RESTRICTED

SENIOR COMMAND
& STAFF COURSE

TUTOR ASSESSED EXERCISE

STAFF COMMUNICATION (PHASE-I)

Presented to DS ENGLISH

Presented by : Wg Cdr Sohaib Rehman

Pak/14038 GD (P)

Student ID : 89/23

Unit : TCS, PAF Base Nur Khan

1
RESTRICTED
 RESTRICTED

TABLE OF CONTENT

1. CHAPTER 1- Introduction

a. Introduction

b. Statement of problem

c. Scope of study

d. Justification of Study

2. CHAPTER II BACKGROUND

a. Literature review

b. Research Questionnaire

c. Hypothesis

d. Definition of keyword.

3. CHAPTER III -METHODLOGY

a. Research Methodology

i. Study Design

ii. Population

iii. Sampling

iv. Research instrument

v. Research procedure

b. Plan of data analysis

c. Validity and reliability

d. Ethical consideration

e.

2
RESTRICTED
 RESTRICTED

4. CHAPTER IV -SUMMARY

a. Summary of project

b. Time activity chart

c. References/ bibliography

3
RESTRICTED
 RESTRICTED

CHAPTER I – INTRODUCTION

Introduction / Background

1. Cryptocurrency is the virtual currency, also called as digital coin, originated in 2009.

The first cryptocurrency was Bitcoin which was created by Satoshi Nakamoto. Other than

bitcoin there are many other cryptocurrencies such as Litecoin, Polkadot, and many more

similar which were originated with the passage of time. These are decentralized

currencies which are not operated by any middleman and are not regulated by any bank

or institution. It is solely peer to peer transaction without the share of personal information

regarding seller and buyer. This allows the user to transact anonymously. These

cryptocurrencies use blockchain platforms and Bitcoin is the first one to use it1.

2. Blockchain technology is widely used technology in cryptocurrency. It has features

of anonymity, security, decentralization, mutual consensus, and distributed network or

ledger. These features make it popular across the globe and boosted global economy. It

is estimated that cryptocurrency market is expected to grow at Compound Annual Growth

Rate (CAGR) of 7.1%2. Despite of its secure features, it is still prone to hacker's attacks

and fraudulent activities such as terror financing and money laundering. According to

chain analysis, the criminal activities have been increased and it is estimated that 30 %.

1 Ridzuan Hussain, “A study of foreign object damage (FOD) and prevention method at the airport and aircraft
maintenance area,” IOP Conference Series: Materials Science and Engineering 152, no. 5 (2006): 33.
2 C. Daniel Prather, Current Airport Inspection Practices Regarding FOD (Washington, DC: US Transportation
Research Board, 2011), 3.

4
RESTRICTED
 RESTRICTED

more money is laundered in 2021 if comparing with 20203. it has also rendered negative

impacts on environment due to increased power consumption in its fast-processing

computers and algorithms4.

3. Although cryptocurrency has potential to boost economy, but aforementioned issues

are hindering its way to be legalized in many countries especially developing countries

like Pakistan which are already suffering from crimes like terror financing and money

laundering. Moreover, it also has religious aspect especially in Pakistan where there is

concept of Halal and Haram earning and some religious restrictions in legalizing it. This

research will address all such questions about current and future potential of

cryptocurrency across globe and its adaptability in Pakistan is keeping in view the legal

and religious aspects.

3
Dzhondzhorov, Dimitar. 2022. "Criminals Laundered $8.6 Billion Worth Of Crypto In 2021: Chainalysis Report". Cryptopotato.
https://cryptopotato.com/criminals-laundered-8-6-billion-worth-of-crypto-in-2021- chainalysis-report/.
4
"Elon Musk Is Right: Bitcoin Mining Is Bad For The Planet". 2022. Fortune. https://fortune.com/2021/05/13/musk- bitcoin-mining-
bad-planet-heres-how-bad/

5
RESTRICTED
 RESTRICTED

Statement of the Problem

4. Cryptocurrency is widely used in world because of its blockchain structure that is

secure, promotes validity of information and safeguard the investments through ledger.

Even though it is considered secure; it is banned by many countries due to its

characteristic of anonymity. It makes it difficult to trace the transactions and investor

which leads to its exploitation. It can open doors for illicit acts such as money laundering,

terror financing and tax evasion. It can greatly impact the countries which are already

prone to such activities. This arises question of its adaptability in Pakistan which was

already affected by these problems in past. This research paper will encompass the

background of cryptocurrency, its impacts on global economy and environment and its

adaptability in Pakistan keeping in view the legal and religious aspects.

