The World Bank’s report indicates an increased number of individuals living in abject poverty over the last three years. That means more people live on not more than $1.90 per day. The Covid-19 pandemic has particularly escalated poverty levels in most developing countries. Other factors include climate change, global conflict, and unchecked inflation. In addition, before you trade Bitcoins make sure to invest in having a reliable trading platform such as
Poverty levels have declined steadily over the last few years until the global pandemic disrupted the trend. Also, 75 to 95 million people might face more economic challenges in the following years, especially in developing countries.
During the post-Covid period, developing nations faced more challenges, including rising unemployment, high crime rates, corruption, and political instability. And these challenges have increased poverty levels further. Consequently, citizens don’t have the opportunity to improve their lives. Some are even unable to support their families or loved ones financially.
Developing countries’ challenges have pushed more citizens to search for green pastures in developed nations. Others have turned to platforms to purchase and sell cryptocurrencies for profits.
The potential gains have made this crypto asset popular in developing nations. Some experts argue that Bitcoin could help deal with the rising poverty in these areas. That’s because it can help individuals get a new income stream, and governments can use it to rekindle their economies instead of using the unstable fiat currency.
Bitcoin as a Legal Tender
Several developing nations have adopted Bitcoin as their legal tender. For instance, El Salvador shocked the world after embracing Bitcoin as a legal tender in 2021. Also, this country holds Bitcoin as a reserve on its balance sheet. This surprising move opened the world governments to consider cryptocurrency a legal tender. Another developing nation, the Central African Republic, joined the bandwagon by making Bitcoin a legal tender.
After El Salvador’s move, the country’s president called upon the central banks and monetary authorities from other countries to attend a Bitcoin Conference, which African countries’ representatives dominated. The meeting discussed the digital economy, financial inclusion, and unbanked banking. Also, the representatives discussed Bitcoin’s benefits and rollout in El Salvador.
However, developing countries have challenges that hinder rapid crypto adoption as a legal tender, including corruption, distrust, and infrastructural deficit. Some reports indicate that several countries have banned cryptocurrency, while others have uncertain regulations.
Why Developing Nations Are Considering Bitcoin as a Legal Tender
Converting a country to embrace Bitcoin as a legal tender isn’t easy./ However, two countries have taken the bold step already and say the future seems bright. Most developing nations can gain significantly from crypto adoption. The crypto ecosystem presents numerous benefits that may help increase their overall GDP and fight poverty.
For instance, Satoshi Nakamoto created Bitcoin to help the under-banked and unbanked. Developing nations have more than 50% of their population without access to essential financial services or banking infrastructure. Blockchain technology and Bitcoin’s rise in these countries could help people participate in the global financial ecosystem. That’s because they would allow them access to low-cost and fast digital cash they can spend anywhere.
The decentralized finance ecosystem allows people without bank accounts to access loans, staking, and savings accounts. Thus, these people can access credit faster and even make passive incomes. Some philanthropic blockchain-based organizations and platforms are partnering with developing countries to make crypto accessible and use it to address their economic challenges.
Additionally, Bitcoin can be a hedge against inflation. The cryptocurrency has a limited maximum supply, making it deflationary. Although the crypto sector is struggling with volatility, Bitcoin can help deal with hyperinflation in third-world countries.
Final Thoughts
Bitcoin can benefit developing nations in different ways. It can help the under-banked and unbanked access financial services, including credit. Also, people in these nations can use Bitcoin to make passive income. Nevertheless, these countries must overcome the challenges that prevent some individuals and governments from adopting cryptocurrency.
