rahman, a banker and the editor of the Fintech magazine, Bangladesh's first and only magazine on financial technology.

"Words like 'currency' and 'mining' can be construed as printing new notes or mining coins, which is a government prerogative and not for individuals," said Mizanur.

"At the moment, the Bangladesh government seems okay with using blockchain for the payment system, as it may improve efficiency, but for tokens or cryptocurrencies, I want the  government to break with this  'Blockchain is good, cryptocurrency is bad' approach because cryptocurrency mining and trading are very much present in Bangladesh. So the government should find ways to legalise it," said the editor of Fintech. 

To crypto enthusiasts like Sifat, legalisation does not matter much. "I have been in it out of passion. The liberty that it provides is unparalleled to anything. You are minting and trading something that has actual values, unlike the evil fiat currencies which will eventually burst the bubble that it creates."