Scope of the Study

5. Background of crypto currency and Block chain technology

(a) Global impact of cryptocurrency with respect to its two aspects:

• Economy

• Environment

(b) Adaptability of cryptocurrency in Pakistan with respect to following aspects:

• Legal Aspects

• Religious Aspects

6
RESTRICTED
 RESTRICTED

Justification of the Study

6. At present many countries are facing challenges in allowing the cryptocurrency as

legal tender due to its features that allows criminals and scammers to operate the dark

net markets, funds terrorists’ groups and launder money with a purpose of tax evasion. It

has been estimated by blockchain data company named chainalysis that in 2021, money

laundering has been increased by 30% globally which makes around 8.6 billion dollars,

and these transactions are done by wallets controlled by criminals in cryptocurrency

blockchain structure which also creates the risk of vaults ransacked by criminals and

hackers. Due to enormous platform, these transactions are being created continuously

where deposits are being transferred without any regulations. It also lacks transparency

because single crypto wallet is being used by multiple users as it is linked with multiple

bank accounts and credit cards. Many countries such as China, Qatar, Oman, Morocco,

Bangladesh, Egypt, and Algeria have fully banned cryptocurrency in their jurisdiction.

This arises question on its global impacts as well as its adaptability in Pakistan.

7
RESTRICTED
 RESTRICTED

CHAPTER II – BACKGROUND

Literature Review

7. Blockchain technology is widely used technology in cryptocurrency which is secure

and records a data of its users in such a way that it becomes difficult or almost impossible

to hack someone's digital financial assets, to change the information or to cheat the

platform being used for cryptocurrency transactions. Its functionality is distributed across

the entire network through with all transactions or dealings are being done. It has

numerous blocks in a chain that contains large number of transactions and every time a

new transaction occurs; it records the information related to it and adds to every

participant's ledger. It is based on the concept of Distributed Ledger technology (DLT)

which is decentralized database that is being managed by many participants at a time.

Distributed Ledger means that the information of the user is distributed among all the

other users without any central server which makes a system transparent and improves

data security because no one can change the data once uploaded without the consensus

of all the user in a network either private or public. It is solely Pear to pear communication5

Figure 1:Blockchain Pear

to Pear Network

8
RESTRICTED
 RESTRICTED

(a) WORKING PROCEDURE OF BLOCKCHAIN TECHNOLOGY: Blockchain

process starts by the request of transaction. As the transaction request is

created or received, a block is created that represents the transaction. This

block is sent to every user or node in the blockchain structure. As the nodes

receives it, it validates the transaction created. Node also receives some

rewards in form of digital coins because it validates the transaction and has

given the proof of work. This block is then added to existing blockchain

structure and transaction is completed6.

Figure 2:Blockchain technology

(b) Global Impact of Cryptocurrency on Economy: Currently, cryptocurrency is

playing major role in boosting the global economy. It is estimated that

cryptocurrency market is expected to grow at Compound Annual Growth Rate

(CAGR) of 7.1% that makes a change of about 0.6 billion US dollars from 1.6
5
D "Blockchain Explained: What Is Blockchain? | Euromoney Learning". 2022. Euromoney.Com.
https://www.euromoney.com/learning/blockchablockchain
6
Lastovetska, Anastasiia. 2022. "Blockchain Architecture Explained: How It Works & How To Build". Mlsdev.Com. https://mlsdev.com/blog/156-
how-to-build-your-own-blockchain-architecture.

9
RESTRICTED
 RESTRICTED

billion dollars in 2021 to 2.2 billion dollars by 2026. This boost has given rise of

Research & Development in this field. Many hardware and software are being

launched by companies in China named Bitmain Technologies, USA named as

NVIDIA and Advanced Micro Devices and many more2.

Figure 3:Share of Global Cryptocurrency Transaction Volume by Region

Side by side talking about the negative impacts, due to anonymity and incapability

to trace the transactor in the blockchain, the criminal activities are also increasing.

According to chainalysis, the criminal activities have been increased and it is

estimated that 30% more money is laundered in 2021 if comparing with 2020.

