Many people in the world live in poverty, without access to basic banking services or even a government-issued ID. But what if there was a way for these people to participate in the global economy and have a voice in the financial system? Cryptocurrency could be that solution.
In this blog post, we'll explore how cryptocurrency can help alleviate poverty and provide economic empowerment to those who need it most. We'll also look at challenges facing cryptocurrency adoption in developing countries. So, let's dive in and see how crypto can make a difference!
Current Internet Access Status in 3rd World Countries
Even though many people live below a dollar a day in developing countries, they can access the Internet. In 2021, research showed that the percentage of people in developing countries that can be accessing the Internet in developing countries is at 57% of the population. Due to this access, they can use their smartphones to access cryptocurrency platforms to buy a cryptocurrency and trade them for profits or even hold on to their tokens as long-term investments. The evolution of cryptocurrency is taking form in various developing countries, and it can be a solution to Third World countries in so many ways. Continue reading to find out how cryptocurrency can help Third world countries to improve their economic growth.
Corruption Reduction and Transparency Promotion When there is corruption, there is a lack of resources needed to improve the livelihood of people. This increases poverty levels in most of the Third World countries. By using cryptocurrency, developing countries can start curbing corruption. It delivers an innovative and essential method of cracking down on corruption. For instance, government projects can be tracked, especially the expenditure. Besides that, people authorized to spend the funds are allocated specific time frames of access, and these funds can only be used for specific or intended purposes. The handling of data in cryptocurrency can also promote transparency, especially through its tracking features. The data is stored in blockchain software which minimizes the risks of data loss. The cryptocurrency blockchain has powerful data encryption, which offers excellent security to the data, and all transactions are available for tracking. This means that corruption can be prevented easily using cryptocurrency because it can increase transparency. This will ensure that funds will be channeled to the areas of production that benefit the country's economy.
3. It Helps to Combat Inflation
Inflation is the devaluation of currency alongside increasing prices of goods and services. This remains a massive threat in various developing countries, especially on their economic growth. By using cryptocurrency, governments of developing countries will be able to maintain the value of currency using it to hedge inflation. For example, bitcoin is considered an asset that retains its value over time, and therefore, it can be used as an inflation hedge. It is considered inflation resistant and is expected to stand strong even during recessions, which is very important for developing countries that suffer inflation.
4. Reduction of Transaction Costs and Time
One of the things that cryptocurrency can bring to you when you sign up for it is time and money. In developing countries, cryptocurrency is valuable, especially when reducing remittance fees. This is the amount of money charged to transfer money from place to place, such as sending money to their home country, especially if they are foreign workers. Who doesn't want to reduce the transaction costs whenever you want to send money? When you consider this, you will find that most developing countries can reduce the number of transaction fees, which is particularly important in helping those countries to save money. Cryptocurrency does not require expensive private infrastructure to function; the fees charged are low compared to particularly banks.
5. It Empowers Entrepreneurs
Blockchain technology and cryptocurrency help entrepreneurs to receive payments in more currencies. For example, an individual can now make financial transactions with countries worldwide without much struggle. The objective is to help small businesses and medium businesses everywhere get finances for their businesses and connect with the rest of the world. The cryptocurrency networks allow business people to quickly convert altcoins into fiat currencies that they need to make payments and purchases. This gives opportunities to various people who may want to venture into different businesses to consider their options and have the investments intact. When there is an increase in the number of people doing business or opportunities for people in developing countries, the chances are that the GDP of that country will increase. Whenever there is an increase in GDP, you will realize that the country's economic growth will be discovered, which is the objective in the long run.
6. Offers Greater Financial Inclusion
You do not need physical infrastructure when it comes to cryptocurrency. This is because it is a software-based and is always ready for use through the Internet. In poverty reduction, financial inclusion is a very important key player. Sometimes, people encounter various challenges when accessing banking services in Third World countries. For example, they need to have minimum balances to open accounts or even multiple documents. Tough Loan application terms can act as barriers to access to bank services. This is quite different for cryptocurrency because you do not require a bank account to operate it. You can now turn to cryptocurrency networks to access different types of financial needs that you have. You can use transactional history to apply for microfinance loans because you will not need documentation or auditing to access various financial services.
Final Take Away
In conclusion, the inadequacies of traditional financial assistance in most developing nations make them a good ground for cryptocurrency adoption. Currently, so many people are embracing the cryptocurrency networks, and for this reason, the regions are benefiting a lot because the trends are affecting people in positive ways. People can now trade globally or even on capital from cryptocurrency trading. This means that cryptocurrency can offer an excellent solution to most developing countries, especially when combating some of the economic growth issues that they have.
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