Can Bitcoin save lives? Hell yes!!! Read the article to the end and you’ll understand.
P2P and Hawala are systems that operate as free money transfers during the most critical moments of your life, allowing for the transfer of money without its physical movement and the need for banks. These methods have a deeply rooted history and have positively impacted society since the 8th century. This system helps millions of people worldwide pay bills, feed their families, and maintain basic life necessities daily, not just in third-world countries. When combined with Bitcoin, this system is extremely efficient and resilient.
The Universal Declaration of Human Rights speaks, among other things, about the right to an adequate standard of living. However, ensuring an adequate standard of living requires financial resources to purchase food, water, and secure safe housing. Increasingly, we are witnessing how banks and governments indirectly violate and hinder these fundamental human rights with their actions, such as freezing accounts, withholding financial assets, and the like. This restrictive behavior doesn’t only affect individuals but entire nations, like Pakistan when the Taliban took power. One of the first actions was to freeze the financial assets of all Pakistani citizens, leaving them unable to meet these basic human needs. We’re talking about millions of innocent women, children, and the elderly. A similar situation occurred at the beginning of the war in Ukraine, where banks were closed, traders turned off their POS terminals, and ATMs were empty within 4 hours of the war’s outbreak.
I personally witnessed this during the onset of the Ukraine war and became a victim of this bank run. Believe me, there’s nothing worse than finding yourself with your 1-year-old child and a wife who relies on you, in a city being bombed, with people dying around you, without access to your money, and unable to even buy gasoline to flee such a place. Fortunately, I had Bitcoin and knew the P2P trading community, but without BTC, I would’ve been trapped in a city where the Russians killed and tortured several of my friends. But back to the article, in which I want to show how strong and resilient BTC is in combination with HAWALA or P2P transfers. Sadly, people get enticed by low fees and use exchanges like Binance, which are heavily centralized, and as history has shown us, that’s always, damn, a bad idea.
But to change this, it’s mainly up to us, developers and exchange owners, to create products that are simple and cheap, just like Binance, for example. Below, I will explain how hawala works; try to imagine it combined with Bitcoin, resulting in an extremely secure, fast, and flexible payment method. With it, payment methods could be combined, and Bitcoin would serve as a medium and ensure the transfer
History: Hawala, which translates from Arabic as “transfer or delegation”, developed in the 8th century due to the need for a safe and effective method of transferring money during trade expeditions. The system gradually spread throughout the Middle East and South Asia, becoming an integral part of the trading community.
In the 20th century, as many individuals from South Asia migrated to the Persian Gulf for work, hawala became a popular method to send money back home. Although the system faced some regulatory challenges at the turn of the century, it remains a significant means of transferring money in many parts of the world in the 21st century.
Advantages: Hawala offers several advantages that explain its enduring popularity. These include:
Speed: Transactions can be executed very quickly, sometimes within minutes, which is much faster than traditional bank transfers.
Availability: Hawala is accessible even in areas where traditional banking services are unavailable. This is particularly crucial in many developing countries.
Simplicity: Transactions within the hawala system are straightforward and don’t require complex documentation or bureaucracy.
Low cost: Hawala often offers lower fees than traditional bank transfers, which is essential for many.
No technology: Hawala developed and operated for centuries without the need for modern technology. Most transactions were based on verbal agreements and trust between parties.
Cultural importance: In many cultures, hawala has become an essential part of social and business life. In countries like Afghanistan, hawala is the primary money transfer system.
Trust and chivalry: Hawala operates on a trust system and personal relationships. Historically, the credibility of a hawaladar (the person managing transactions) was often judged based on their reputation and chivalry.
Trivia and facts:
Suez Canal Construction: In the mid-19th century, when the construction of the Suez Canal began, a massive workforce was required. Thousands of workers from Egypt and other parts of the Middle East were hired for this project.
Due to the inadequate infrastructure in the area, there were challenges in paying these workers. Traditional banking systems were either unavailable or too slow. In this instance, hawala played a pivotal role, allowing for quick and efficient payments to workers without the need for physical movement of money.
This example highlights how hawala can serve as a flexible and practical solution in situations where traditional financial systems fail or are unavailable.
Emergency Situations: Hawala played a pivotal role in providing financial aid in areas affected by disasters or war conflicts. In situations where infrastructure was destroyed or unavailable and banking services were non-functional, hawala was often used for rapid and efficient delivery of financial assistance to those most in need.
For instance, the situation in Somalia in the 1990s can serve as an example. The country was hit by a civil war and a humanitarian crisis. Global humanitarian organizations frequently utilized hawala to transfer financial assistance into the country where the banking infrastructure was virtually non-existent. This instance highlights how hawala can serve as an essential tool in responding to humanitarian crises.
Labor Force Migration: In the 20th and 21st centuries, hawala played a crucial role in transferring money between migrants and their families back home. As workers moved abroad, they often used the hawala system to send money home.
This was particularly true for South Asian countries like India, Pakistan, and Bangladesh, where millions of people migrated to countries such as Saudi Arabia, the United Arab Emirates, and Kuwait for work. Due to deficiencies in the banking and financial systems in these countries and high fees for international bank transfers, hawala emerged as a more efficient and cost-effective alternative.
This example shows how hawala can serve as a tool for social and economic support in a global context, allowing individuals to provide financial support to their families and communities back home.
British Empire: During the British colonial rule in India in the 18th and 19th centuries, British authorities frequently utilized the hawala system to transfer money between Great Britain and India. This system was deemed reliable and efficient, facilitating the smooth operation of the empire’s financial transactions.
The hawala system was often used in conjunction with the “bill of exchange,” a document used in international trade to represent a demand for payment. This was one of the key mechanisms that enabled the British Empire to effectively manage its vast colonial holdings and trade.
Hawala and Crime: In some instances, hawala has been used to support illegal activities. For example, in the 1990s when the Taliban ruled in Afghanistan, hawala was used to finance terrorist activities.
Given the anonymity and lack of official documentation associated with hawala transactions, this system was appealing to criminal organizations, using it to transfer money undetected by legal authorities.
However, this represents only a small portion of hawala usage and should not overshadow its true significance and value as a vital financial tool for millions worldwide. It’s also essential to note that like any financial system, hawala can be misused, necessitating proper oversight.
The key to the freedom and prosperity of communities lies in the free transfer of money without restrictions and sanctions, and that’s where we must begin. If we allow sanctions and various constraints to be applied and expanded, affected communities will drown in poverty and scarcity. As we know, nothing breeds violence more than poverty and deprivation. It’s no coincidence that countries and communities with high poverty rates are significantly affected by crime and violence, spreading beyond impoverished areas. Hence, this situation affects us all.
Combining Bitcoin with hawala offers the best support mechanism we have for economically supporting countries that need it most. That’s why we, at Acechange, have introduced BMT (Bitcoin Money Transfer), which combines and leverages the best features from the world of cryptocurrencies and money transfers.
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