Along with other cryptocurrencies, Bitcoin (BTC) has facilitated the economic growth of numerous nations. Despite extreme poverty, Bitcoin is frequently utilized as a digital currency for internet transactions in third-world nations. This is most likely a result of internet accessibility and participation in the cryptocurrency market.

Many emerging countries, like India, and entire continents, like Africa, have strong cryptocurrency acceptance rates. Bitcoin owners in third-world nations can trade BTC for profit or keep their tokens as investments after obtaining them through websites accessible to their nations.

Using Bitcoin as a decentralized currency substitute has advantages for individuals and businesses, especially in nations with large rates of unbanked citizens. Theoretically, an internet connection with a strong crypto wallet is all a person needs to start trading bitcoins. People from third-world countries can now trade with people worldwide because of Bitcoin’s decentralized nature.

Low-income individuals may find it difficult to access basic financial services due to the unfriendliness of financial organizations. Many people may not be able to obtain loans, including business owners who may require start-up capital. Given that banks nearly always have many documentation requirements and prerequisites, even creating a simple savings account may be difficult for some people.

Cryptocurrencies like Bitcoin provide unbanked people access to financial services via decentralized finance (DeFi) networks. Because cryptocurrencies fill in the voids left by developing countries’ national currencies, emerging markets also profit from their adoption.

Whether employed as a medium of exchange, a store of value, or a unit of account, cryptocurrencies address several problems that frequently impact national currencies, including:

Some challenges that cryptocurrencies address

Cryptocurrencies can replace traditional remittances as economic lifeblood for many underdeveloped nations; Peer-to-peer (P2P) cryptocurrency networks, with their significantly cheaper costs, are a potential alternative in situations when using conventional platforms like Western Union to move money across borders is excessively expensive.

Countries in development and poverty

1.3 billion people, dispersed over 107 developing nations, live in multidimensional poverty, according to World Vision. This represents 22% of all people on Earth, with 84.3% residing in South Asia and sub-Saharan Africa. Financial hardship, bad health, a lack of education, violence, and lack of power are just a few examples of the many facets of poverty.

There are many factors contributing to poverty in emerging nations, with some of the most common ones being:

• The causes of poverty in developing nations inresolvingAlthough, the underlying technology of Bitcoin, has helped numerous businesses outside of finance, it was primarily developed as a solution to financial instability brought on by a large reliance on centralized institutions. So, the question is: “Is Bitcoin beneficial for underdeveloped nations?” Any of these problems will it assist in resolving? Yes, it is the answer.
• Using blockchain technology and cryptocurrency solutions does not promise to end poverty. They have undoubtedly opened the way for greater services in the nations that most require them. Even in the healthcare industry, blockchain-based technologies like CareAI have improved access to healthcare for underserved groups.

Bitcoin’s effects on industrialized and poor countries will differ.

Cryptocurrencies like Bitcoin are frequently regarded as investments or received skeptically in wealthy nations. Bitcoin is sometimes viewed as a dangerous undertaking and a highly unpredictable trend, particularly in the financial sector, where traditional ideas about centralized money still reign supreme.

For instance, Jamie Dimon, the CEO of JP Morgan, is a well-known opponent of Bitcoin and even referred to it as a “fraud” in 2017. But as the value of the cryptocurrency increases, his company appears to be heading oppositely.

People working in cryptocurrencies continue to push back against regulators even though regulations vary. Crypto fans are allowed to participate in the cryptocurrency economy however they like. Investors, miners, and traders use Bitcoin in industrialized nations like the United States, the United Kingdom, and Canada.

Freedom to transact isn’t as common in nations like Nigeria, where many people have turned to cryptocurrencies to get through financial difficulties. The Nigerian government banned cryptocurrency in 2021, blocking the way to financial independence afforded by crypto in place of rules or warnings.

Particularly in regions with a track record of financial instability, cryptocurrency establishes stronger roots in developing nations. High adoption rates on the continent, for instance, are proof of Bitcoin’s influence there. According to the UN, “Africa could be the next frontier for cryptocurrency.” Both individuals and business owners have discovered useful applications for Bitcoin, such as using it to pay foreign suppliers in BTC rather than USD.

A small business entrepreneur in Africa explained to Reuters how paying his suppliers in Bitcoin increased his revenues and helped shield his enterprise from currency depreciation. He didn’t have to pay additional fees when using BTC. Bitcoin transactions were quicker, safer, and more cost-effective than exchanging Nigerian naira for dollars or using expensive money-transfer services.

Simply put, Bitcoin gives people in developing nations an opportunity to escape the chains of poverty and, at the absolute least, to deal with the difficulties that come with living in a developing nation.

Third-world nations’ old banking systems have flaws that are intrinsically linked to them, leaving gaps that are ripe for Bitcoin adoption. Citizens can combat difficulties with currency volatility and financial inequality by having access to cryptocurrencies and blockchain technology.

Can Bitcoin assist in banking the unbanked?

Currently, there are more than 2 billion people without access to banking. They may be able to obtain financial services that would otherwise be inaccessible to them, thanks to decentralized financial infrastructures.

According to Statista.com, a sizable portion of the unbanked reside in nations with unstable economies. In some circumstances, people may have a broad mistrust of less developed or corrupt financial systems.

