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Bitcoin in Argentina

Bitcoin in Argentina
Economic consequences from the COVID-19 pandemic and supply chain shortages have ramped up inflation in Argentina to record levels. At its peak, economists estimated that inflation in Argentina reached a 60% increase since the beginning of the pandemic. The rapid deflation of the peso pushed about 37.7% of the population of Argentina below the poverty line by significantly reducing their purchasing power, signaling a serious economic crisis. The adoption of bitcoin in Argentina is helping people to fight against inflation and poverty.

Bitcoin in the Developing World

In recent years, many developing nations have turned to bitcoin for a couple of different reasons. First, bitcoin is decentralized, meaning that international organizations like the International Monetary Fund (IMF) do not regulate it. Second, bitcoin is highly effective at containing inflation and is a relatively steady asset as opposed to standard market investments and savings.

The cryptocurrency penetration rate in Argentina has reached 12%, Cointelegraph reported. This is more than double most other countries in Latin America. Due to the success of bitcoin in Argentina, the central bank motioned to forbid financial institutions from operating with digital assets.

The IMF and the World Bank claimed that cryptocurrency in developing countries is dangerous, because it opens doors for money laundering and economic volatility, according to Politico. Bitcoin is also an environmental hazard. “If Bitcoin were a country, it would be among the top 30 energy users in the world,” Foreign Policy reported. This means that as bitcoin increases in popularity around the world, it could harm the environment and worsen changing weather patterns.

The Key to Sustainable Global Development

Many economists believe that bitcoin and other forms of cryptocurrency hold the key to sustainable global development. This would be particularly beneficial to the world’s poorest nations and communities. Decentralized finance allows people to build entire financial ecosystems without intervention from world banks, according to Foreign Policy. Because of decentralized financial blockchains, people across the world have broader access to capital and can easily and securely transfer money.

People in the developing world usually experience exclusion from modern cryptocurrency systems due to their technological complexities and the necessity of online financial literacy. Because of this, the expansion of bitcoin in Argentina and other developing nations marks a victory in the fight against global poverty.

One of the greatest advantages that bitcoin offers to a country like Argentina is that it can provide a “financial identity” to people who have not had access to financial institutions like banks. As of 2022, 1.7 billion people across the world lack access to modern financial services, according to Foreign Policy. Therefore, providing access to financial assets is a priority in the fight for global development.

Bitcoin as a Method of Reducing Poverty and Inflation

The success of bitcoin in Argentina and other developing nations is catching attention around the world, particularly from the federal governments of rich countries like the United States and global organizations like the IMF. The IMF and the World Bank are actively working to prevent countries like Argentina from adopting bitcoin as a legitimate form of national currency. However, their efforts are failing because multiple countries in the Central African States, as well as El Salvador, have already motioned to adopt Bitcoin as a national currency, according to Politico.

While Argentina has not yet officially adopted bitcoin, the nation is experiencing significant economic growth and optimism for the reduction of the alarmingly high poverty rate. As economic complications from the pandemic and global conflicts increase, many countries in the developing world are finding significant successes in financial systems that have traditionally only benefitted rich nations.

– Ella DeVries
Photo: Flickr

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How Bitcoin in Honduras is Aiding its Economy

Bitcoin in Honduras
Honduras has one of Central America’s most robust and fastest-growing economies. Still, there is no doubt that the nation has had its fair share of economic strife. In April 2022, a heavily tourist-populated region nicknamed “Honduras Prospera” legalized the use of Bitcoin and other forms of cryptocurrency. Honduras Prospera will serve as a trial for Bitcoin usage in Honduras, with expectations for future growth.

Economic Struggles in Honduras

Honduras’ economy has certainly had its struggles. Hopefully, by introducing Bitcoin in Honduras, the country’s economic struggles will diminish. In the pre-COVID-19 pandemic age, in 2018, at least 16.5% of Hondurans lived on less than $1.90 a day. Since 2019, two significant hurricanes and natural disasters have impacted the nation and exacerbated the number of people in poverty due to the pandemic and its effects. In 2021, the poverty rate reached 73% with the extreme poverty rate reaching 53%. That marks the highest poverty and extreme poverty rates in Honduras since 2005.

