Cryptocurrencies are changing the world in more ways than meet the eye. They have made transactions easier and safer, and the blockchain technology that allowed them to exist is now being used for more than just cryptocurrencies.
Among the most promising developments that have spawned from the cryptocurrency space are the ones that are taking effect in developing countries. Some people believe that cryptocurrencies have thus far functioned only as another game for wealthy investors. The truth is that many people in developing countries are now able to join global commerce in ways that they haven’t been able to before.
The biggest advantages that cryptocurrencies offer the developing world are increased access to money, the improved ability to send or receive it, greater access to ATMs and digital wallets and a huge increase in transparency, which is sorely missing in many countries.
Access to banking
The first aspects which lead to cryptocurrency’s success were its simplicity and ease of access.
The World Bank estimates that over two billion people around the world lack access to banking services. There are several reasons for this, most of which center around poverty, but the end result is that these people are disconnected from global commerce. This is where cryptocurrency now shines…
There are many applications that allow you to open a cryptocurrency wallet and use it for banking purposes from your mobile device. Because mobile devices have proliferated in the developing world far faster than banking services, there is now a perfect opportunity for cryptocurrency to fill in a huge gap in international commerce. The end result is a higher level of inclusivity than would ever be found in traditional banking services.
So, how are cryptocurrencies changing the developing world?
Easy Transactions Over Mobile Devices
The accessible nature of cryptocurrencies allows you to easily complete transactions over your mobile device. It is now safer and easier to maintain a cryptocurrency wallet than it is to deal with banks and various financial institutions, which make international transactions difficult or costly.
Of all of the challenges holding developing countries back, corruption is one of the most persistent. Unnecessary bureaucracy and corrupt officials cause the ever-growing gap between the rich and the poor to persist, and even money that is set aside for the public interest simply goes missing on a regular basis.
The blockchain technology that enables cryptocurrencies to function comes with tools that make corruption impossible; or at the very least too visible to go unnoticed. The blockchain is an immutable ledger of all transactions. This means that every transaction is publicly recorded on a ledger and it can never be deleted.
This level of transparency makes unscrupulous activities difficult to get away with, while also allowing ordinary people to safely conduct transactions.
Greater Social Mobility
Despite the stereotype of cryptocurrencies being another game available only to the rich, cryptocurrencies offer a new solution to global income inequality.
One of the greatest setbacks to social mobility in the developing world is corruption, but as we have seen, that issue is tackled ferociously by cryptocurrencies and their blockchain technology.
Unlike traditional banking institutions, no physical presence at any specific location is required for crypto banking. Generally speaking, you just need an internet connection and a crypto wallet. Now some countries are seeing the rise of crypto ATMs, allowing any user to purchase, send or receive money from anywhere in the world.
Cryptocurrencies provide accessibility, transparency and clarity, three things that are often in short supply in many developing countries.
Every year, hundreds of billions of dollars in remittances are sent to developing countries. According to the World Bank, this figure stood at approximately $441 billion in 2016.
The remittance payment process has created a global industry that is seldom favorable to migrant workers and immigrants. Traditional remittance services such as Western Union collect fees and sometimes enact various different charges, making these transactions more expensive.
Cryptocurrencies have allowed remittance payments to be made in an easier and far more affordable way. Crypto transfers are conducted very easily, but not at the expense of safety. This is another factor that has made Bitcoin popular in developing countries. There have been new services emerging in developing countries, such as SureRemit from Nigeria, that are targeting the growing crypto remittance demand.
Cryptocurrencies have offered the world an alternative to the problems that come with traditional banking. These alternatives have extended to countries of all levels of economic development. It will be interesting to see how the world at large changes as a result of cryptocurrencies, but there is no doubt that they are also helping developing countries.