What Impact has Bitcoin had on Bangladesh’s Fabric Industry?
Bangladesh’s textile industry is one of the essential industries in the country. It employs many people and generates a substantial income for the country’s exports. Nevertheless, the emergence of Bitcoin has had an impact on the industry.
7 Positives of Bitcoin that Benefits the Textile Sector of Bangladesh
1) The first benefit of bitcoin is that it gives the textile sector workers an opportunity for direct investment without going through any middlemen or brokers.
2) The second benefit is that their profits are also free from taxes when they invest in bitcoin through Bitcoin Pro. This can be a way for them to avoid taxation from government officials, which demands money from them under the pretext of so-called “income tax.”
3) The third benefit is that the workers gain access to financial markets through bitcoin which they couldn’t have otherwise, thus helping them diversify their investments without leaving their homes. This kind of financial freedom is not available with conventional banks.
4) The fourth benefit is that because of bitcoin, the workers can easily send remittances through online platforms to their families in Bangladesh at meager costs compared to traditional remittance services.
5) The fifth positive outcome is reducing their business expenses during all production and transactions since they can eliminate the role of intermediaries.
6) The sixth benefit is that bitcoin can be used to directly buy goods produced in Bangladesh, which will increase the export market for Bangladeshi products worldwide, thus increasing the local economy.
In addition, this money does not stay within the confines of other countries due to exchange rates and processing fees imposed on traditional financial transactions.
7) The seventh benefit is that it can bring more transparency into the business transactions since all transactions are recorded on a public ledger known as the blockchain. It can help reduce corruption in the textile sector through increased transparency.
8 Negative Side Effects of Bitcoin on the Textile Sector of Bangladesh
The rise in digital currencies such as bitcoin has harmed Bangladesh’s traditional banking and financial system. It may also create a significant crisis in the future:
1: Though Bangladesh is a country that lacks electricity and revenue generation to support the population, it has been found that about 60 percent of bitcoin users are from this country.
2: The textile sector cannot compete with the world market due to a lack of training and skillsets for working in a modern business environment.
3: Most of the population in Bangladesh has been using traditional financial tools such as bank accounts and cards for transactions purposes. Only 10 million people out of 160 million have been using internet banking services so far.
4: Although no one can predict future inflation trends, hyperinflation has targeted Bangladesh over the past four years
As a result, the value of the Bangladeshi taka experienced depreciation against foreign currencies, including that of the US dollar.
5: Bangladesh has experienced significant trade deficits over the past few years. As a result, it has had to rely on foreign aid and credit to meet its import bill. Bitcoin can be used as an alternative source of foreign currency, leading to trade deficit reduction in the future.
6: The Bangladeshi textile industry is one of the most labor-intensive industries in Bangladesh, with millions employed directly and indirectly in the sector. Bitcoin can be used to employ workers worldwide in the future, further increasing employment in this sector
7: As mentioned before, bitcoin provides users with financial freedom that they have never had in the past.
Though there is no official data on how many people are using bitcoin in Bangladesh, there is a huge potential for users to increase in the future, especially among the 20 million-plus population of young people who are part of the workforce.
8: The main challenge businesses face concerning transaction costs is foreign exchange (FX) rates.
Bitcoin is a digitally encrypted form of currency that approximately costs about ৳68,000 as of November 2017. Economists and researchers around the globe may have criticized it for being an asset bubble due to its high fluctuations in value over the past few years. However, this digital currency has both positive and negative effects on the textile sector of Bangladesh.