Cryptocurrencies are rapidly changing the world’s financial ecosystem. At the core of this change is financial freedom, giving individuals the power to manage their own financial assets. As much as crypto has the potential to change the world for the better, its impact varies from region to region. For the developing parts of the world, financial inclusion and freedom are needed more than any part of the world.
In the developing world, sending and receiving money is costly and sometimes time-consuming. According to The World Bank, the global average cost of sending $200 in the first quarter of 2018 was 7.1 percent, more than twice as high as the average cost of the 3 percent target set by the Sustainable Development Goals. Among the regions of the world, Sub-Saharan Africa is still the most expensive region to send money to, where the average remittance cost is 9.4 percent.
Additionally, many people in the developing world are completely cut out of the financial system. According to the latest Global Findex Report, From 2014 to 2017, the number of people who have an account with a financial institution or through a mobile money service in developing countries rose from 54 percent to 63 percent. This still leaves a big gap between disconnected people. The story is different in the developed world, where financial inclusion is high and where the existence of numerous fintech firms have enabled low-cost money transfers.
What this signifies is that as cryptocurrencies sweep across sectors of the global economy, their impact on developed economies will differ from developing ones. Thus, we can’t push the same use cases that are gaining grounds in the developed economies onto the developing world. What the developing world needs is a native approach to cryptocurrency adoption. But how would that play out?
Starting with crypto education
One of the biggest approaches to building native cryptocurrency use-cases and driving mainstream adoption in the developing world is to educate the masses. Individuals, governments, and institutions need to be educated on the nature, importance, and the technicalities of digital currencies and their impact on developing economies.
The low level of knowledge on the nature of cryptocurrencies has already cost some countries. While Argentina is seeing an influx of Bitcoin ATMs but without much adoption, Venezuela is also impacted by an unprepared national cryptocurrency implementation program. Crypto education still hasn’t gone down well with individuals and lawmakers, regulations on cryptocurrencies are still like “guessing games” in many countries, signifying that setting up many Bitcoin ATMs or building a national cryptocurrency without the proper measures is not feasible in the long-run. Clear-cut laws need to be enacted, authorities need to learn more about the industry, and individuals need to know crypto beyond trading assets. These measures are needed if these countries want to reap the benefits of virtual currencies.
Building native crypto use-cases
Developed countries already have fully-fledged financial systems. Crypto use-cases in these countries, in most cases, cannot automatically survive or make an impact in the developing world where the financial system is lacking in many things.
Developing economies need cryptocurrency use-cases that take into consideration the financial system in these regions. This means crypto and blockchain startups need to find a way of building solutions that tackled the highly inefficient, less developed, and corrupt financial system in the developing world. In order to achieve these goals, cryptocurrencies need to grow beyond trading tools into currencies that can save the ordinary citizen.
To the developed world, crypto might mean a new form of money and a financial system that will give freedom to individuals. In the developing world, cryptocurrencies should do more than this. Crypto should be able to drive financial inclusion, build a financial ecosystem from scratch, and thus move a chunk of the population out of poverty. In doing so, startups in this space need to see the space from the point of ordinary people in the developing world.