People in developed countries are not aware of the true potential of cryptocurrencies. This is because they don’t face similar financial problems like people in developing nations do. Money is easy to come by because almost everyone in developed countries own a bank account. They can simply take a loan from the banks when needed but this situation is completely different for people in developing nations where the rates of poverty and unemployment are high. According to research, on a average only 36% of the overall population in developing countries have access to the banking system which in turn creates financial problems.
However, cryptocurrency can help these developing countries in astonishing ways. The economic crisis in developing nations is often the result of hyperinflation, corruption or lack of access to global economy. Entrepreneurs, economists, businessmen and bankers have realized that blockchain technologies can solve all these problems. That is why they are incorporating cryptocurrency in their dealings. Following are some ways in which cryptocurrency can help developing nations.
Reaching the Unbanked Population using Cryptocurrency
As said earlier, majority of the population in developing countries have no access to banks. But they have mobile phones and these mobile phones have become their connection with the globe. Online banking in cryptocurrency provides convenience and makes it easier for the unbanked people to deposit and withdraw money from anywhere. It is especially convenient for people who live in remote places with no banks in the neighborhood. Cryptocurrency banking was reportedly the most prominent method of handling money in Kenya, with 20.7 million people using smartphone apps to transfer money. Forbes recently published an article highlighting the importance of blockchain in Indian demographics.
Increasing Business Opportunities
The lack of access to the global market hinders the business in developing nations. Businessmen cannot expand their business and enter the international import and export market because they have no way of converting their national currency into widely accepted money like the US dollars. However, cryptocurrency has completely solved this problem. Now, they can trade in cryptocurrency which is used in major developed nations and will soon become the principal means of financial dealings worldwide. As a result, cryptocurrency increases the business opportunities in developing countries.
Hyperinflation or inflation is the sustained increase in the money supply of a country. The money becomes worthless when a country prints too much of it which is usually the case in developing nations. The prices of the goods rise and subsequently the purchasing rates of goods drop. The economy of the country suffers a huge blow as the money does not flow smoothly. However, if the country deals in cryptocurrency there will be no need to print currency and thus inflation rates will decrease.
Repairing Corrupt Financial System using blockchain
A big factor that results in poor economy of developing nations is the corrupt financial system. In conventional banking, money goes through a lot of people before it reaches the concerned party which increases the chances of corruption. Cryptocurrency is a Blockchain technology which does not require a central bank and as a result, the money is only handled between two parties. Developing nations can use cryptocurrency to eliminate corruption from their economy. Several companies like Bajaj Electronics and Tech Mahindra have started using blockchain based transaction. This has dramatically reduced the delay between the stockist and the retailer. Other corporations in India have started exploring more of it with collaboration of Yes Bank.