Some of the major economic problems among the developing countries are the lack of financial inclusion and the high levels ofinflation.But what isBitcoina practical solution?
Regions such asLatin Americaand Africa tends to have high rates of inflation.According to Statista, the level of inflation monthly average for South America to 2022 " has been 11.22% and, according toTradingEconomics, the level of average inflation for Africa in 2022 has been 7.5%.
thecryptocurrencywas created over a decade ago, when Bitcoin saw the light for the first time in 2008, with a market capitalization today of nearly $400 million.
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According to ButBitcoinWorldwide.com, there are 200 million Bitcoin wallets worldwide , 400,000 daily users, and 53 million Bitcoin users in total.
The case ofThe Savior
El Salvador was the first country in Latin America to adopt Bitcoin as legal currency of2021.
The economic situation of the country before the adoption of Bitcoin was complex due to the high levels of inflation and lack of financial inclusion.
According toTrading Economics, the annual inflation rate of the country in September was 7.49%.
After a year of the adoption of Bitcoin in the country, the surrounding views are mostly negative according to statistics provided by the Chamber of Commerce of El Salvador in early 2022, with only 14% of the population using it.
One of the strongest criticisms of the adoption of BTC within the country has been the lack of knowledge about what Bitcoin is. And how it works?
The case of The Central African Republic
The Central African Republic adopted Bitcoin as legal tender in April following a decision made by President Touadéra.
The president, together with the parliament, planned to launch a project called Sango, the first crypto center on the continent.
CAR you have been looking to have its own cryptocurrency under the Sango Project , the Sango Coin aimed at creating its own digital economic monetary system backed by Bitcoin.
According to the official Sango website, their goals are to take Bitcoin to the next level, and create the first crypto island.
So which countries could adopt Bitcoin?
In Latin America, Venezuela has been considered a crypto-friendly country, according to Triple-A A. More than 10.3% of its population invests in crypto, approximately 2.9 million people of the population.
The country has its own cryptocurrency called Petro , backed by its government and launched in February 2018.
The digital currency is backed by the oil and mineral reserves of its own country, being used mainly by the government.
The country has one of the highest inflation rates in the Latin American region. According to Trading Economics, the inflation rate in October was 1.946%
Mexico has also been considered as a contender to enter the legal tender cryptocurrency club. It has one of the most advanced technological policy laws after the creation of a law in March 2018. It also has the influential support of the important Mexican senator Indira Kempis.
In the Africa region, Nigeria has been considered as another of the potential countries that could adopt cryptocurrencies as legal tender.
The economic situation in the country coupled with its rapid level of Bitcoin adoption has positioned Nigeria as a perfect candidate to be one of the next players in the legal tender cryptocurrency industry.
Stis local currency, the Naira, has depreciated 209% in recent years and, according to Trading Economics, its inflation rate for September was 20.77%.
Is Bitcoin a possible solution for inflation?
Inflation is one of the biggest problems among economies globally, as mentioned above. Latin America and Africa is one of the regions with the highest inflation rates worldwide.
Bitcoin brings a new monetary system based on the ideas of absence of intermediaries and decentralization.
But is it possible that cryptocurrency is a solution to the problems of inflation?
The answer is partly yes, thanks to the different characteristics of stablecoins such as USDT and USDC among others.
In opposition to the economic system, monetary traditional printing money as it grows indefinitely, the economic system deflationary Bitcoin is due to its circulation maximum of 21 million coins.
What do the experts think?
Marcos Bravo Catalan, Founder of Beps Global Consultants says:
“Latin America is one of the regions that are more complex, when we talk about macroeconomic issues, with high rates of inflation and a lack of massive levels of financial inclusion, the world of cryptocurrencies offers many possibilities for people in different countries of the mainland”
Maria Mercedes Etchegoyhen, lawyer and founder of Cryprogirls says:
“Bitcoin has been helping people around the world while working as a new payment method system. Those countries with high inflation, corrupt governments and with high levels of regulations are the ones that I think have the best chance of adopting cryptocurrencies as legal tender.”
What will the future hold?
It is difficult to know which country will be the next to adopt Bitcoin as legal tender, but there are two economic factors that are common in the countries that have led to its adoption: high inflation rates and a lack of financial inclusion.
Following the case of El Salvador, education is a key factor in the adoption of Bitcoin or any other cryptocurrency. For that adoption to be successful, the population will need to understand what cryptocurrencies are and, more importantly, how they work.
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