What Bitcoin means for developing economies

While Bitcoin has garnered much of its attention from major economies such as the United States, Canada and the United Kingdom, there is still huge potential for cryptocurrency to grow in developing economies where a large portion of the population is unbanked or has limited access to loans, credit cards and other financial products, making Bitcoin a viable tool for transferring funds and investing.

Getting bitcoin has become relatively easy these days, with several startups creating a seamless way to open a wallet and transfer funds. Bitcoin exchanges allow people to buy or sell cryptocurrencies online and make money from price fluctuations.

In contrast, opening a traditional bank account or securing a loan is a cumbersome process that usually requires a lot of paperwork, such as proof of identity or financial status. Transactions on the Bitcoin network bypass these requirements, and identities do not need to be verified. Ownership and transfers are made through a series of computers solving complex algorithms, a process known as Bitcoin mining. In addition, Bitcoin transactions have extremely low transaction costs, making it a preferred choice for those seeking cost-effectiveness.

Developing economies are often very sensitive to the dynamics of major economies, such as the Chinese market. Recall that China suffered a huge stock sell-off last month, which triggered a sharp drop in the stock market and caused the currency to depreciate. This has affected the purchasing power of many individuals in these countries, prompting them to look for some investment products that can preserve their value.