The new Bitcoin Cryptocurrency makes it possible for underdeveloped countries to make remittance without getting taxed or having their privacy violated. A cryptocurrency, broadly defined, is a form of digital “coins” that exist on a blockchain. This digital money prevents third party access to user identity, transaction information, user preferences or activities. Acting as a form of digital cash, cryptocurrency makes it possible to receive and make payments without the use of a banking system, allowing underdeveloped countries to benefit from economic growth which could mean a higher quality of life.
Transforming a Civilization
El Salvador is one of the many nations to reap the benefits of the currency. Bitcoin has positively transformed its socio-economic status by reinstalling financial hope throughout the region. Users benefit from not having to pay capital gains taxes and are able to settle debts with the banking system.
After the 12-year civil war ended in 1992, El Salvador’s living standards were set back decades. Any advancements in infrastructure, agricultural production and commerce were destroyed, leaving the population in a state of extreme poverty. At that point, El Salvador was considered the most dangerous place in the world. From poverty, gangs were formed, dominating every aspect of life. People lived in constant fear, the police were reportedly too scared themselves to help, and people weren’t safe in their own homes. By investing in Bitcoin, a shift was created within the society, re-instilling hope in El Salvador.
The organization Fill up the Tank of Love aims to give Salvadorian children hope for a brighter future to ensure they don’t turn to gangs and violence. The project, called Bitcoin Beach, works on educating poor communities in El Salvador on how to use the cryptocurrency for everyday life. The goal is to use a circular economy to create a sustainable Bitcoin ecosystem in El Salvador, where the majority of the population doesn’t have access to bank accounts. Using Bitcoin over the Lightning Network, locals learn how to pay for medical care, food and utility bills.
Bitcoin Adoption in Underdeveloped Regions
Bitcoin currently thrives as a legal form of currency for populations throughout Latin America and Africa, bringing with it lots of concern and controversy from officials in developed nations. Big corporations in developing countries initially dismissed the idea of cryptocurrency becoming a legal form of money, with many claiming it wouldn’t last. Since 2008, the digital currency has been growing stronger than imagined. For countries with a flailing economic crisis, the mentality has been one of having nothing to lose with Bitcoin as the best chance these countries have to overcome poverty. Being the first to lead the market, El Salvador passed a bill that made Bitcoin legal tender in the country; turning it into a pioneer of financial technology.
The high rate of the digital cryptocurrency adoption in these regions is due to the restrictions and inaccessibility of foreign currencies. Bitcoin makes exchanging money globally cheaper and more accessible to all. This is especially important in underdeveloped countries because of the lack of access to banks; most people in these countries don’t have bank accounts. Being cut off from cross-border commerce, the dearth of financial services has also made it impossible for these populations to participate in e-commerce resulting in a sloping economy. The cryptocurrency has given those without bank accounts the potential to invest in Bitcoin and secure significant returns, however careful analysis of the crypto market is required to decide when to invest.
Spanning throughout Latin America and Africa, the digital currency facilitates transactions in seven African nations: Ghana, Kenya, Nigeria, Senegal, Tanzania, Uganda and the Democratic Republic of the Congo. With Nigeria being one of the world’s largest Bitcoin markets and one of the first to legalize the currency in Africa, Bitcoin seems to solve many economic issues for Africa. Similarly, to underdeveloped regions in Latin America, poverty, poor governance and inadequate infrastructure in Africa have put a toll on any possible economic growth opportunities.
Currently, 60% of the world’s digital money passes through Africa, allowing the continent to reap the benefits of cryptocurrency. Through Bitcoin, Africa has the chance for economic growth by enabling cross-border payments. People are able to become entrepreneurs or make a living through digital cryptocurrency, working virtually for global companies.
Cryptocurrency Education is Key
The most important part of running a successful digital economy is to become educated on the way it works. Organizations like Bitcoin Beach in El Salvador work to educate the locals in order to create a stronger economy. To most, cryptocurrency seems to be complex, while in truth it is a fascinating innovation that has the power to completely rebuild a nation.
Attorney Joel Nagel is the founder and managing partner of Nagel & Associates, LLC.