Why developing countries are adopting Bitcoin as legal tender
The World Bank’s report indicates an increased number of individuals living in deep poverty over the past three years. That means more people are living on no more than $1.90 per day. The Covid-19 pandemic has particularly escalated the level of poverty in most developing countries. Other factors include climate change, global conflict and uncontrolled inflation. Additionally, before trading Bitcoins make sure to invest in having a reliable trading platform such as bitcoin profit
Poverty levels have fallen steadily in recent years until the global pandemic disrupted the trend. Moreover, 75 to 95 million people may face more economic challenges in the following years, especially in developing countries.
During the post-Covid period, developing countries faced several challenges, including rising unemployment, high crime, corruption and political instability. And these challenges have further increased the level of poverty. Consequently, citizens do not have the opportunity to improve their lives. Some are even unable to support their family or loved ones financially.
The challenges of developing countries have pushed more citizens to search for greener pastures in developed countries. Others have turned to platforms to buy and sell cryptocurrencies for profit.
The potential gains have made this crypto-asset popular in developing countries. Some experts argue that Bitcoin can help address the growing poverty in these areas. That’s because it can help individuals get a new revenue stream and governments can use it to revive their economy instead of using the unstable fiat currency.
Bitcoin as a legal tender
Several developing countries have adopted Bitcoin as their legal tender. For example, El Salvador shocked the world after embracing Bitcoin as legal tender in 2021. This country also has Bitcoin as a reserve on its balance sheet. This surprising move opened the world’s governments to consider cryptocurrency as a legal tender. Another developing nation, the Central African Republic, joined the bandwagon by making Bitcoin legal tender.
Following El Salvador’s move, the country’s president asked the central banks and monetary authorities of other countries to attend a Bitcoin conference, which African countries’ representatives dominated. The meeting discussed the digital economy, financial inclusion and banking without a bank. The representatives also discussed Bitcoin’s benefits and rollout in El Salvador.
However, developing countries face challenges that prevent rapid crypto adoption as legal tender, including corruption, mistrust and infrastructural deficits. Some reports indicate that several countries have banned cryptocurrency, while others have uncertain regulations.
Why Developing Countries Consider Bitcoin Legal Tender
It is not easy to convert a country to embrace Bitcoin as a legal tender./ However, two countries have already taken the bold step and say the future looks bright. Most developing countries stand to gain significantly from crypto adoption. The crypto ecosystem presents a number of benefits that can help increase their overall GDP and fight poverty.
For example, Satoshi Nakamoto created Bitcoin to help the underbanked and unbanked. Developing countries have more than 50% of the population without access to important financial services or banking infrastructure. Blockchain technology and Bitcoin’s rise in these countries can help people participate in the global financial ecosystem. That’s because they would give them access to cheap and fast digital cash they can spend anywhere.
The decentralized financial ecosystem allows people without a bank account to access loans, investments and savings accounts. Thus, these people can access credit faster and even earn passive income. Some philanthropic blockchain-based organizations and platforms are working with developing countries to make crypto available and use it to address their economic challenges.
In addition, Bitcoin can be a hedge against inflation. The cryptocurrency has a limited maximum supply, making it deflationary. Although the crypto sector struggles with volatility, Bitcoin can help manage hyperinflation in third world countries.
Final thoughts
Bitcoin can benefit developing countries in various ways. It can help underbanked and unbanked access to financial services, including credit. Also, people in these nations can use Bitcoin to earn passive income. Nevertheless, these countries must overcome the challenges that prevent some individuals and governments from adopting cryptocurrency.
