Bitcoin In Struggling Economies
Bitcoin in Struggling Economies
Those who avidly research Bitcoin and other cryptocurrencies understand there is a multitude of factors behind global demand. But we often think of crypto in a Western context – it’s easy to view this technology as something that’s only accessible in developed nations.
But one of the most exciting developments surrounding cryptocurrency is its use in countries that have struggling economies. The traditional monetary system fails in some cases, which leaves citizens to determine ways to stay above water. Cryptocurrencies have proven to be a useful tool in more ways than one.
While tracking the exact amount of Bitcoin being traded in individual countries is impossible, it’s still easy to pick up on some prevailing trends that are driving demand. You can also view the current price levels that cryptocurrencies are trading at in each country – which can make it easier to tell how high demand is.
In this article, we’ll take a look at how Bitcoin is impacting three different struggling economies. We’ll dive into some of the ways cryptocurrency is being used to negate issues in each of these countries. Some of these issues are caused by bad economic policies, while others are the product of ruthless dictators – either way, you’ll see how crypto is making a positive impact in some of the less fortunate areas of the globe!
Zimbabwe is one of the most interesting displays of cryptocurrency demand. The country has been marred by constant instability, mostly to do with the local government attempting to seize additional power within the state. In late 2017, the military in the country took control of the government – sending the economy into panic. As Zimbabwe doesn’t support its own currency (they use US dollars and other African currencies in their local economy), many people began to turn to digital currencies to store value and escape potential cash shortages.
This led to a marked increase in the cost of Bitcoin in the nation. At many times, Bitcoin was trading above 10 percent higher in Zimbabwe than other places on earth. On top of this, many analysts believe that Bitcoin sees massive amounts of demand due to remittances to Africa – people sending money back to their families. Many Africans working in Europe and other areas of the world send money home to help support their loved ones, and sending cryptocurrencies has emerged as a more accessible option. While many people in Africa don’t have reliable bank accounts, they can create crypto wallets using cell phones and hard drives.
In India, increased demand in cryptocurrency seems to be coming from slightly different motivators. While India does have its own currency, the national government has been hard at work trying to crack down on black market cash. For years, many Indians have held onto money they’ve earned to prevent paying taxes on their full income. To put this habit to an end, the Indian government announced a deadline to exchange cash for new bills – after the deadline, the old cash would no longer be a legitimate currency. This meant that people needed to declare all their illegal money.
It appears that many individuals in India began to see cryptocurrency as a way to ensure they don’t have to repeat a similar process. Instead of storing their income in cash at home, some people began to trade crypto and use it as a store of value. This indicates that cryptocurrency may become a vital resource when citizens don’t trust the currency-related decisions their government is implementing.
The Indian government has started to implement policies geared towards ridding India of cryptocurrency – they don’t want it undermining their efforts to control currency issues. The government has announced that Indian banks will soon be banned from dealing with any crypto platforms, making it much harder for residents to purchase and sell cryptocurrencies in the nation. While this might create issues for some people, many analysts believe it will only be a hiccup – the more regulation India enacts, the more their residents seem to become interested in Bitcoin and other cryptocurrencies.
If you’ve been paying attention to the news at all, you most likely understand there is a lot of political turmoil currently taking place in Venezuela. Mass protests and political unrest have become rampant in the country – citizens are attempting to rid themselves of their current leader, Maduro. And while political tensions have been high, the economic issues associated with them have been even worse. A significant amount of people are now living in abject poverty. It is estimated that the national currency has experienced over 13,000 percent inflation in the last year alone – leaving many people with worthless currency.
To gain a real income, many Venezuelans have turned to Bitcoin mining to bring some stability back into their lives. While cryptocurrencies are known for their volatility, they’re still much more stable than the local ‘Bolivar,’ which is worth 99 percent less than it was a short time ago. One of the only affordable goods in Venezuela is electricity – the national government heavily subsidizes it. Miners are taking advantage of this low-cost energy to configure mining rigs and produce a side income that often dwarfs the average wage in the country. Bitcoin mining has become a more stable source of currency for many living in Venezuela.
Aside from the rise in demand for some traditional cryptocurrencies, the Venezuelan government has also announced its intentions to create its own cryptocurrency backed by the national oil reserves. Details have been relatively scarce, and crypto experts have expressed doubts about the viability of the project.
As you can see, there is a range of different uses for cryptocurrencies in economies that are struggling. It’s clear that Bitcoin and other popular cryptocurrencies can fill a gap that otherwise might go untouched. We are only just starting to see the vast number of ways that cryptocurrency can help positively change the economy and bring real value to the lives of many people around the world.
Instead of thinking of cryptocurrency in a small frame, it’s important to see how global events and economic shifts can drive demand and find new applications for this useful technology. There’s no doubt that the coming years may see even more developments in the implementation of crypto in struggling economies – stay tuned to see what a game changer crypto may be.