Corruption, poverty, inflation and high levels of unemployment are some of the common problems facing third world countries. The years of bad governance and political instability have dragged some countries into a devastating economic crisis.
With accelerated development and growth in other developed nations of the world, prospects for these third world countries are sometimes dark. However, the introduction of cryptocurrency and blockchain technology has caused renewed enthusiasm for the prospects of revival in these developing countries. The purpose of this article is to examine possible responses to the big question “how cryptocurrency can be useful to third world countries?”
- Reduces remittance costs.
The global remittance system is almost entirely dependent on the activities of third world country citizens who are immigrants in the developed countries. From time to time, these people have to send money home. To do this, they must rely on intermediary services such as Money Gram, Western Union, Uni Transfer, etc. These platforms charges fees that significantly increases transactions cost. According to data published by the World Bank in 2017, remittances derived from developing or third world countries in 2016 amounted to about 441 billion dollars, more than half of the overall registered global remittances. The figures also found out that the global transfer fee for sub-Saharan Africa is $20 for $200 average, and this was the highest rate in the world.
With cryptocurrency, remittance costs can be significantly reduced, as well as the stress for receiving international money transfers.
- Improve financial inclusion in third world countries.
Lack of financial inclusion is a major problem in many third world countries around the globe. With reference to the World Bank, there are more than two billion people without a bank in the world. Most of these numbers live in developing countries around the globe. In countries such as Chad, Pakistan, Niger Burundi, Cameroon and Yimen, less than 15% of the adult population own bank accounts. It was even said that those who have bank accounts were underbanked, which means they do not have access to high-quality banking services. This prevents them from participating in world trade.
There is an additional incentive for empowering medium and small sized enterprises. Local traders can start thinking globally in terms of exports and imports. Banks in third world countries, such as Nigeria, are known for their unwillingness to borrow funds to small scale enterprises, even when the appropriate collateral is provided. With cryptocurrency platforms, medium and small sized merchants and business owners can receive cryptographic loans. This will greatly contribute to their commencement in exports and imports business, which is a fundamental element of national trade.
- Fights against corruption.
Corruption is one of the major disasters of third world countries. Corrupt government officials and the lack of economic democratization demonstrated the design that abandoned the collective commonwealth of these third world countries in the responsibility of few individuals. The middle class is almost gone and above 70% of the population lives below the line of poverty.
In developing countries, the illegal allocation of public funds by corrupt officials in the government is a major problem. Lack of compliance with the best contractual practices results in capital projects now being managed by cable that divert funds from the state for their own selfish interests. The use of cryptocurrency especially those based on a smart protocol will enable a more transparent system of contracts. Since the Blockchain technology files are public, citizens will have the ability to monitor how public funds are used.
Also, other ways that cryptocurrency is useful to third world countries include;
- It is one of the easiest ways of making payment. With the advancement of Blockchain technology, people can now make payment with coins with few minutes and the recipient will receive the fund immediately.
- It creates room for accountability. With the advancement of Blockchain technology, people can now see what is inside their wallet without having any doubt.
- Another way is security. There is no doubt that making payment through Bitcoin and other coins is one of the safest ways of making payment. Peoples account will be protected without any issues.
Other ways include transparency, reliability etc. These factors and many more have helped third world countries through the invention of cryptocurrency.
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