In recent years, cryptocurrency has gained popularity in emerging nations. This is brought on by a number of things, including as the high cost of conventional financial services, the difficulty of accessing banking, and the requirement for a safer and more open method of money storage and transfer. The low cost of transactions is one of cryptocurrencies’ main benefits for underdeveloped nations. Traditional banking services, particularly for overseas payments, can be highly expensive. This is due to the overpriced costs that banks frequently impose on these transactions. On the other side, using cryptocurrency can reduce the cost of sending money abroad.
Rise of Cryptocurrencies in Developing Countries
There are a number of reasons why developing countries have shifted to cryptocurrency. Some of the most common reasons include:
- Affordability – Cryptocurrency transactions are typically much cheaper than traditional financial transactions. This is because there are no intermediaries involved in cryptocurrency transactions, such as banks or credit card companies.
- Accessibility – Cryptocurrency can be used by anyone, regardless of their location or financial status. This is because cryptocurrency does not require a bank account or credit card to use.
- Security – Cryptocurrency transactions are more secure than traditional financial transactions. This is because cryptocurrency transactions are recorded on a public ledger, which makes them more difficult to counterfeit or hack.
- Transparency – Cryptocurrency transactions are more transparent than traditional financial transactions. This is because cryptocurrency transactions are recorded on a public ledger, which makes it possible to track the movement of funds.
Usage of Cryptocurrencies in Developing Countries
As a result of these advantages, cryptocurrency is becoming increasingly popular in developing countries. This trend is likely to continue in the years to come, as cryptocurrency becomes more widely accepted and used.
- Remittances – Remittances are payments sent by migrants to their families back home. In developing countries, remittances can make up a significant portion of the national economy. For example, in 2020, remittances to developing countries totaled over $550 billion. Cryptocurrency can be used to send remittances more cheaply and quickly than traditional methods.
- Microfinance – Microfinance is a type of financial service that provides small loans to low-income individuals and businesses. Cryptocurrency can be used to provide microfinance loans more efficiently and effectively than traditional methods.
- Trade – Cryptocurrency can be used to facilitate trade between businesses in different countries. This can help to reduce the cost of trade and make it easier for businesses to do business with each other.
- Investment – Cryptocurrency can be used as an investment asset. This can provide investors with a way to diversify their portfolios and hedge against inflation.
Overall, cryptocurrency has the potential to be a major force for good in developing countries. By providing a more secure, efficient, and affordable way to store and transfer money, cryptocurrency can help to improve the lives of millions of people.
