{"id":1169,"date":"2024-07-23T10:30:17","date_gmt":"2024-07-23T10:30:17","guid":{"rendered":"https:\/\/hiribi.com\/blog\/?p=1169"},"modified":"2024-07-23T10:30:18","modified_gmt":"2024-07-23T10:30:18","slug":"crypto-adoption-in-developing-countries","status":"publish","type":"post","link":"https:\/\/hiribi.com\/blog\/crypto-adoption-in-developing-countries\/","title":{"rendered":"Crypto Adoption in Developing Countries"},"content":{"rendered":"\n

Cryptocurrency adoption has accelerated globally in recent years. While Bitcoin initiated the revolution over a decade ago, today we have thousands of cryptocurrencies. Unlike in developed countries, where these digital assets are often seen as investment vehicles or get-rich-quick schemes, developing nations view them as tools to address real-world challenges such as financial exclusion, currency instability, and expensive remittances. This has made adoption in developing countries progress even faster.<\/p>\n\n\n\n

In this article, HiRiBi<\/a> invites you to look at some success stories and conduct a small case study of this phenomenon.<\/p>\n\n\n\n

Why Crypto Finds\nFertile Ground in Developing Economies<\/strong><\/h2>\n\n\n\n

Several\nfactors contribute to the growing popularity of cryptocurrencies in developing\nnations.<\/p>\n\n\n\n

Unbanked Populations<\/strong><\/h3>\n\n\n\n

Many people in these countries lack access to traditional banking systems. In some remote rural areas, physical bank branches are scarce or non-existent, making it difficult for people to open accounts or access financial services. Additionally, opening a traditional bank account typically requires formal identification and proof of income, which can be challenging for those working in informal sectors or lacking proper documentation.<\/p>\n\n\n\n

Cryptocurrencies\noffer a solution to these challenges by providing an alternative financial\nsystem. Users can create a wallet on their phones, eliminating the need for\nphysical bank branches. This makes their funds readily accessible, even in\nremote areas, as long as there is internet connectivity. Additionally, opening\na cryptocurrency wallet requires minimal identification or verification\ncompared to traditional bank accounts.<\/p>\n\n\n\n

Volatile Local Currencies<\/strong><\/h3>\n\n\n\n

Some developing countries face currency instability due to high inflation, which erodes the purchasing power of the local currency. This makes it difficult for people to save and plan for the future. Political instability and economic mismanagement further exacerbate these issues, causing fluctuations in exchange rates and devaluing local currencies compared to foreign ones.<\/p>\n\n\n\n

In\nresponse, many citizens in these nations use cryptocurrencies as a hedge\nagainst economic challenges. Unlike fiat currencies, which governments can\nprint at will, cryptocurrencies like Bitcoin have a pre-defined maximum supply.\nThis scarcity theoretically limits inflation and provides a sense of stability.\nAdditionally, cryptocurrencies operate on a global network, independent of any\nspecific country’s economy, making them less susceptible to local economic\nfluctuations and political events.<\/p>\n\n\n\n

High Remittance Costs<\/strong><\/h3>\n\n\n\n

Millions of people from developing countries migrate for work opportunities, sending money back home to support their families. Traditional remittance services often charge high fees, eating into the hard-earned cash of these migrant workers. On the other hand, cryptocurrencies offer a faster and, in most cases, cheaper alternative for sending and receiving remittances.<\/p>\n\n\n\n

Real-world Implementations and Impacts<\/strong><\/h2>\n\n\n\n

Argentina\u2019s Inflation-Driven Adoption<\/strong><\/h3>\n\n\n\n

Forbes\nrecently reported that Argentina has the highest crypto adoption rate in the\nWestern Hemisphere. According to the report, Argentinians account for 2.5\nmillion of the 130 million users on the top 55 crypto exchanges.<\/p>\n\n\n\n

Interestingly, while global crypto investors often gravitate towards highly speculative assets like meme coins, Argentinians prefer stablecoins like USDT. The country has experienced high inflation, with a rate of 276% in the past year, and faces complex restrictions on accessing the dollar. Cryptocurrencies, especially stablecoins like USDT, provide Argentinians with exposure to the dollar and act as a hedge against their rapidly depreciating local currency. In the past, citizens have had to buy dollars through the black market at unfavourable rates.<\/p>\n\n\n\n

Recently,\nArgentina elected Javier Milei, a pro-Bitcoin president, who has shown interest\nin dollarizing the country’s economy.<\/p>\n\n\n\n

