How Digital Currencies Are Necessary For A Developing Economy

Cryptocurrencies have the potential to change the lives of some of the world’s poorest and most needy people for the better. Cryptocurrencies have the power to improve the lifestyle of the residents of developing economies and make them participate in the global economy and escape from poverty.

The digital currencies can help in areas like hyperinflation, poverty, lack of jobs, lack of access to banking, lack of capital and poor access to markets. This aim can only be achieved by giving everybody access to modern banking and financial services through blockchain technology.

Many economists and aid officials and bankers who have researched and found that a combination of cryptocurrencies and mobile phones will give the world’s poor access to the global economy.

A brief introduction of how mobile phones and cryptocurrencies can liberate the lower-income category:

Mobile World Live reported that more than $10 billion worth of money was deposited and withdrawn through the M- Pesa peer to peer app in Kenya between July and September of 2016. Safari.com had 20.7 million users in Kenya alone last year.

Many companies, after the success of M- Pesa, are trying to replicate it by offering cryptocurrency banking services through apps. Micro money claims to have made 40,000 loans to people in Myanmar, Cambodia, Thailand, Indonesia and Sri Lanka through its blockchain system. This system was made possible through a mobile app that is easily available on Google Play. Micro Money aims to make banking services like loans available  to the world’s unbanked population, which is almost 2.5 million.

If the unbanked population is given access to the banking facilities, women will be greatly benefited because 55% of the unbanked population are women. This is a statistic from The World Bank.

Empowering Businesspeople

BitPesa is also on the same path; it is designed to help importers in Kenya, Nigeria, Tanzania and Uganda to receive payments from or send money to Europe, USA or China.

BitPesa has more than 6000 users in 85 countries. The company claims that the users have made 17,000 transactions through its blockchain system. The objective is to encourage entrepreneurship by letting business people receive payments in multiple currencies.

Another asset of companies like BitPesa is that the money is sent directly to people in developing nations, instead of aid workers.

How Ethereum can help refugees

Cryptocurrencies have grown so much that even the United Nations World Food Program is using these currencies to help the poor. The program started using ethereum to send funds to 10,000 refugees in Jordan in May 2017.

In 2018, the Financial Officer of the United Nations World Food program Houman Haddad hopes to use Ethereum to send funds to upto 500,000 refugees. The UN has selected Ethereum because it can be sent to apps on mobile phones. Many of the refugees have access to mobile phones but are deprived of banking facilities. Setting up a mobile phone tower might be cheaper and faster than the traditional relief efforts.

Overcoming Inflation

A very common problem occuring in developing countries is inflation. People in some areas are poor because their money is not of any value. Corrupt governments can make money worthless by simply printing too much of it.

Venezuela is suffering from 1600% inflation. The rate reached 500% in December 2017.

Replacing Corrupt Financial Systems

Another use for cryptocurrencies in countries affected by inflation is as savings. Local activists and traders in Nigeria and South Africa believe that cryptocurrencies can democratize the economy by giving the average person access to cash.

Panaesha Capital is a fintech company with products and services in the sphere of blockchain technology and cryptocurrencies. The company’s products can be used from anywhere on the globe. Log on to www.panaeshacapital.com for more info.

Leave a Reply

Your email address will not be published. Required fields are marked *