More than a decade has passed since Bitcoin and blockchain technology was introduced to the world. Some may believe that we still have a long way to go with blockchain and crypto adoption since it’s still considered a novel concept; not a lot of people are comfortable with the idea of investing their money on new technologies, possibly even more so people in developing countries where fiat money is still very much the norm. However, various reports and studies, such as one conducted by blockchain project Onfo, debunk this idea.
The experiment focused on four countries: the U.S., Germany, Indonesia, and Russia, with the first two classified as developed countries and the latter two as developing countries. About 100 individuals from each country were given free crypto assets and were advised that they would receive more if they invited other people to use the crypto assets. The respondents from Indonesia and Russia adopted cryptocurrencies four times faster than those from the U.S. and Germany because the developing countries valued small amounts of money more.
The results on Indonesia, in particular, presented that the country can potentially show massive growth in crypto adoption due to the country’s lack of a national credit lending system and increasing smartphone penetration, as well as the consequences of the COVID-19 pandemic. The results of Onfo’s experiment are significant considering that Indonesia had only entered the crypto scene almost two years ago, whereas the U.S. market has had decentralized innovations as early as 2008.
Indonesia will more or less face its “crypto renaissance” because of its rapid adoption of digital assets.
Some of the countries that are leading in the crypto adoption race are unexpectedly developing countries as well, the first of which is Turkey, taking up 20% of the crypto adoption proportion worldwide. Turkey is followed by Brazil, Colombia, Argentina, and South Africa in the race, according to data from the 2019 Statista Global Consumer Survey.
Aside from seeing crypto as a good investment and a convenient form of payment for goods and services in the digital world, some of these countries are using digital assets as a possible hedge against the extreme inflation that they have experienced in the past.
The high inflation rate of the local currency fuels the organic adoption
Turkey has suffered from economic disruptions for the longest time, with its worst crisis happening in the mid-1970s. It was also in the late 20th century when the country reached its highest inflation rate at 138.71%. As of this writing, Turkey’s inflation rate is at 11.39%, an increase from 10.94% in April.
Brazil and Argentina similarly hit three digit levels of inflation around the same time. Brazil experienced hyperinflation in early 1990 due to the lack of foreign trade, high external public debt, and excessive growth of money. Argentina similarly experienced inflation because its government expanded the money supply. However, fast forward to today, Brazil’s recent recorded inflation rate is at 1.88% while Argentina’s is at 42.10%.
Meanwhile, Colombia and South Africa had an average of single to double digit levels of annual inflation rates over the past decades. At present, Colombia’s inflation rate is at 2.85% while South Africa’s is at 4.1%.
Economic uncertainties continue to exist today and it has been a common idea that Bitcoin, in particular, can be used as protection against inflation because, unlike fiat money, its supply is limited. With only 21 million Bitcoins available today and also the decentralized nature of the cryptocurrency, centralized bodies cannot create an oversupply of money.
Many private companies are contributing to the speedy adoption of blockchain and cryptocurrencies around the world. For example, Pundi X has a presence in countries like Brazil and Turkey.
We are able to introduce the power of blockchain and cryptocurrencies in an easy and understandable manner, breaking down the barrier of intimidation that people may feel towards the technologies.
With this progress in crypto adoption in developing countries, digital currencies can provide a stiff competition to fiat money. This is similarly an opportunity for individuals and organizations to catch up to the evolution of digital technologies in this ever changing world and maximize them to fit their needs and wants. Additionally, crypto stands a chance in becoming a safe haven for nations with struggling financial systems as we face economic crises like the one brought on by the COVID-19 pandemic today.
