The economy is one of the factors that either develop or destroy nation-states. For centuries, it has remained a matter of concern for not economists but philosophers and now for technologists too. From communist’s ideals of considering currency a social construct to the capitalist’s notion of considering it a reality of life. Currency, the unit and a determiner of the economy has undergone several transitional phases as well. In a recent development in the year 2009, a Japanese aka Satoshi Nakamoto designed a unit of cryptocurrency called Bitcoin. The idea behind bitcoin was to invent an electronic peer to peer cash-transfer system, without the involvement of a middleman.
Its an established fact that be it the Bretton wood system, the standardization of currency against gold or the passage of Petrodollar, all these systems are built to strengthen the already established economies that are ruling the world for decades. It was only recently that this creation of bitcoin surged and challenged the monetary order of the world, resultantly receiving resistance from the world. Amidst all the crisis and criticism, bitcoin still managed to create a place for itself and become a tool of salvation for developing countries from the imposing taxes and conditions of the financial moguls of the world.
In a limited time period of just 8 years, bitcoin has succeeded in emerging as a powerful digital currency. It’s challenging the hegemony of the USD in the world. Fuad Ahmed, a currency trading expert is going to read into detail all the factors that are making the digital currency bitcoin the game changer for developing countries.
Bitcoins, opening avenues for development
Banking the Unbanked.
Most developing states face the issue of their masses living deprived of basic financial facilities like those provided by banks. Even when there is no access to banking facility in remote areas, the inhabitants still use the internet. This facility can help people in the far-flung areas where even bank fail to account the money.
Countries like India, Pakistan, Bangladesh, and Brazil have initiated numerous monetization drives. Recently India led a campaign of giving each family at least one bank account to keep track of the money they possessed and bring it into circulation. the poor and rich factions of society can come to the same table and move towards prosperity, only with the introduction of blockchain in the system.
Since Bitcoin doesn’t use a bank account for its transactions, it records all the money movement in the blockchain and minimizes the chances of theft or data from hacking. The use of bitcoin can also save these countries from corruption as the transactions will all be transparent and the money that is stored as stagnant will come into the rotation to make these nations healthy and sound societies.
Charities and funds.
As the biggest NGOs in the world have headquarters in the urban centers of developed economies. Whenever these NGOs run a campaign to collect funds, the money from across the world comes to the bank accounts of these developed nations. the banks deduct half the money as it comes to their accounts. A share of the amount gets deducted in the name of service charges. These charges can easily be avoided with cryptocurrency that doesn’t use any bank for services rather runs free.
In common observance when catastrophes like famine or floods hit somewhere, the need to immediately revive the supplies occur. In most cases, NGOs fail to deliver any supplies in the limited time available to them to help the needy. With bitcoin, they can transfer a huge amount of money to places within time without any delay. This can immensely help the poor and needy and also trigger the development and sustainability process of the developing nations.
Remittances.
The emigrants in the US or Europe are mostly citizens of countries still striving for survival in a current financial tornado. The political volatility and economic turmoil have hit no countries more than the emerging economies of the world. To make ends meet, its the citizens of these developing nations that travel to developed countries for a better future.
Remittances are the money that these people send to their families in their home countries. Developing Countries like Pakistan are states that have a major portion of their economy coming from remittances.
There is always a problem of which mode to adapt to send this money home. People use methods like fund transfer through banks or using money transfer services like the Western Union. However, these services charge 9-20% of the amount on each transaction. That’s the reason emigrants of these nations choose illegal means to send home money giving no profit to their countries. Whereas, the use of bitcoin can curb the menace of illegal fund transfer. The charge on bitcoin transfer is just 2-3% while the rest is just free.
Final Word.
On a broader canvas, developing nations where are a burgeoning middle class, they are evidently adding to the world economy. However, a major chunk of the population can be an asset if utilized in economic development. The use of bitcoin by this population can do wonders for these nations with no financial services.
You repeated one paragraph almost at the end of the article.
Besides that, you are right. Bitcoin has become an alternative for many people, and there are a few other currencies trying to open similar paths. I can recall Monero and Litecoin now. I guess (and I do not have a crystal ball to know) that they will remain as alternatives unless governments begin prosecuting them.
Time will tell.