Big banks and traditional financial organizations charge a lot for their financial services. For those who are struggling financially, everything could be challenging, including making an initial deposit, keeping a minimum level, and paying withdrawal and membership fees.

People who don’t have bank accounts frequently identify a lack of funds as the main factor was keeping them unbanked, even in first-world nations like the U.S. The gap between those banked and those who are not is further exacerbated by banks’ lack of accessible services for lower-income households.

Can Bitcoin, therefore, lessen inequality? In particular, Bitcoin enables the unbanked to take control of their finances without having to cope with burdensome fees and monetary restrictions by filling the holes that traditional financial institutions generate.

How does cryptocurrency contribute to the development of poor nations?

The main advantage that cryptocurrencies provide developing nations is financial inclusion, but there are other advantages. People in developing nations can leverage Bitcoin trading and cut transaction fees to save costs. Small firms can also engage in international trade by using Bitcoin as a payment method and avoiding the red tape associated with traditional banking.

Also Read: How Bitcoin is becoming a hedge against inflation?

Corruption reduction and transparency promotion

One of the main causes of poverty in third-world nations is corruption. Corruption deprives a nation of vital resources that may be used for infrastructure, healthcare, crisis response, and other purposes, furthering the poverty of a nation that is already underdeveloped. According to research by the anti-corruption NGO Transparency International, there is a strong association between the two.

The Philippines saw one of the most well-known corruption scandals, where former president Ferdinand Marcos embezzled a record-breaking $10 billion while in office. As a result, the nation’s economy stagnated, and the national debt skyrocketed, plunging the nation into recession.

Singapore, was able to end poverty by first getting rid of corruption. The People’s Action Party launched an anti-corruption drive that helped Singapore attract international investment and advance economically by reviving the nation’s economy.

By utilizing blockchain technology, cryptocurrency can assist emerging nations in eradicating corruption. Since blockchain records are available to the public via an immutable distributed public ledger, governments may be held accountable. It can track government spending on initiatives and projects without falsifying or changing records. Additionally, authorized individuals may be prohibited from spending funds for reasons other than those they were allocated.

According to academic research, cryptocurrency can dramatically lower unlawful bribes in the public sector by up to $2 trillion annually. The Brookings Institution claims that blockchain technology can end a 15-month corruption inquiry with a single click. Since data is saved on numerous computers, there is no chance of data loss, which encourages openness. Data security is additionally improved via encryption, and practically all transactions are publicly visible thanks to trackability.

Increased financial integration of the underprivileged

Marginalized groups now have access to banking services in places previously inaccessible or unavailable because of blockchain technology. Blockchain technology enables quick, safe, and affordable peer-to-peer international money transfers.

The unbanked can now access financial opportunities, including loans and investments, thanks to blockchain-based DeFi projects. Trading cryptocurrencies and gaining money can also be used to accomplish something as simple as saving money.

With Bitcoin, people may invest and borrow smaller sums of money from others. These microloans and micro-investments make this risk distribution among individual lenders.

The unbanked can use cryptocurrencies without opening a bank account as long as they have a crypto wallet. Documentation is not required for those who want to participate in microfinance (microloans and micro-investments) because blockchain technology makes everything accessible. Cryptocurrencies are still helpful to developing nations because they don’t need physical infrastructure. Cryptocurrencies increase financial inclusion, giving developing nations a powerful tool to fight poverty.

Minimizing transactional expenses and time

Crypto-based services only charge about 2-5% of the total amount, compared to traditional remittance systems that can charge up to 10%. Through lower remittance fees, overseas employees from developing nations can potentially profit from cryptocurrencies. They are no longer concerned about high transaction costs when sending money home.

Remittances sent home by Haitians who work abroad account for 26% of the country’s GDP. Fees can range from 8 to 10% for workers sending money from the US, Canada, or the Dominican Republic, totaling $150 million in fees annually. The money saved on transaction fees can add up for workers who make little money or are just starting to save.

Money sent by an overseas worker is converted into Bitcoin and sent to the receiver over the blockchain using the app. The service is convenient for both the sender and the recipient because it is converted into a local currency. As transactions are reduced by as much as 90%, cryptocurrencies like Abra are starting to compete with established remittance systems like Western Union.

Fight against inflation

Inflation is characterised by currency depreciation and rising prices for goods and services. It still represents a threat to fiat money that periodically manifests itself. Because cryptocurrencies like Bitcoin are assets that keep their value over time, customers frequently utilise them as a hedge against inflation.

Historically, inflation has been hedged using gold, another reasonably stable asset. However, because it is conceivably more accessible, Bitcoin has grown to be a more attractive choice. In a downturn, what will happen to Bitcoin? Since it was constructed right after a recession, it is predicted to withstand them. Since there is a fixed quantity of 21 million bitcoins, it has a low inflation rate.

How do developing-world governments use Bitcoin?

The blockchain software company ConsenSys Ventures is an example of how bitcoin is being adopted in developing countries. The business has incorporated blockchain in land titling in collaboration with the National Institution for Transforming India Aayog, the Indian government’s policy think tank. The employment of blockchain technology in national supply chains and health records is among its other possibilities.

Twiga Foods, a B2B logistics platform, has teamed up with IBM to offer microloans to Kenyan food stall entrepreneurs. The company created a blockchain-based financing platform that can quickly evaluate lender credentials to assist such vendors in increasing their inventory purchases and expanding their operations.