When Bitcoin was first introduced to the general market, numerous stock and bond investors were interested in the assets’ potential to yield considerable income. However, regular people and even governments were reluctant on Bitcoin’s use cases, considering it wasn’t tied to any financial institution and was based only on digital cryptocurrencies.
Still, as the ledger became more popular and people learned how to buy Bitcoin online to trade it for better financial outcomes, it was clear that the coin was here to stay. After a while, mining bitcoins became more challenging, and altcoins appeared one by one to counterfeit the first cryptocurrency’s power on the market. Now, Bitcoin is close to reaching the 20-year operation milestone, and governments are considering making it a legal tender since it’s a great alternative to fiat money.
Let’s see if this would be possible in emerging economies, where technology is at its peak.
Why would the biggest economies turn to Bitcoin?
There are numerous problems with fiat money currently. Recent inflation, depreciation and recession risks affected millions worldwide since they can’t rely on their money anymore. At the same time, social and political turmoil is putting considerable pressure on citizens to leave their countries and flee to better places. Overall, the world is on fire.
Still, economically speaking, emerging economies face the problem of instability that triggers the rest of the issues. Corruption is at its peak, and this doesn’t allow citizens to get a hold of their assets and be more in control of a better future.
That’s why allowing Bitcoin would help people achieve a safer income level without interfering with official financial institutions. However, the risks of volatility and the need for specific devices and internet connection are huge barriers for many countries.
In Africa, for example, some companies created a unique system through which people could buy, sell and trade Bitcoin with only their SIM cards, not needing a smartphone or internet access. Such a solution should be integrated first in more areas to see how people can increase their chances for a better life.
Blockchain would also implement innovation
Besides the introduction of Bitcoin in these economies, employing blockchain for specific applications would also promote technology integration. For example, banking and fintech companies have already shown interest in using these networks within their systems because they provide more safety and better databases than current practices.
Blockchain is also an excellent tool for crowdfunding, which is incredibly helpful in times of hardships due to extreme weather conditions and complex health issues that require expensive treatments. This solution would help gather money from all over the world and give it to whoever needs it in a matter of days.
Still, these technologies need thorough planning
Introducing Bitcoin and its blockchains within emerging economies is easier said than done because their implementation is already challenging in developed countries. For example, America’s SEC is delaying its decision in regard to the BTC ETF’s legal framework. At the same time, other regions from all over the globe have simply banned the use of crypto and related technologies.
For Bitcoin and blockchain to be adequately leveraged in these regions, crypto companies must consider the necessity of:
- Suitable infrastructure, from reliable internet access to power sources facing crypto transactions and mining. A strong network is required to handle secure communication and data transfer;
- People’s education and awareness regarding the use of cryptocurrency. Besides regular citizens, these emerging economies should have professionals willing to be trained in this matter so they can maintain blockchains and networks safe;
- The regulatory environment provided by these countries. Some regions are more welcoming of crypto, while others have banned it entirely, hindering opportunities for implementation;
- The lack of trust from organizations. Crypto and blockchain are relatively new technologies, so economies might not trust their safety and usability, even when assured by experts;
From afar, the biggest challenge is scalability. Massive blockchains, such as Ethereum’s, struggle with making these environments more scalable by introducing numerous updates to these systems. Unfortunately, as user numbers continue rising, it may be almost impossible to keep transaction fees at low rates continuously.
Have emerging technologies approached blockchain and Bitcoin?
Emerging countries tried introducing these new technological practices within their systems. For example, India’s National Institution for Transforming India worked with several blockchain software firms to implement blockchain in land titling projects, supply chains and even health records.
Africa, on the other hand, has had numerous attempts from businesses. For example, some expanded their operations to provide micro-loans to vendors through a blockchain-lending platform in Kenya. Another impressive project in Nigeria leveraged blockchain to monitor the Niger River’s toxin levels to clean the area. Funds for this project are coming from international organizations with crypto.
Haiti is considerably using blockchain for the benefit of its citizens. For example, a few years ago, its government proposed improving bureaucracy with blockchain, where property transactions and voting outcomes would be recorded.
Haiti’s Business Development and Investment department made numerous plans to help citizens after the 2010’s earthquake and the Covid-19 pandemic, by attracting private investors and providing farmers with more resources on selling their products and helping the economy rise.
This entire effort was backed by blockchain, which recorded and tracked payments.
While using cryptocurrency for developments might be suspect to some countries, leveraging blockchain doesn’t have to involve these assets for any projects. Of course, crowdfunding requires sending digital money, but there’s no crypto involvement in keeping data records or sending important information to other companies on the globe. Therefore, blockchain could be adopted more rapidly than crypto, which is still a step forward to technological advancements.
Bitcoin is the first digital asset in circulation and has maintained its importance until now when numerous countries consider making it legal tender. Still, emerging economies would benefit from its usage the most because it would allow people with no banking access to control their money and not interfere with official financial institutions. At the same time, crypto is not subject to inflation or corruption, making it a safe asset for the long term.