Industry News The Reasons Why BitCoin Will Expand Rapidly in the Developing World

The Reasons Why BitCoin Will Expand Rapidly in the Developing World

February 3, 2016

Two-BitcoinsExplaining to average citizens of the Western world the reasons why BitCoin matters is not easy. Even harder is to provide them with a reason why they should get interested in the same cryptocurrency. In the US, for example, it is not hard to spend, save or send money.

Most of the population in the United States possesses credit cards and bank accounts, and the same are readily used when someone needs to send money to relatives, acquaintances or friends. At the same time, there is an array of services that did not exist a decade or two ago that provides the same possibility.

These include PayPal as the most famous one, but in the category are also SnapChat, Square, and even Facebook. For many individuals in this region, BitCoin is a solution for a problem they simply do not have. Even if they understand how this technology functions, they still think that this solution for financial dealings that circumvents governments and big banks is something that interests only geeks, E-Sports fans, libertarians and similar people.

The same can be seen in the number of people that are actively using BitCoin as a currency. Here, investors who purchase BTC and hope to profit from the rise in prices do not count, but ordinary people who use this digital currency like any other, meaning that they buy goods and services with it.

According to the online retail company, which started accepting BTC payments almost 2 years ago, this cryptocurrency makes up only 0.1% of all sales.

Lands of Opportunity

However, the Western world is not the only part of the globe relevant to the BitCoin network. When a digital currency transaction becomes international, its outlook starts to change. With BTC, the costs of transferring currency remain very low, unlike traditional services offer from the Western Union and other mainstream companies in this domain.

Equally important, BitCoin brings an alternative for using or storing money even if a person does not own credit cards or a bank account. Nigeria is a great example of this trend. Records show that in 2014, more than one-third of the country’s population did not have access to any form of traditional banking services.

The same individuals do not necessarily come from a part of the population that is located below the poverty line, nor do they all live in remote parts of the country. But, because of a myriad of reasons, they simply do not have the traditional bank services at their disposal.

A Chance for MFI Companies

Places like Nigeria are the reason why companies like Stellar, a business that utilized digital currencies to move money across the Internet, are gaining traction. Together with Oradian, the providers of software that is used for small banking processes (which do not take place in a formal bank) it is trying to find its place in Nigeria as a provider of money transfer services.

With their offer, people would be able to send money to friends and family both in Nigeria, but also outside of it. In the network, other developing countries are located, but so are US, EU countries and many more.

According to the Stellar representatives, money is already flowing really well in Europe and America, but there is a chance for BitCoin when it comes to the developing countries. Stellar and other businesses like it are called MFI, or micro-finance institutions.

The Power of Digital Currencies

This network in Nigeria is not something that users should employ individually. Instead, it is connected to two dozen additional MFIs and all of them provide bank-like options and services, but to people who do not have banks. Here, people are able to move money between any of these MFIs and because of this, more than 300,000 are already involved in one way or another with these companies.

This does not mean that the same people will keep their money in BTC form. Stellar, for example, only offers an infrastructure for exchanging and transferring money. Using it, people can send money in US dollars and others can receive them as BTC on the other end.

Other currencies are also available and the option, although seems simple, is actually groundbreaking. For the first time in history, there is a sort of translator for different types of money, and BitCoin is located among the established traditional Fiat currencies.

Here, Oradian founders believe the true power of cryptocurrencies lies – not strictly as a consumer tech, but as infrastructural blocks which offer other services. While today BTC has already found uses with ordinary consumers, like using BitCoin to bet online, many will stay out of the system for the forcible future.

But this does not have to be an issue if the BitCoin P2P network is employed as infrastructure. Others feel the same way, even if they are not actively included in BitPesa or other remittance services for the developed nations. All agree that here, BitCoin infrastructure provides an invaluable possibility for new business.

A World-Wide Offer

All of this is actually only the first step in the upcoming process. Now, users visit their local MFI to access their services. But, for Nigeria, the physical transfer of money remains hugely popular with almost half of the people who send money using things like prepaid debit cards or travelers who carry money on them. In the country, this includes bus and taxi transport where individuals bring the money with them to its end destination.

But, BitCoin allows this to occur in a much safer and more affordable manner. By being able to send money across any national border without high fees, the services BitCoin offers go against the grain of the current systems of the developed nations. Traditional transfer variations bring about an average fee of 12% when money is sent to the continent of Africa. Doing the same between the African nation includes transfer fees that are even larger.

In the long run, BitCoin will remake the entire system in a completely different way. It will be a catalyst for an alternative to the banks that are simply not present in any relevant numbers and financial services that costs too much. It also adds completely new benefits, like tracking the flow of money during its digital transit in a very precise manner.

Still, this does not mean that an average person in the developed nations will use BTC to buy things. Instead, it will use it as the underlying technology that is essential for their financial services. As time goes by, more people will be included in the same process, and even if they do not realize it, all of them will be enforcing and supporting the global BitCoin network.

Source: WIRED