Bitcoin is a common word today. You are probably among the millions worldwide who have come across the term. You may also be among the few who understand what it means. Either way, you should know that Bitcoin is the leading cryptocurrency in the world. It’s a decentralized digital currency. Major cryptocurrency exchanges, such as British Bitcoin Profit, provide a variety of ways to purchase bitcoin.
Bitcoin is different from your typical fiat currency in many respects. To begin with, it is not in a physical form like coins or notes. Instead, it is in a purely digital format. Moreover, it is a decentralized currency that no government, bank or single entity controls. Through the central bank and other financial entities, your government controls and monitors your bank and even cash transactions.
Bitcoin and Developing Countries
Developed countries adopted Bitcoin much earlier than developing countries. And this has made Bitcoin use more widespread in the former than in the latter. However, recent data indicates that the adoption rate of Bitcoin is higher in developing countries today than in developing countries. Countries like India and Kenya are leading examples.
One major factor driving developing countries to adopt Bitcoin is its potential to help them overcome some fundamental economic and financial challenges. Some of these significant challenges include low financial inclusion and high inflation rates. Even at its nascent stages of adoption, Bitcoin has proven that it can help developing countries get over these issues.
Today, thanks to Bitcoin, a significant number of people in developing countries that could not have or access banks and other financial services are covered. With Bitcoin, people do not need documentation and other unnecessary requirements that banks demand. Accessing Bitcoin requires an internet connection and a Bitcoin wallet.
Countering Inflation
Inflation occurs when the prices of goods and services increase while the value of money doesn’t. And this implies that when inflation rises, you cannot buy the same amount of goods or services with the same amount of money as you used to. In developing countries, inflation is a significant problem characterized by a complex web of factors.
One way Bitcoin can help developing countries counter inflation is by providing an alternative to fiat currency. As stated in the introduction, Bitcoin differs from fiat currency in several ways, although it often serves the same purpose. So, instead of having or using the U.S. dollar to pay for goods and services, people can use Bitcoin instead. Bitcoin is not subject to government regulations and other interferences that cause inflation.
Bitcoin is more convenient than fiat currency or gold in hedging inflation. It is more accessible even to the ordinary person. You only need to use your fiat currency to purchase some Bitcoins, and you are ready to go. Additionally, Bitcoin is more stable than fiat currency. Since it has a fixed supply, Bitcoin is quite resistant to inflation. No government or entity can increase or reduce supply to alter its value.
Finally, Bitcoin is an internationalized digital currency. Unlike most fiat currencies, Bitcoin is not subject to national policy. And this means that Bitcoin provides a better option than local or national currencies in countering inflation. Federal or local issues that could cause inflation in the national or local currencies will not affect Bitcoin per se.
Takeaway
Developing countries should use Bitcoin as an important hedge against inflation. Bitcoin offers some unique qualities that make it more convenient, stable, and resistant to inflationary factors at national or local levels.
