Georgia, a former member of the communist Soviet Union, has emerged as one of the most important countries in the world of Bitcoin. The country is home to less than four million people and has a nomimal gross domestic product (GDP) of less than $17 billion.
To put that into perspective, there is a state in the United States also called Georgia. This single state, one of 50 that make up the country, is home to more than 10 million people and has a nominal GDP that approaches $400 billion.
Smaller developing countries could potentially emerge as leaders in digital currency development.
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So, yes, the country of Georgia is a pretty small place, and it rarely makes international headlines. The tiny country has, however, slowly emerged as a hot place to do business. Especially crypto-business.
In the World Bank’s “Ease of Doing Business” rankings, the tiny Caucasian country comes in at number 14 out of nearly 200 countries. If a ranking were to be created for “Most Important Bitcoin” countries, Georgia would almost certainly make the top 10, and quite likely even top five. For a country that’s home to less than four million people, that’s a pretty big deal.
Developing countries could take the lead in Bitcoin mining
So why is Georgia so important for Bitcoin? The sparsely populated country is home to some of the world’s largest Bitcoin mining operations. In fact, last summer, BitFury – the world’s most well-funded mining operation – announced that it was planning to build a $100 million data center in the country.
Importantly, Georgia has emerged as one of the major hubs of Bitcoin mining because the government itself is sinking money into cryptocurrency-related operations. The Georgian government is accomplishing this through the country’s Co-investment Fund, a private equity fund that was started and is still heavily influenced by the country’s richest billionaire and prime minister, Bidzina Ivanishvili.
While other world governments struggle to figure out how to regulate Bitcoin, smaller developing countries could potentially emerge as leaders in digital currency development. For one, it’s often easier for local politicians to quickly and easily create and implement laws and regulations. Private influences, such as lobbying firms, established interests (i.e. traditional banks), and other forces are generally not as powerful in these countries. At the same time, smaller countries usually have smaller governments. This means that setting up regulations and determining legal policies will generally be easier.
Furthermore, countries that are struggling to address poverty, or are extremely concerned with encouraging economic growth due to their small size, will be more likely to encourage the growth of the Bitcoin industry. For the United States or for the European Union – both with economies that produce more than $15 trillion worth of economic activity each year – Bitcoin is a relatively tiny sector. For a country like Georgia, the multi-billion dollar Bitcoin sector represents a huge opportunity.
As a result, smaller, less economically developed countries like Georgia could prove to be vital through the early stages of growth for Bitcoin. Simply by presenting more of an opportunity for economic growth, such countries will have an increased incentive to embrace cryptocurrency, even as governments in larger economies struggle with how to deal with the cryptocurrency.
What about small developed countries?
At the same time, even small wealthy countries, such as Singapore, could emerge as major Bitcoin hubs. Singapore has already hosted major cryptocurrency conferences and is home to numerous successful Bitcoin startups.
The local government has been among the leaders when it comes to addressing and regulating Bitcoin. Singapore is no economic slouch, however, with the small city-state being among the richest and most important cities in the world. In terms of human development, business, GDP (per capita), education, and other rankings, Singapore almost always makes the short list of most developed countries.
These smaller countries can generally be more flexible and responsive to changing conditions and emerging opportunities. And Bitcoin certainly presents an emerging opportunity. As such, countries like Georgia and Singapore are becoming the vanguard of early cryptocurrency adopters. As time goes on, more of these smaller countries will likely position themselves as Bitcoin hubs, so make sure you keep your eye out for developments.
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