This makes about 8.6 billion dollars. Cryptocurrency is also giving rise to the

digital crimes such as hacking, terror financing, scams, and money launder

through digital means. This happens because cryptocurrency is not consumable

in hard form, and it is very difficult to locate it original owner as one wallet is linked

to multiple bank accounts and credit cards. Around 17% of the money laundered

in 2021, is transferred to decentralized finance applications which were received

from some unknown and illegal addresses3

10
RESTRICTED
 RESTRICTED

Figure 4:Total Cryptocurrency laundered in the period of 2017 to 2021

(c) Cryptocurrency and Environment: Cryptocurrency has rendered some

impacts on the environment. As cryptocurrency require very efficient and fast

algorithms, it demands very intelligent software and hardware which are also

consumes high power. It is found that currently Bitcoin mining is consuming

0.5% of the electricity across the globe which is quite a huge amount if

implementing in developing countries which are already facing major energy

crises. However, this issue can be resolved by shifting whole system of this

network to renewable resource so that basic energy needs are not

compromised. Although cryptocurrency is saving the world from the paper

currency, but it is creating higher risk of CO2 emissions. It is estimated that

Bitcoin emissions have increased to 40 million tons in last two years4.

11
RESTRICTED
 RESTRICTED

Figure 5: Bitcoin Carbon emissions

Potential of Cryptocurrency in Pakistan and its Adaptability:

(d) Legal Aspects: Cryptocurrency is gaining popularity in Pakistan. The first

cryptocurrency found in Pakistan was Pakcoin in 2015 but it was not legalized

by any government. Currently in the year 2020 to 2021, the trading of

cryptocurrency has boosted in Pakistan at about 20 billion dollars. There is

great potential seen of crypto currency boost in Pakistan because it will make

exchange of money across the border easier and faster which was lacking

earlier and was hindrance in the way of foreign direct investment. Moreover, it

is already seen that Pakistani nationals have cryptocurrencies worth $5 crore

where transactions are being carried out through private banks and some

exchange firms7. Although it has great potential in boosting economy,

regulatory authorities in Pakistan such as Federal Investigation agency (FIA)

7
"Pakistanis Invest $5 Crore In Crypto In Just Six Months: Reports". 2022. Cnbctv18.Com.
https://www.cnbctv18.com/cryptocurrency/pakistanis-invest-5-crore-in-crypto-in-just-six-months-reports-12047472.

12
RESTRICTED
 RESTRICTED

have also taken legal actions against the crypto transactions involved in some

criminal cases. FIA freezes over thousand accounts linked with crypto wallets

FIA is banning many crypto accounts and wallets due to following reasons8

• Increased fraudulent cases recorded online through these crypto-

applications

• Increased risk of using cryptocurrencies for terror financing and money

laundering which was main cause of Pakistan economy's downfall and

inclusion in FATF grey list.

• Risk of destabilizing the financial system because of funneling money

from some illegal sources and to illegal accounts.

Religious Aspects: The religious perspectives are divided into two groups where

one considered it Halal drawing analogies from the gold currency in past and some

consider it haram considering it against the principles of Islam. There are some

major rules in Islam that are governing the exchange market. The most important

is Riba and Interest free exchange of money. The others are that trading is haram

when it contains usury and have unclarity called as Gharar. Moreover, the trade of

unlawful or forbidden goods is also haram. It is declared Haram by the IFTAA

bodies that are official shariah bodies on Turkey, Palestine, and Egypt. Keeping in

view the Islamic economic principles the cryptocurrency contains following features

which makes it haram according to one group9:

8
"Pakistan Seizes Over 1,000 Bank Accounts For Cryptocurrency Trading". 2022. Daily Pakistan Global.
https://en.dailypakistan.com.pk/31-Dec-2021/pakistan-seizes-over-1-000-bank-accounts-for-cryptocurrency-trading.

13
RESTRICTED
 RESTRICTED

• The possibility of funding unlawful means and forbidden goods because

of anonymity of transactors.

• It contains usury.

• It contains the unclarity in rates called as Gharar.

The other group of scholars calls it halal. These opinions are from Jurists and some

popular names are Dr. Daud Bakar from Malaysia, Mufti Abu Bakr from South

Africa, and Prof. Ali EI from Saudi Arabia. They call it digital assets and its rates are

dependent on the demand and supply rate. They argue that it has all the features

of commodities that were used in Islamic era as Market Exchange10.

Research Questions

8. The research questions which will be addressed during the course of this study are

as follows:

(a) How crypto currency effect the global economy and environment i.e.,
positive and negative aspects.

