Many people consider cryptocurrencies as the instrument for supporting the growth process in many developing countries. But what impact do Bitcoin and other digital currencies have on businesses and individuals in developing nations? Undoubtedly, decision-makers should consider the possibilities of using Bitcoin to reduce developmental barriers.
According to the World Bank, poverty remains unacceptably high across the world. Additionally, humans continue to share economic growth benefits unevenly in different countries and regions. And this, combined with economic chaos, governmental collapse, and civil war, worsens the people’s livelihoods in developing areas.
Additionally, economic factors like limited financial services access and high inflation rates drive poverty in these regions. Another factor contributing to high poverty levels in different areas is the low trust level for financial systems and corrupt governments. All these factors work together to limit economic development.
Bitcoin could be significantly beneficial in developing nations because it may address issues like lack of trust in financial systems. It could also increase access to different financial services. Thus, developing countries could consider Bitcoin a medium for supporting the growth process in these regions. Bitcoin can increase financial inclusion while enhancing funds’ traceability. What’s more, this cryptocurrency can help individuals escape poverty by trading it on a profit-maximizer.app Such a platform allows people and organizations to purchase and sell this virtual currency for profits.
It is good to have a comprehensive overview of digital currencies to understand how Bitcoin could affect developing nations. Bitcoin has several advantages for the users when compared to the central bank-issued currencies. Perhaps, Bitcoin is better than the US dollar or the Euro because of its underlying blockchain technology.
Blockchain refers to the decentralized and distributed database within a network of different computers. This database contains summarized entries in blocks. For instance, this technology creates an algorithm with records of ongoing transaction chains between participants in a decentralized peer-to-peer network. This system broadcasts the records to every member of this network.
Today, Bitcoin is the largest virtual currency because its market capitalization exceeds $189 billion. Satoshi Nakamoto introduced it back in 2008 after publishing a white paper explaining how it would work.
Bitcoin’s general advantages for developing nations
Bitcoin combines crucial properties for fostering trusts, like transparency and accountability. Such characteristics allow for trust-free interactions among counterparties. Blockchain uses a consensus mechanism, private and public keys encryption, and hash functions to control transactions. Consequently, a Bitcoin user doesn’t have to trust the counterparty but the underlying technology and the network. Thus, blockchain should be secure against attacks and fraud.
What’s more, Bitcoin transactions do not involve intermediaries. And this reduces the time a person takes to send or receive Bitcoins. Additionally, Bitcoin lowers transaction costs by eliminating intermediaries.
Since no government can manage Bitcoin, the cryptocurrency is not subject to restrictions of specific geographic locations. What’s more, people can trade this virtual currency the world over for profits. And that’s the reason why people in developing countries are embracing Bitcoin for low-cost funds transfer, especially when sending small amounts internationally.
Bitcoin can help developing nations’ citizens to engage in international trade even with few or no traditional financial services. Since Bitcoin can serve as a quasi-bank account, it can improve financial inclusion in these regions. All that a person needs is internet access to download and install a Bitcoin wallet. With this application, a person can easily use Bitcoin to transact and save funds. By decreasing transaction costs, Bitcoin can increase profits for small businesses. What’s more, Bitcoin uses a technology that enhances transparency and trust in the system, unlike the traditional financial system. Thus, embracing Bitcoin could encourage more people to save and invest in developing nations’ economies.