Crypto and Blockchain: The Rising Sun of Developing Nations

In this blog I will be talking about how cryptocurrencies and blockchain technology are becoming a beacon of hope and opportunity for people in developing nations.

I will also share how crypto and blockchain is changing the lives of people in these nations and why it will be a good idea for people in developing nations to adopt this technology for their own good. 

Connecting the Unbanked to Digital Money

Did you know that according to the Global Findex Database 2021 released by the World Bank, there are about 1.4 billion adults who do not have bank accounts? In many developing nations, traditional banks are located too far away from the rural and remote arrears and also banking services are super expensive for low-income individuals to use. But the exciting news is that cryptocurrencies can change all of that!

For example, El Salvador made bitcoin a legal tender and after that introduced an application called Chivo Wallet in 2021, allowing people to use bitcoin without needing a bank account.

The government also encouraged people to use the app by providing a $30 bitcoin incentive. This initiative was quickly embraced, and now many local transactions are conducted in Bitcoin, even in the most remote and rural areas.

Additionally, people can receive remittances directly to the app in Bitcoin at a very low cost. How cool is that? You don’t believe me? Check out El Salvador’s Bitcoin adoption documentary on YouTube, it's really worth a watch!

Another example is Nigeria, with over 60% of adults lacking access to banks, crypto is stepping in to fill that gap! Platforms like Paxful and LocalBitcoins are making it easier for Nigerians to buy and sell cryptocurrencies, allowing them to save and invest without the need for traditional banking.

Did the Nigerian government like this?, I don't think so, there was some resistance from the government for the use of crypto within the economy, in 2021, the Nigerian government banned trading cryptocurrencies, but with all that resistance, people embraced crypto so quickly that the country became Africa’s top cryptocurrency economy where 99% of the people knowing about crypto and 46% owning it. 

What about Argentina? In Argentina, more than 50% of Argentinians are unbanked due to the deep distrust in the banking system. Hyperinflation and local currency devaluation has caused many people to shift to crypto, especially bitcoin and stable cryptocurrencies pegged to the dollar like USDT and USDC.

Platforms like Binance and Local Bitcoins enable users to buy and sell crypto easily, which helps them store value, receive remittances, and even make daily transactions bypassing traditional, costly and inefficient banking services. 

Then we have Morocco, Vietnam, Egypt, Philippines and Mexico, the top 5 countries where the largest unbanked population exists according to a recent study released by the Merchant Machine. The top 5 unbanked countries are all seeing more interest in cryptocurrency but regulations on crypto in each country are quite different. In Morocco, people are eager to explore crypto despite government restrictions. 

Vietnam has many users trading cryptocurrencies, even with some rules in place. Egypt is witnessing a growing interest, especially among young people, as the government works on clearer regulations. The Philippines is leading in adoption, with many using crypto for daily transactions and sending money. Lastly, Mexico's tech-savvy crowd is turning to digital currencies for remittances, thanks to supportive fintech platforms.

Cryptocurrencies provide the unbanked people to experience the new financial digital era exposing the inefficiencies of the traditional banking systems. Crypto helps both developed and developing countries to experience low cost and faster domestic and cross border transactions providing a lifeline to those people excluded from the banking system.

Just picture a world where everyone, regardless of where they live or their financial status, has the chance to be a part of the new financial Era where transaction settlement times are instant and cost only cents! everything can become new! 

Preserving Value in Times of Hyperinflation

Imagine you have a new kind of digital money like Bitcoin that increases in value over time. What will you do? will you hold onto your physical cash that declines in value overtime, or will you shift to own that digital gold?

Holding onto cash is like betting on a weak opponent who is about to face a stronger and formidable one, likewise, if anyone wants to survive in any country where inflation is very strong, the only way to beat it is to shift to an asset which is stronger than inflation, that's the way to survive, is that not?

Take Venezuela for example, the country’s inflation rates have skyrocketed to over 2,000%. In 2020, over the past decade, the country’s inflation was over 100,000%. In such situations, how can people protect their savings? Many Venezuelans in response to this have turned to cryptocurrencies by converting their cash, particularly Bitcoin, as a way to protect their wealth.  

Another example is Zimbabwe, the country where cash was worthless and had no purchasing power. In 2008, the inflation in Zimbabwe skyrocketed to 89.7 sextillion percent. Yes, you read that right, people burned cash to keep themselves warm and large sums of cash was thrown into dustbins.

Despite all of these difficulties due to currency instability, it is inspiring to see how people in Zimbabwe are slowly moving onto cryptocurrencies. With necessary regulatory clarity, proper infrastructure like internet access and electricity, proper education about cryptocurrencies, adoption in crypto in Zimbabwe can really skyrocket allowing more people to safeguard their wealth and combat inflation. 

Inflation is inevitable in any country, whether developed or developing. Even if inflation remains within a range of 5-10%, it becomes unbearable for many people trying to keep up with living costs. When finances are tight, even a slight price increase can feel overwhelming.

So, when you have money, rather than simply saving all of it, it’s best to invest some portion of that money in an asset that has a good track record and appreciates in value. But always remember to do your own research. 

Empowering Entrepreneurs with New Opportunities

Cryptocurrencies and blockchain technology are opening doors for entrepreneurs in developing nations. With the invention of decentralized finance or DeFi, entrepreneurs now have access to more loans bypassing barriers in traditional banks.