(b) What is status of adaptability of crypto currency in Pakistan keeping

in view the legal and religious aspects?

(c) What are pros and cons of adapting cryptocurrency in Pakistan and
its future potential.

14
RESTRICTED
 RESTRICTED

Hypothesis

9. In this research paper, we argued that although cryptocurrency is boosting global

economy, it is causing an increased rate of criminal cases such as money laundering and

Terror financing which is hindering its way to be legalized in many countries. We also

argued that some of features of cryptocurrency are also against the Islamic concept of

currency and market exchange which makes it susceptible to be banned in Pakistan.

Definition of Key Words

10. Some of the keywords that have been used in this proposal are defined below: -

a. DLT: Distributed Ledger technology

b. FIA: Federal Investigation Authority

c. IFTAA: Darul Iftaa - Institute of Islamic Jurisprudence

d. FATF: Financial Action Task Force

9
"Principles Of Trading In Islam (Part. 1) – The Sharia Laws Of Islam". 2022. Syaria.Com. https://syaria.com/260- principles-
of-trading-in-islam-part-1.html.
10
"Cryptocurrency: An Islamic Law Perspective". 2022. Cryptocurrency: An Islamic Law
Perspective.https://www.proshareng.com/news/-BlockChain---Cryptos/Cryptocurrency--An-Islamic-Law-Perspecti/56661.

15
RESTRICTED
 RESTRICTED

CHAPTER III – METHODOLOGY

Research Methodology

11. The strategy followed will be Qualitative analysis which will use the research tool

of content analysis and case study research.

Our main approach will be to analyze the data regarding effects of cryptocurrency on

global economy and environment, and adaptability of cryptocurrency in Pakistan and its

future potential. A case study will be built keeping in view the legal and religious factors in

Pakistan.

(a) Study Design. This study will focus on all the parameters and variables that

makes cryptocurrency popular in global economy and environment. These

parameters will be analyzed on the basis of how different countries responded to

its adaptability and how these parameters rendered positive or negative impacts on

it. Research will be conducted on Pakistan with respect to its legal and religious

factors. After doing in dept research and data collection, in depth analysis will be

done and all parameters will be accessed by comparing economies which did and

did not anticipated cryptocurrency.

(b) Population. The sample groups include:

• Countries Anticipated Cryptocurrency as Legal Entity

• Countries did not anticipated Cryptocurrency as Legal Entity

• Countries Banned Cryptocurrency

• Case Study of Pakistan

16
RESTRICTED
 RESTRICTED

(c) Sampling. Sampling will be accomplished through facts and figures provided

at famous analyst groups for example The Economist, Chainalysis. Moreover,

comparisons and analysis will be built from different research paper.

(d) Research Instruments. Following instruments are intended to be used for this

study:

I. Data Analysis: Data from various government and economic websites

would be collected.

II. Case Study Analysis: The response of different other groups will be

analyzed which went through the same issue in past.

(e) Research Procedure. The steps involvd in the research will be :-

I. Research design including layout of research plan and review of literature.

II. Collection of data and determining parameters to study

III. Analysis of data (Qualitative)

IV. Report writing and submission

Plan of Data Analysis

12. In first stage, the data will be collected about how cryptocurrency has been affecting

global economy and what are major parameters which boosted. In second stage analysis

will be done on its acceptance across the globe about how different countries are reacting

to its legal implementation. For that qualitative analysis will be done. The content

analysis-based approach will be adopted in which sample groups will be chosen such as

17
RESTRICTED
 RESTRICTED

countries that have anticipated cryptocurrency as legal currency and those which did not

and have banned its use. The case study will be built on Pakistan considering its legal

and religious aspects. Lastly, research paper will be composed, and results will be

presented.

Validity and Reliability

13. The analysis of data is based on reliable sources and research papers published on

study related topics.

Ethical Considerations

14. The facts and figures are displayed in a way that it cites the original source, and it is

free from any research misconduct such as plagiarism.

