The need for cryptocurrencies and the decentralization and accessibility they bring has been proven in the world, nowhere greater than in developing countries. Such countries often struggle with problems like corruption, poverty, inflation, and high rates of unemployment.
Let’s take a look at how cryptos can help developing countries, and how they can make their citizens’ lives easier, even in the most devastating periods in their country’s economy.
1. Cutting down remittance costs
Remittance systems around the world depend almost completely on developing countries’ citizens’ activity as the developed world’s immigrants. These people may rely on sending the money they earn back to their families in their native countries. To do this, they need institutions like Money Gram, Western Union, Uni Transfer, and the like. However, these platforms are known for their fees that further increase the costs of such transactions, leading to remittance costs in developing countries to climb as high as $441 billion in 2016 alone.
Developing countries often suffer from currency volatility and inflation, with Venezuela being a prime example, with a 40,000% annual rise in the price of consumer goods. However, Venezuela is among the countries that have turned to cryptos for a solution by developing their own oil-backed crypto called Petro.
While they still have a long way to go in order to fix the economy of their country, Petro has already made huge changes in their way of living. So far, Petro has helped with devaluing the fiat currency of Venezuela by as much as 95%. If Venezuela can do it, so can other countries, and their way of life can improve significantly if they would just give cryptos a chance.
3. Improving financial inclusion
The people of developing countries suffer from a serious lack of financial inclusion and some estimates claim that over 2 billion people around the world are unbanked. This leads to their inability to participate in global commerce, which ultimately makes their lives much more difficult.
Cryptocurrencies can change this by providing millions with access to proper banking services and financial instruments. There are numerous platforms that can allow this through nothing more than smartphone apps. Telecommunications has reached a lot more people than banks, which is why this method can easily work. The end result? Much greater financial inclusion and access to previously unachievable goods and services, and even funds themselves.
4. Eliminating corruption
Corruption is among the biggest issues in developing countries, with many believing that this is exactly what prevents them from developing further. Corrupt governments are mostly the reason why the middle class has completely disappeared, and why the majority of their citizens struggle with poverty for their entire lives.
Cryptos can help here too, especially through the use of smart contracts, which are fair, transparent, and recorded on public blockchains, allowing monitoring and eliminating fraud. They can bring structure and transparency to the election process by helping the people choose the representative they truly wish, instead of being manipulated into life under a single party for generations.
These are only a few of the ways that cryptos can help these countries, which is why their adoption is more of a necessity than simply a small benefit.