Citizens of developing countries may have trouble accessing standard financial services, such as bank loans, mortgages, money transfers, or savings accounts. For many, cryptocurrencies offer a solution.
These digital assets are more trusted by residents of developing countries than in economically stable countries. Many financial experts predict that the widespread use of cryptocurrencies could become an effective tool for combating inflation, poverty, and corruption, and even stimulate job creation. An expert from Merehead, a blockchain development company, will discuss the impact on the economy.
These digital assets are more trusted by residents of developing countries than in economically stable economies. Many financial experts predict that the widespread use of cryptocurrencies could become an effective tool for combating inflation, poverty and corruption, and even help stimulate job creation. In this article, Merehead, a blockchain development company, examines how cryptocurrencies may influence economic development in these regions.
Why do so many people in developing countries lack access to traditional banking services? Many lack the necessary documents, and the banking infrastructure itself can be completely underdeveloped. Without these documents, it’s difficult to conduct business, make payments, or even receive benefits or payments. Without the ability to open a legitimate bank account, shady transactions and cash transactions increase.
What problems are hindering the development of banking infrastructure and access to services in developing countries?
As a result, the population lacks access to education, stable employment, and even access to food and safe drinking water can be limited. Almost half of the world’s countries are classified as developing countries. These countries are located primarily in Asia, Latin America, and Africa.
Problems of the global economic development prospects
The World Bank’s forecasts are bleak. Economic growth in 2025 is projected to be only 2.7%, the worst in three decades. This trend means the poor will become even poorer. Standard banking services will be curtailed, further hindering economic development. Therefore, the introduction of alternative financial systems, such as cryptocurrencies, could act as a countervailing factor, helping to stimulate long-term economic growth in developing countries.
In European countries, financial inclusion of banking services for citizens is almost 100%. Researchers have calculated that this accessibility to banking services increases a country’s GDP. Digitalization has become the primary tool for accessing services. This has fueled the rapid development of mobile operator services, internet providers, and blockchain technologies.
Source: Statista
How Cryptocurrencies Are Improving Financial Inclusion
Cryptocurrencies have become one of the most effective tools for access to financial services. What opportunities are opening up for users?
sending international transfers;
obtaining loans;
passive income organization;
no need to collect documents to receive services;
no need to visit bank branches;
availability of cryptocurrencies regardless of the day of the week or time of day.
If a person has a smartphone, internet access, and can open an e-wallet, then it doesn’t matter where they are when conducting financial transactions.
And developing economies seem to be seizing the opportunity with cryptocurrencies. For example, in El Salvador, Bitcoin became legally equivalent to the US dollar back in 2021. This is a country where, at the time, more than 70 percent of citizens lacked access to standard banking services.
Cryptocurrency service statistics show that the number of people owning digital assets has grown by 25% over the past two years. Attitudes toward cryptocurrencies in developed and developing countries differ dramatically. The former are seeking to establish regulation through legislation and introduce regulations for the cryptocurrency sector. The latter are more actively supporting the rapid adoption of digital coins.
What Cryptocurrencies Bring to Developing Countries: Benefits in Various Aspects
Remittances have become incredibly important due to the increase in labor migration. Workers send money to their families, and these transactions accounted for a significant percentage of developing economies. However, payment services and international financial systems incur significant fees, ranging up to 7-9%, which was simply unaffordable for many.
Mobile crypto payments have changed everything . These payments are instant, regardless of the sender and recipient’s geographic location. Moreover, fees are minimal. This is due to the absence of intermediaries in decentralized financial systems. The absence of banking costs and the need to maintain employees makes cryptocurrency -based financial processes cheaper.
Source: Statista
Stimulating business development with digital assets
Financial experts cite a lack of credit and difficulties for local producers in accessing international markets as factors hindering business activity in developing economies. The lack of fast and favorable currency conversion rates for payments complicates international procurement and sales.
Therefore, small and medium-sized businesses are actively using cryptocurrency platforms, which offer opportunities for lending and favorable exchange rates. Thanks to these exchangers, digital assets can be easily converted into fiat . Thus, cryptocurrency facilitates financial development.
Reducing poverty, corruption, and inflation: the role of cryptocurrency in these processes
Inflation in developing countries can reach tens and even hundreds of percent annually. Governments in these countries are using cryptocurrencies to hedge against risks.
Corruption is also a major problem. Bribes and various schemes drain billions of dollars in revenue from budgets. Cryptocurrency operates on blockchain technology . This is a highly decentralized and transparent system, as once entered, information cannot be deleted or altered. With blockchain , the receipt and expenditure of funds is completely controlled.
Digital assets are also very effective in the fight against poverty. They offer a way to preserve savings and provide humanitarian aid or donate funds to charity. Non-profit organizations can support educational and social programs, assist the poor and those requiring medical treatment. In this case, cryptocurrency provides mobility and high-speed payments, along with targeted spending tracking.
How to Avoid Problems with Cryptocurrency Adoption in Developing Economies
Digital assets require financial and digital literacy, which can be challenging for the poor and uneducated. Conducting transactions requires modern gadgets and internet access, which isn’t always possible.
The state must ensure that overall education and financial literacy are improved, as well as user protection, including the security of personal data and the transactions themselves.
Blockchain and digital assets have already become firmly entrenched in the global financial system. Their development and use are unstoppable, and now all that remains is to regulate them. It’s crucial to focus our collective efforts on improving the overall well-being of the population and the standard of living for all citizens.
This is a sponsored article.
Source: https://bravenewcoin.com/sponsored/article/how-do-cryptocurrencies-help-developing-countries