18
RESTRICTED
 RESTRICTED

CHAPTER IV – SUMMARY

Summary of Proposal

15. Blockchain technology is widely used technology in cryptocurrency which is secure

and records a data of its users in such a way that it becomes difficult or almost impossible

to hack someone's digital financial assets, to change the information or to cheat the

platform being used for cryptocurrency transactions. Currently, cryptocurrency is playing

major role in boosting the global economy. It is estimated that cryptocurrency market is

expected to grow at Compound Annual Growth Rate (CAGR) of 7.1%. Although it is

boosting economy, but it has rendered some negative impacts on society and

environment. As cryptocurrency require very efficient and fast algorithms, it demands

very intelligent software and hardware which are also consumes high power. Moreover,

its feature of anonymity and non-traceability of transactor giving rise to the digital crimes

such as hacking, terror financing, scams, and money launder through digital means.

Cryptocurrency is also gaining popularity in Pakistan. There is great potential seen of

crypto currency boost in Pakistan because it will make exchange of money across the

border easier and faster which was lacking earlier and was hindrance in the way of foreign

direct investment. Although it has great potential in boosting economy, regulatory

authorities in Pakistan such as Federal investigation agency (FIA) have also taken legal

actions against the crypto transactions due to increased fraudulent cases, digital crimes,

19
RESTRICTED
 RESTRICTED

hacking, funnel money laundering and terror financing. Talking about religious aspects,

there is division of Islamic scholars where both making analogies from past to consider it

halal or haram.

In this research proposal, we argued that although cryptocurrency is boosting global

economy, it is causing an increased rate of criminal cases such as money laundering and

Terror financing which is hindering its way to be legalized in many countries. This study

also argued that legalizing cryptocurrency can cause instability of financial structure of

Pakistan due to aforementioned crimes. We also argued that some of features of

cryptocurrency are also against the Islamic concept of currency and market exchange

which makes it susceptible to be banned in Pakistan.

TIME ACTIVITY CHART

Weeks
S.No Activity
1st 2nd 3rd 4th 5th 6th 7th 8th

1 Research Design

2 Literature Review

3 Research Instrumentation

4 Data Collection

5 Data Analysis

6 Write up

7 Submission of Dissertation

20
RESTRICTED
 RESTRICTED

References / Bibliography

1. Team, Chainalysis. 2022. "Defi Whales Turned Central, Northern & Western
Europe
Into The World’S Biggest Cryptocurrency Economy - Chainalysis". Chainal-
ysis.https://blog.chainalysis.com/reports/central-northern-western-europe-
cryptocurrency-geography-report-2021-preview/.

2. P Dzhondzhorov, Dimitar. 2022. "Criminals Laundered $8.6 Billion Worth Of

Crypto In 2021: Chainalysis Report". Cryptopotato. https://cryptopotato.com/criminals-
laundered-8-6-billion-worth-of-crypto-in-2021-chainalysis-report/.

3. A"Elon Musk Is Right: Bitcoin Mining Is Bad For The Planet". 2022. Fortune.
https://fortune.com/2021/05/13/musk-bitcoin-mining-bad-planet-heres-how-bad/.

4. D "Blockchain Explained: What Is Blockchain? | Euromoney Learning". 2022.

Euromoney.Com. https://www.euromoney.com/learning/blockchablockchain

5. Lastovetska, Anastasiia. 2022. "Blockchain Architecture Explained: How It Works

& How To Build". Mlsdev.Com. https://mlsdev.com/blog/156-how-to-build-your-own-
blockchain-architecture.

6. "Pakistanis Invest $5 Crore In Crypto In Just Six Months: Reports". 2022.

Cnbctv18.Com. https://www.cnbctv18.com/cryptocurrency/pakistanis-invest-5-crore-in-
crypto-in-just
7. Rid Bansod, Smita, and Lata Ragha. "Blockchain Technology: Applications and
Research Challenges." In 2020 International Conference for Emerging Technology
(INCET), pp. 1-6. IEEE, 2020.-six-months-reports-12047472.htm.

8. "Pakistan Seizes Over 1,000 Bank Accounts For Cryptocurrency Trading". 2022.
Daily Pakistan Global. https://en.dailypakistan.com.pk/31-Dec-2021/pakistan-seizes-
over-1-000-bank-accounts-for-cryptocurrency-trading.

9. "Principles Of Trading In Islam (Part. 1) – The Sharia Laws Of Islam". 2022.

Syaria.Com. https://syaria.com/260-principles-of-trading-in-islam-part-1.html.

10. "Cryptocurrency: An Islamic Law Perspective". 2022. Cryptocurrency: An Islamic

Law Perspective. https://www.proshareng.com/news/-BlockChain---
Cryptos/Cryptocurrency--An-Islamic-Law-Perspecti/56661.

21
RESTRICTED