The Philippines\u2019 Crypto-Powered Remittances<\/strong><\/h3>\n\n\n\n

The\nPhilippines is one of the world’s largest recipients of remittances. The\ncountry, which has over 10 million of its citizens working abroad, was ranked\namong the top five remittance recipients in 2023 by the World Bank Group,\nreceiving $40 billion.<\/p>\n\n\n\n

Traditional\nremittance services like MoneyGram and Western Union charge substantial fees,\noften exceeding 10% of the total amount sent. This eats into the hard-earned\nmoney sent back home by Overseas Filipino Workers. Additionally, traditional\nbank transfers can take several days to clear, delaying access to funds for\nfamilies who rely on remittances for everyday expenses. This has necessitated\nalternative channels.<\/p>\n\n\n\n

The\nCentral Bank of the Philippines (BSP) has shown a progressive attitude towards\ncrypto by recently approving a pilot program for the crypto platform Coins.ph\nto explore using a Philippine Peso-backed stablecoin for remittances. <\/p>\n\n\n\n

Previously,\nFilipinos abroad had to use USD-backed stablecoins, incurring fees to convert\nthem into pesos. However, with the peso-backed stablecoin, PHPC, these\ntransaction costs will be eliminated. PHPC will also be available on other\nmarkets, allowing remittances to be sent from all over the world. Unlike\ntraditional channels like banks, sending remittances via cryptocurrencies is\ncheaper and available 24 hours a day.<\/p>\n\n\n\n

Nigeria\u2019s Inflation and Unbanked Population<\/strong><\/h3>\n\n\n\n

Nigeria\nis one of the most populous countries in Africa. One of the key factors driving\naccelerated crypto adoption in Nigeria is the country’s high inflation and\ncurrency devaluation. In June 2024, Nigeria’s inflation rate reached a 28-year\nhigh of 34.2%. Additionally, the Naira has been weakening against the dollar,\nstanding at 1605 Naira per dollar at the time of writing. As the purchasing\npower of the Naira declines, Nigerians have increasingly turned to\ncryptocurrencies to store and grow their wealth.<\/p>\n\n\n\n

A\nfraction of Nigerians, particularly those in rural areas, lack access to\ntraditional banking services. KPMG reports that a third of the Nigerian\npopulation has low financial capability. Most of these individuals have no\naccess to modern financial services like remittances, savings, and borrowing.<\/p>\n\n\n\n

This\nsituation has prompted the technologically savvy to turn to cryptocurrencies.\nThese digital assets provide an avenue to participate in the digital economy,\nunlocking services like staking, remittances, and trading.<\/p>\n\n\n\n

A Promising Future<\/strong><\/h2>\n\n\n\n

The case\nstudies and success stories above highlight the transformative potential of\ncryptocurrencies in developing countries. They offer an alternative financial\nsystem that is accessible, transparent, and potentially less susceptible to\ntraditional economic pitfalls. As regulations evolve and infrastructure\nimproves, we can expect crypto adoption to continue growing, fostering\nfinancial inclusion and empowering communities globally.<\/p>\n","protected":false},"excerpt":{"rendered":"

Cryptocurrency adoption has accelerated globally in recent years. While Bitcoin initiated the revolution over a decade ago, today we have thousands of cryptocurrencies. Unlike in developed countries, where these digital assets are often seen as investment vehicles or get-rich-quick schemes, developing nations view them as tools to address real-world challenges such as financial exclusion, currency instability, and expensive remittances. This has made adoption in developing countries progress even faster.<\/p>\n","protected":false},"author":1,"featured_media":1170,"comment_status":"closed","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[77,71,104,69],"class_list":["post-1169","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-bitcoin","tag-crypto","tag-hiribi","tag-hiribi-com","entry"],"_links":{"self":[{"href":"https:\/\/hiribi.com\/blog\/wp-json\/wp\/v2\/posts\/1169","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hiribi.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hiribi.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hiribi.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/hiribi.com\/blog\/wp-json\/wp\/v2\/comments?post=1169"}],"version-history":[{"count":1,"href":"https:\/\/hiribi.com\/blog\/wp-json\/wp\/v2\/posts\/1169\/revisions"}],"predecessor-version":[{"id":1171,"href":"https:\/\/hiribi.com\/blog\/wp-json\/wp\/v2\/posts\/1169\/revisions\/1171"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/hiribi.com\/blog\/wp-json\/wp\/v2\/media\/1170"}],"wp:attachment":[{"href":"https:\/\/hiribi.com\/blog\/wp-json\/wp\/v2\/media?parent=1169"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hiribi.com\/blog\/wp-json\/wp\/v2\/categories?post=1169"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hiribi.com\/blog\/wp-json\/wp\/v2\/tags?post=1169"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}