The Implication of Bitcoin for the Developing Countries

by - 10/16/2017 09:08:00 PM

Since its inception in 2009, the digital currency Bitcoin has been making waves and simultaneously facing criticism from different industries in the world. Following the idea of decentralized currency manifested in the paperless world, Satoshi Nakamoto came up with the concept of digital money called the Bitcoin.

From the Communist notion of considering money a social construct to the Capitalist idea of calling it the only reality, currency had a long journey to travel. Coming through different transitional phases, the currency has now reached a point where one of its forms is solely present virtually only. Regardless of the purpose, it was initiated for, bitcoin because of its decentralization is now serving as a redeemer for many developing countries. Fuad Ahmed, a currency trading expert makes an analysis with his critical eye about bitcoin revolutionizing the state of developing nations by saving them from the effects of superpowers’ imperial architect.

In the following passages of the article, we are going to highlight all the aspect that are involved in the bitcoin becoming a game changer for developing countries. The early users of the currency happened to come from the most developed nations of the world but, cryptocurrency gained great popularity in the developing nations in the recent times, therefore, Fuad Ahmed is going to study all factors that make bitcoin the developing nations favorite currency, in detail and present his readers with a thorough analysis.

Reduces the legal cost for emerging countries

Many developed countries traveled a path to success because of their rigidity to keep all transactions, businesses, and contracts legally secured. While in developing countries, there are still individuals, companies or governments that enjoy an edge over a majority of the population by shying away from following the norm, when it comes to legalizing the matters. Bitcoin along with its underlying technology blockchain technology is going to be a guarantor and a secure method to monitor all transactions taking place in the developing countries. So, these emerging markets if make purchases, imports and payments in bitcoin can have all their businesses properly regulated and kept track of through the use of this technology.

The problems of developing countries often remain incomprehensible for those living in the prosperous parts of the world. It’s difficult for the inhabitants of developed countries to realize the struggle that a person from a third world country undergoes, to get his property transferred. From the payment methods to the transfer of money, if the money used is bitcoin and transfer contract written is a smart contract, many of the problems of these individuals can be minimized. This technology can make all the information secure and trackable for both the seller and the customer.  There are some very common problems related to law, transfer of money, property, and inheritance that demand the involvement of a third party and also do not work without human intervention, widening the room for corruption and infringement of rights, especially in countries where the implementation of the law is not in the right state.

In such countries where social order is disrupted because of the vacuum caused by lawlessness, bitcoin with blockchain can work together to form a well-organized system.

Remittances can be profitable

World Bank, in a survey, observed that the remittance flow or the money that is sent home by the emigrants had totaled up to $404 billion in 2013, and increased up to $585.1 billion in 2016.  It’s a common culture that citizens of developing countries travel to developed countries for work and because the salaries there are higher than the amount paid to them at home, so there’s a fair amount of money that comes in the name of remittance to developing countries. States like India and Pakistan thrive on the income they receive from their citizens working in settled countries like the US, the UK, Europe and more. This money when received through banks or institutions like the Western Union suffer a cut of about 9-20% under the service charge. Whereas, if this money is sent through bitcoin using blockchain technology, the money transfer can take place within minutes without the delay of days from banks or any money transfer service provider. This money can be sent at about 2-3% service charge if sent in bitcoin, with the whole, transaction totally traceable and monitorable with blockchain. This process can lead to addition of a good amount to developing countries economy that suffer a major blow when emigrants choose to send home money using illegal means and there is no trail, countries fail to maintain themselves as corruption free because the citizens go for options that save money but are not safe for the economy of the country.

Charities and donations

It’s a very discomforting fact that most of the NGOs of the world that operate in developing or underdeveloped countries are all headquartered in the developed states. When these organizations receive funds or any amount for charity, they receive it in their local currency. This causes them the deduction of a huge amount when this money is being transferred from banks or through other means. While if bitcoins are used by these organizations in place of regular currency, the amount that’s cut because of several transactions and regulation from bank accounts can be cut and majorly reduced. The amount that banks charge for services can be used for the welfare of the poor that the developing nations can benefit from.

Banking the unbanked

People in most of the developing nations are living under terrible circumstances where they have no access to the banks or any other financial institution. India, in the recent years, in the same wake, introduced a demonetization policy and giving each family a bank account to record each penny that was being circulated. However, the process still failed to keep a record of all the money in circulation. Since the world is shifting to all things dependent on the internet, there’s access to even the inhabitants of far-flung areas to the internet. It also predicted that by 2020, 80% of the world population is going to start using smartphones which is synonymous with 80% learning to join the world of internet. So, bitcoin in this situation, for countries that have not been using the facility of banks can easily have their money recorded in blockchain if they use bitcoin for their payments or keep money in coins.

Final word

Bitcoin is a revolutionary process that is going to change the entire monetary system of the world and turn it into a very solid network. This is going to be a game changer for developing nations that are suffering from all kind of financial problems.

You May Also Like