What are the benefits of cryptocurrencies for the “poor”?

In recent decades, industrialization has lifted many countries out of poverty, but in Asia, South America, and especially in most parts of Africa, there is still a lack of advanced infrastructure. They are not only poor, but also widespread inflation and corruption.

Today, cryptocurrency and blockchain technologies are changing the world, and the status quo in many areas has improved. So in some developing countries and even extremely poor countries , what is the use of cryptocurrency or blockchain technology?

Developed countries vs developing countries

First, let us define what is a developed country and what is a developing country. The World Atlas defines developing countries as countries with low human development indices, which usually means that developing countries have lower life expectancy, lower education levels and lower per capita income than other countries. The fertility rate is higher . "

In this definition, there are several exceptions, such as the New Industrialized Countries (NICs), which are not yet a developed country, but which are growing faster than other developing countries, such as Brazil and China. On the other hand, developed countries are defined as “higher industrial and human development indices than other countries”, as well as advanced infrastructure and economic conditions.

While issues such as corruption, poverty and inflation are ubiquitous in the world, there is no doubt that they are more prevalent in developing countries.

In fact, many issues are highly relevant, and according to international anti-corruption NGO research, there is a clear correlation between poverty and public sector corruption. This is where cryptocurrency and blockchain technology can provide solutions.

corruption

One of the biggest problems facing developing countries is corruption, as they often do not have mechanisms to track the transfer of funds. The International Monetary Fund estimates that the public sector’s annual bribes range from $1.5 trillion to $2 trillion, accounting for 2% of global GDP . Cryptographic currency and blockchain can alleviate this disaster.

The blockchain ensures that every transaction is secure and verifiable when paid for public projects. Public sector agencies can assign cryptocurrencies to those involved in the project on the network, and the transactions will be verified by miners who receive cryptocurrency rewards.

At present, there are already some examples of cracking down on corruption through blockchain, which is used by Brazilian state-owned technology company Serpro to combat fraud in the country's outdated land ownership system.

poor

The cryptocurrency can also provide financial status to 40% of adults worldwide who do not have a bank account, the vast majority of whom are from developing countries. In some countries, such as Myanmar, this figure is as high as 95%, which may include living too far from the bank, not having enough assets, or lacking the necessary documents.

It’s important that cryptocurrency and blockchain technology can bring financial inclusion to these people – so they can build savings and credit, get loans, pay for goods and services online, and invest in them – this is them What could not have been done before, these things in turn help to reduce poverty.

Having cryptocurrencies does not require a bank account. This approach can also provide huge growth potential for small businesses in developing countries. The decentralized nature of cryptocurrencies enables these companies to truly operate globally for the first time.

In addition, due to risk considerations, many start-ups may not be able to obtain loans through traditional financial institutions, but due to the establishment of a cryptocurrency loan platform, they can now use cryptocurrencies to obtain loans. This model may produce a positive chain reaction that ultimately drives the economic development of these countries.

inflation

Yes, cryptocurrencies are known for their volatility. However, in some countries where inflation is very high and the currency is almost worthless, especially in Venezuela, bitcoin is being seen as a valuable investment and currency alternative. According to the BBC, in Venezuela, in March 2019, the price of a cup of coffee rose by 373,000% from a year ago.

Many Venezuelans are converting their Bolivar currency into Bitcoin so they can hold something of value. It is therefore not surprising that the popularity of Bitcoin in Venezuela has soared. Sometimes the trading volume of Bitcoin in these regions is even comparable to that of the United States.

In addition, Bitcoin mining can also bring huge wealth to the locals – according to 2018 data, a bitcoin can be earned in Venezuela to earn 531 US dollars, which may not be too much for Westerners, but for Venezuelans Say quite a lot.

The Venezuelan government launched its own cryptocurrency coin last year. However, due to its link to the catastrophic value of Bolivar, it is hardly recognized internationally. The New York Times called it a "meaningless, non-traded cryptocurrency," Venezuelan entrepreneurs said in an interview that it was "terrible" and "the dictator would try to use the blockchain to further concentrate." Therefore, in essence, petroleum coins and bitcoin are not the same type.

Conclusion

As the Goldman Sachs strategist said:

“In the traditional financial system with insufficient money service supply, Bitcoin (and the more common cryptocurrency) will provide a viable alternative.”

Although with cryptocurrency and blockchain technology, corruption, poverty, high inflation, and various social problems will not disappear quickly, but it can bring new changes and hopes to the already bleak reality. This is also the value of technology.

Compile: Martha Card

Source: Block wave