Kazakhstan Warms Towards Bitcoin as Local Currency Freefalls

Kazakhstan’s national fiat currency, the Tenge, has been falling for decades, recently, hitting a record low. Meanwhile, interest in Bitcoin is growing, and volumes have been steadily rising in the Central Asian country.

Also read: France’s Third Largest Bus Company Accepts Bitcoin

Kazakhstan’s Currency Problems

The Central Asian country was the last Soviet republic to declare independence back in 1991 when the USSR fell. With above-average oil reserves and a 2014 GDP of about $420 billion, Kazakhstan has the largest and strongest performing economy in Central Asia.

With strong economic outlook, Kazakhstan’s local currency, the tenge (KZT) by all means should be doing better than its neighbors. However, it keeps falling year after year due to a variety of reasons, including corruption and oil prices.

Over the winter, the KZT hit its record low against the dollar and lately it has been declining again. With the currency falling almost 70% since the 2008 financial crisis began, the citizens’ savings have been hit hard, and many are looking for safer ways to save.

Kazakhstan Warming Towards Crypto

For centuries the Kazakhs have followed Russian culture and politics closely, and, when Russia tried to outlaw cryptocurrencies, so did Kazakhstan. Then-head of the National Bank of Kazakhstan, Kairat Kelimbetov, suggested in 2014 that the National Bank might “designate Bitcoin a form of financial pyramid scheme.”

Thankfully, as Russia finds itself loosening their policy, it appears that Kazakhstan is as well as Kelimbetov’s successor, Daniyar Akishev, is far more progressive on the subject.

“This is a reality with which we will come up against in the very near future, and ignoring it is not possible,” Akishev said in June, as he admitted that blockchains might be useful for the country. “We are considering the possibility of using the blockchain system, either on the stock exchange or in other areas of payment services.”

There is no full Kazakhstan bitcoin exchange yet, but KZT trades on LocalBitcoins and a few smaller exchanges in the region. More importantly, a bitcoin advocacy center, Bitcoin Kazakhstan, has opened in the country’s largest city, Almaty, to provide consulting, training, business networking, mining, and other services to any Kazakh in person or online. Their stated goal is “to assist in promoting the use of Bitcoin in the territory of the Republic of Kazakhstan.”

Set up by Boris Komarov in 2014, the center has been increasing its consultancy and intermediary services over time. Komarov told EurasiaNet:

People are slowly getting to know Bitcoin and crypto-currencies, but very slowly. They need better education, which is why I created the first Bitcoin course in Russian for beginners and established First Bitcoin Center to help them. But so far, not many people are asking for help.

The bitcoin infrastructure is improving as well. In December, Almaty received its first Bitcoin ATM machine. Owner Kanat Amrenov admits that there isn’t enough Bitcoin traffic for it to be profitable yet, but his prime location in the business capital of the country should help boost its popularity, and he hopes to be profitable by fall before buying even more machines.

Do you think bitcoin adoption will keep growing in Kazakhstan? Let us know in the comment section below.

Images courtesy of ssrresourcecentre.org, nationalgeographic.com, xe.com, eurasianbusinessbriefing.com