It’s known that countries around the world are on completely different economic levels. Take a first world country such as The United States of America and compare it with a third world country like Zimbabwe. Financial wise, America is a hundred times stronger than Zimbabwe, so where does cryptocurrency come into play? Governments, blockchain technology companies, and different financial institutes are all busy developing new ways for cryptocurrency to bridge the wide financial gap between countries.
Recently one of these countries to adopt cryptocurrency is Zimbabwe. This African country has taken full advantage from what Bitcoin has to offer. But what caught the attention of investors and traders from other countries is that normal Bitcoin price is currently trading at around $6,000 per unit where a Bitcoin unit in Zimbabwe is close to $10,000.
A trader from Zimbabwe told the media that the reason for this high Bitcoin price is because Zimbabweans don’t just trade cryptocurrency but they use it in day to day business transactions. So with a higher demand for Bitcoin in Zimbabwe, it makes sense that the price will be higher. This just shows you what big role cryptocurrency plays in daily living for residents of developing countries.
Zimbabwe’s financial crisis came when Robert Mugabe was still governing Zimbabwe. Mass printing of the Zimbabwean dollar to pay the country’s debt caused an over-supply in currency, which led to the Zimbabwean dollar losing value and later on resulting in hyperinflation. Only when Mugabe stepped down from presidency and Zimbabwe switched to the US dollar did the hyperinflation go away. Yet inflation is still rising, so in order to prevent it from reaching a higher point, cryptocurrency transactions have been implemented.
Hedge Against Hyperinflation
Another country to use cryptocurrency as a way of countering hyperinflation is Venezuela. However, situations are a bit different there. With inflation in Venezuela reaching new heights, basic goods essential for a living has become unaffordable. The average Venezuelan can’t afford to live anymore, so what is the plan?
Since Nicolás Maduro became president a few things led to electricity becoming almost free across the country, so to adapt their income methods, Venezuelans have started to mine Bitcoin. According to The Atlantic, several bitcoin mining devices can earn a Venezuelan miner close to $500 a month. However, there are rumours that the government in Venezuela could try and ban Bitcoin like they did in China. How effective this is likely to be is not fully certain.
The benefits cryptocurrency are incredible. Take Caribbean country, Haiti, they also have seen the advantages of allowing cryptocurrency trade, such as a decrease in inflation as well, better access to financial institutions including banks, and even remittance fees has potential to be reduced.
A Refuge for the Poor
It’s clear that cryptocurrency is helping the financial world to move forward but in third world countries and other financial struggling nations is where the benefits of cryptocurrency trade can clearly be seen. A great number of residents in countries within Africa make a living by selling goods and services. Since those type of countries don’t have the same corporate opportunities such as America or The United Kingdom, African residents have been forced to become merchants as an example.
Since the flow of money is interrupted by the lack of financial institutes and crime rates being through the roof, small businesses have been impacted tremendously. So for the average working class citizen whose life is built around the selling of goods and services cryptocurrency brings financial growth. And for a consumer, cryptocurrency brings opportunity to expand their interests.