In developing countries, bitcoin is rapidly growing in terms of adoption. Much of that growth has to do with the ability of consumers to take advantage of banking services in areas where it is simply not possible to obtain or maintain a bank account.
Newsmax reports that approximately 2.5 million people around the world are not able to gain access to a bank account. The top reasons cited for why the poor in developing nations do not have a bank account include bureaucracy and long distance to a bank.
Unlike in the United States or European countries where consumers are able to benefit from the use of debit cards, consumers in developing countries are also severely limited by restrictions. Even in countries where it is possible to obtain a bank card, minimum deposits and high monthly fees often apply. As a result, such countries are typically cash societies, which makes digital goods largely out of reach of such consumers. This is not because the products are not affordable, but simply because consumers in developing countries do not have bank accounts, debit cards, or credit cards to use for purchasing such items. The inability to access a bank account can also make it difficult for consumers to gain access to credit or obtain a loan. This means that virtually everything purchased must be paid for in cash. The inability to obtain a merchant account so that an individual can accept payments online can also be challenging in terms of setting up a business. In both situations, bitcoin prove to be an ideal solution.
Alternative financial services have become more widely available in developing countries, but even those services can be expensive. For instance, the cost associated with cashing a check is typically between 3 percent and 5 percent of the total amount of the check. With bitcoin, it is possible for the unbanked to receive payments and make payments in the digital currency without the need to access a bank account at all. Instead, bitcoin wallets are made to handle each step of the transaction from payment to receipt. There are no checks to cash, no fees that need to be paid to a check cashing center, and no need for a bank account.
The unbankable individual also does not need a bank account in order to store funds long term. With a bitcoin wallet, consumers in developing nations are able to store their funds for as long as they like and make payments when they wish without paying any fees at all. Provided that the relevant merchant accepts bitcoin, the process is as simple as transferring the digital currency from their digital wallet to the digital wallet of the merchant.
The ability to store wealth using a bitcoin digital wallet can also prove to be beneficial in countries where the government is restrictive or untrustworthy. While most people living in developed countries never need to worry about whether the funds in their bank accounts will be sized by the government, this is a very real concern in many countries around the world. Due to the anonymity associated with bitcoin and the fact that it is not regulated by a centralized government, digital currency cannot be easily appropriated by a government. Additionally, bitcoin cannot be devalued as a result of government inflationary monetary practices.
Bitcoin also presents tremendous opportunity for the expansion of micro-lending in developing countries where access to credit is severely limited. While a small loan to purchase livestock or even a motorbike might not sound like much to someone living in the United States, such purchases can make a significant difference in the life of someone living in a developing country. Bitcoin also presents a relatively inexpensive and low-risk method for start-up entrepreneurs to accept and make payments.
The benefits associated with the use of bitcoin for the unbankable can also extend far beyond national borders. Migrant workers who send money back home via Western Union are often vulnerable to paying large fees. With bitcoin, it is possible to eliminate such fees while also providing more funds to the families accepting the funds and allowing for the transfer of funds more quickly. All of this can be done through the use of smart phones. According to a report published by the World Bank, smart phone usage is booming in emerging economies, with mobile technology reaching more than 75 percent of people in such countries.
In developing nations where bitcoin is gaining broader exposure, it may be possible to expand opportunities for the economically disadvantages while also raising the standard of living and even boosting global economic growth.