Cryptocurrency is a Lifeline for People in Developing Countries — and Blockchain could be Even Better

For people in the developing world, finance is a major problem. Issues like inflation, corruption, and unstable banking systems make it hard to store money safely.

Due to low income and often high rates of unemployment, the residents of third world countries often rely on remittances from friends and family living abroad in stronger economies.

In Kosovo, where unemployment is more than 30% and the average monthly wage is just 463 euros according to the most recent stats, many people rely on money from family members living in more developed countries.

According to FocusGroup, it’s estimated that people living in developed economies send around $26 billion to family and friends abroad every year.

There’s clearly a huge demand for a way to send and receive money from overseas, but no good official way to do it. Banks can be prone to collapse and corruption, and even when they work they come with high fees. The average global remittance cost is 7.09%, a big chunk of any transaction. People making these transfers also have to deal with crippling conversion rates and security issues.

Even if banks were reliable, around 2 billion people in the world have no access to them. This means that, around the world, people in low income countries have been forced to look for other methods of storing, sending, and receiving money.

To solve the problem, millions of people have been turning to cryptocurrencies.

Using crypto to fight poverty

It’s becoming more and more common for people in poorer countries to use cryptocurrency to send and receive money.

In Venezuela, the economy has been brought to its knees by extreme inflation and an unstable infrastructure. Residents of the country turned to cryptocurrency as a means of storing their money that was more reliable than their national currency.

In Zimbabwe, the economic system has collapsed. People in the country have flocked to cryptocurrencies and similar digital services as a way of keeping their savings safe and processing global trades. Platforms like BitFinance have provided a welcome way for citizens to avoid relying on a broken financial system.

In countries where certain goods have become scarce, people have been using cryptocurrency to buy things from abroad without incurring massive fees and being forced to rely on a banking system they don’t trust.

While the developed world has been debating the safety and stability of cryptocurrencies, those in weaker economies haven’t had that luxury. They’ve had no choice but to adopt this new technology and it’s worked out well.

In response to this demand, a number of startups and organizations have sprung up on the ground in developing countries. They make it easier for people to send and receive money across international borders, without having to worry about shady banks or sky-high fees.

More official measures include the United Nations World Food Program, which used ETH to send money to 10,000 refugees in Jordan in 2017. They have plans to expand the project and send money to 500,000 in 2018.

This success has encouraged countries like Denmark to look into cryptocurrency and blockchain technology as a way of helping those in need.

However, there’s still room for improvement.

How blockchain can help

Using cryptocurrencies to transfer money has been working so far, but with blockchain it’s possible to make the process even more efficient and secure.

Blockchain can be used to build international systems and networks that allow money to be sent easily across international borders. If done properly, this would eliminate many of the costs involved in traditional remittance, like banking fees and problems with currency conversion rates.

This technology is so powerful because it decentralizes networks. This avoids corruption by ensuring that no third party can control the information stored on a blockchain, and instead shares power between individual members of the network.

It’s also totally global — there’s no need to worry about dealing with different financial institutions in different countries. Transactions can take place in a matter of seconds, and when done properly the costs are extremely affordable.

It’s a way of tightening up an existing activity and making it safer and smoother. There are plenty of companies looking into this — Stellar is just one example. They’re building a platform where people can send money abroad without many of the drawbacks involved in traditional methods.

Stellar uses cryptocurrency and blockchain technology to replace traditional financial networks, making it possible to send money overseas – including micropayments – within a secure framework that’s quicker and more efficient than existing methods.

Users can check the XLM value and use the tokens within the platform to send and receive money more easily.

Billions of people in the developing world are in need of a more reliable way to send and receive money than banking systems currently offer. The rise of blockchain technology and cryptocurrencies is already proving itself to be a workable solution, and there’s a lot of room for growth.