Unambiguous: What is hawala/hundi
It is distinguished from other remittance systems via trust and extensive use of connections such as family relationships or regional affiliations. Transfers of money take place based on communications between members of a network of hawaladars.
It works by transferring money without actually moving it, requires no bank accounts and is consummated without leaving a paper trail. This form of money transferring is associated with ethnic groups from Africa and Asia.
Published in The Express Tribune, October 24th, 2012.
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Some day these hawalders will discover Bitcoin.
Bitcoin is an online digital currency that works similar to cash but can be sent electronically over the Internet.
The difference between BItcoin and Hawala is that a Bitcoin money exchanger can operate indepedently.
A hawalder in the remittance destination country is of no use without a relationship with the hawalder partner in the sender's country. Also the two hawalders must trust each other as eventual settlement may not happen until a later time.
Bitcoin cuts any need for there to be a tie between the two sides.
It will not be long for current hawalders to figure out they can use bitcoin to do deals on their own. Bitcoins don't yet have much value for the beneficiary of a remittance transfer -- the recipient will likely be just looking for a way to convert the coins to the local fiat currency. But to an enterprising hawalder, acquiring and holding larger amounts of bitcoins becomes useful for paying for purchases made abroad or for sale to a local investor perhaps.
Also, a hawalder has lower costs than the formal, licensed money exchangers.
Compare the difference between Bitcoin and a Western Union.
A WU agent location needs lots of volume to pay for the overhead. But a Bitcoin-friendly hawalder or any other individual who provides a Bitcoin cash-out method can be profitable on every trade, even if only doing one or two exchanges per day.
It doesn't need to be a full time operation or need to start out as an intentional part-time gig even. There no doubt are individuals who have a little extra time and a little extra money that will do this exchange "as a favor" to be able to earn the 5% or 10% that doing such an exchange can bring.
And then word gets out and in the following weeks there are two recipients who need this favor. And then it is four, then eight, and pretty soon this individual now has this sideline business doing bitcoin cash-out service.
Also, then consider how basic business sense starts to take over. If I am offering a Bitcoin cash-out service to you, and you turn around and use that cash to pay for your mobile phone refill, then why don't I just start selling to you mobile phone refills for bitcoins, and earn the profit from that sale as well?
So essentially, there already exists entrepreneurial Bitcoin hawalders. It is every person and business who is willing to convert cash to bitcoins and vice-versa.
The same quick system can be adopted by Banks to facilitate the people abroad. After all the Hundi System is functioning, reliable & quick. We also have Money Gram & Western Union. They are both making a great chunk of Profit. I fail to understand why the Banks like NBP,MCB,HBL & others cannot come up with some alternative which is fast & secure.
@IceSoul
Please do not dismiss @John F off-hand. While many people do transfer money through hawla and remain undetected, there is always a chance of being in the soup even when the transaction is purely domestic in nature. People who handle these type of transaction have a wide range customers, some of them may be of doubtful credentials. If one of them is caught, the investigation will in most likelyhood reach at the door of everyone who has used this handler. Even when you are confident about the handler from your end of the transaction, you are more likely to be completely in the dark about the handler on the other end. The fact that this type of transaction sometime involve more than on handler makes it even more risky. Stay away from it, and advise others accordingly.
Hawala is an easy way to turn black money into white, this work as an insect in weakening the economy of Pakistan
@John F: Don't know which world you are living in, but there are people in Pakistan transferring billions of rupees through the hawala system. Of course, its not as simple as this article makes it out to me.
Dont fall for it guys. These transactions are monitored very closely by the FBI since thats how drug dealers and terrorists operate. Go ahead and use a hawala if you want to spend a free holiday on a sunny island called Guantanomo.