For example, in India, platforms like Unocoin offer entrepreneurs to easily access loans by depositing some crypto as collateral. Other Defi platforms like Aave and compound provide global accessibility, meaning anyone anywhere in the world can access these platforms and borrow loans by placing crypto as collateral. 

In Rwanda, blockchain technology has been implemented in the agricultural sector, one notable example is the INATrace, an open-source traceability system based on blockchain technology.

INATrace was successfully implemented for Rwanda’s coffee production allowing farmers to record detailed information about their coffee production, including the exact location of the coffee farm, the type of coffee beans grown, processing methods used like washed natural or honey processed, quality attributes such as the grading of the coffee beans based on size and weight and any sustainable practices. 

All this information is recorded securely in the blockchain making this information available to end customers through scannable QR code on the coffee packages fostering trust in the product. Not only that, INATrace also helps coffee farmers to showcase their practices and quality standards allowing them to set better prices in the international market.

Isn’t it amazing when blockchain technology has the potential even to transform the lives of agricultural workers? Do you think that this technology has any limits in its ability to make a difference? I don't think so!

Fostering Transparency and Reducing Corruption

Blockchain technology is transparent and decentralized, which means it has the capability to combat corruption. If blockchain technology can be carefully implemented in systems where corruption often thrives, for example in political systems, public procurement and contracting, land and property rights, judicial systems, education and healthcare systems, then it will be a game changer!

Centralized systems widely used in these systems have helped to facilitate corruption at the expense of people, leaving many people powerless. But with a properly implemented and a truly decentralized blockchain, corruption has no chance!

For example, the government in Malta launched Malta Digital Innovation Authority to implement blockchain technology in its educational system. What this means is, using the blockchain to issue academic certificates, which guarantees the authenticity of student’s qualifications. This prevents qualification fraud and helps employers and institutions to verify the credentials pretty quickly and securely. 

This initiative is a win-win situation for all the stakeholders. Students will benefit from this as they can easily prove that they did earn the qualifications because their certificates are notarized on the blockchain in a tamper proof manner. So, students will have no problem proving their academic qualifications even when the learning institutions and training colleges run out of business.

On the other hand, employers and other verifiers no longer need to worry about the authenticity of a candidate’s certificates, as long as they are verifiable on the blockchain. This ensures that the credentials presented during the hiring process are genuine and tamper-proof. What about education institutions then? they will benefit from low administration cost, as these institutions do have to deal with future queries relating to certificate queries, copies etc. 

What about using distributed ledgers (blockchain) to record land and property rights? Several European countries such as Sweden,Poland and Georgia are integrating blockchain to be included in their land registration systems to improve security, transparency and efficiency.

Land registration is a process of recording detailed information of a land such as the ownership information, boundaries and location, transaction history,title deeds etc. So, if this information is recorded in a real distributed ledger (blockchain), then these records become tamper-proof, highly secure, transparent, and protected from unauthorized modifications by any single entity.

Land records are often stored on centralized servers or in large paper-based registers monitored by a single person in most developing and developed nations. We know that centralized servers can be vulnerable to a single point of failure, such as hacks or environmental hazards. Even when land records are stored in a paper-based way, the person who manages these records can easily forge the data. 

Many serious problems can arise when land records can be easily tampered with; for example, disputes over property ownership will rise, resulting in costly and lengthy legal battles. Trust in the real estate sector could diminish, reducing property prices. People who are legitimate owners could lose their properties if data is altered, showing a different owner. In the worst case, uncertainty and issues about ownership in the real estate sector can discourage infrastructure projects, affecting the whole economy! 

Realizing these many underlying issues, India was the first Asian country to take this initiative, implementing blockchain technology for land registration around 2018, with various states launching pilot projects to enhance transparency and reduce fraud.​ 

Recognizing the need for modernization, Pakistan followed suit in 2021, integrating blockchain into land registration through the Punjab Land Records Management and Information System (PLRMIS). This initiative aims to create a secure and tamper-proof record of land ownership, helping to mitigate the risks associated with traditional centralized systems​.

Final Thoughts: A New Dawn

Crypto and blockchain came into the rescue of many people and nations, much like a spring of water in the wilderness. Cryptocurrencies help individuals to preserve their wealth and participate in the new digital financial system, requiring only a computer and a good internet connection. Thanks to bitcoin, the first digital currency to demonstrate the reliability of blockchain, we see a way forward.

Blockchain technology has the power to build trust. That is the whole point of it! The whole point of integrating blockchain into any current system whether it is health care, voting systems, land and property rights, Education, judicial system, supply chains etc. is to reduce corruption. To reduce corruption, what do we need? The answer is we need a real solution that can provide trust! 

This word should not be taken lightly. The word “Trust” carries more weight than you can imagine. The reason corruption and lack of transparency exists in any system is because people working behind those systems or technological solutions implemented in those systems are not successful in providing trust.

A properly implemented distributed ledger which is genuinely decentralized, immutable and transparent is the only technological solution I personally believe can provide that trust.

“Where there is corruption, there is no trust and where there is trust, there is no corruption”. 

~BcCryptonian

Disclaimer: The contents of this article are for informational purposes only and are not financial advice. The views here are just the author’s opinions. The crypto market is volatile, so be sure to do your own research before investing.