One of the primary reasons Honduras’ economy has struggled is its dependence on agriculture and trade with the United States. If either of these sectors struggles, the entire economy struggles. Honduras’ agriculture accounted for slightly less than 30% of the country’s workforce in 2019 and is responsible for at least 12% of Honduras’ Gross Domestic Product (GDP).

Honduras’s trade with the United States accounts for about 41% of all Honduran trade annually. At the end of 2020, the bilateral trade earnings were more than $9 billion with a surplus that unfortunately only favored the U.S. Despite the immense difficulties the country has experienced since 2019, Honduras’s economic projections have been optimistic, with expected annual economic growth of 4.5%. The acceptance of Bitcoin and cryptocurrencies in Honduras will allow that figure to increase by the end of the next fiscal year.

Benefits of Accepting Cryptocurrency for Honduras

Introducing Bitcoin in Honduras has many benefits for the Prospera region before the rest of Honduras follows suit. The usage of Bitcoin in Honduras aims to entice foreign investors and make tourist spending easier to facilitate. It is a move following the introduction of Bitcoin in El Salvador, one of Honduras’s neighboring countries. Bitcoin in Honduras and El Salvador, while likely to face technical challenges in the early stages, intend to bring new business opportunities across borders and in international markets.

Cryptocurrency and Bitcoin have significant potential for economic security and allow for lower transaction fees. The decreased costs will encourage foreign investors and encourage locals to make use of Bitcoin as well. The lowered fees will prove beneficial to those living in poverty as they work to avoid extra costs and fees. One of the greatest challenges to implementing Bitcoin and cryptocurrencies anywhere is the technological barriers many places face. These include setting up a digital wallet. However, as Honduras Prospera is a tourist destination and is prepared for technological changes, it is a perfect location for a test run of cryptocurrency use.

Having Bitcoin in Honduras will open the door for new employment opportunities and can diversify the financial foundation of Honduras’s economy. The diversification of Honduras’ economy will allow for future safety should its agricultural foundation falter or trade with the U.S. become too difficult.

Honduras’s Economic Future

People do not widely accept the idea of Bitcoin in Honduras, as the first rollout of Bitcoin and cryptocurrencies are only taking place in one region of the country. Hondurans are skeptical of the economic advantages of Bitcoin after seeing the difficulties El Salvador has faced in its first weeks of using the cryptocurrencies.

One of the best ways to bring about economic growth in Honduras is to increase economic competition in all regions of the country, especially in the rural areas. The rural areas of Honduras are the most likely to experience poverty. Plus, with the benefits of Bitcoin in Honduras, including the lower transaction costs, Bitcoin should be able to easily spread to the country’s corners. Bitcoin also allows for merchant protection. Given Honduras’ heavy reliance on trade and the international economies and markets, the success in the piloting of Bitcoin will create even more support for introducing Bitcoin to the area.

Honduras’ estimated economic growth has stalled at about 4% since 2020. Honduras is still struggling to rebuild its infrastructure and economy since the COVID-19 pandemic and natural disasters hit, making any efforts to fix the problems invaluable. With the benefits of Bitcoin in Honduras, many already are finding popular Bitcoins for use, and with the need for any economic recovery, expanding Bitcoin’s availability for use will likely receive significant support. There are many websites already helping Hondurans find the best Bitcoin or cryptocurrency to use and the first Bitcoin ATM opened in August 2021. The expansion of Bitcoin will lead to economic growth in Honduras. It might allow Honduras’s economy to exceed expectations for its annual economic growth, thus amplifying the impacts of cryptocurrencies.

– Clara Mulvihill
Photo: Flickr

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How To Destabilize Authoritarian Regimes

Destabilize Authoritarian Regimes
Development experts claim that freedom is a necessity in the fight to end poverty, yet more than 2.5 billion people around the globe live under authoritarian rule. As the world becomes increasingly digital, powerful autocrats gain access to virtual tools capable of stifling dissent and quashing liberty. Nowhere is this more evident than in China, where the government has taken steps to replace paper cash with a digital currency that central banks back. The transition would allow state officials to monitor the purchases and activities of every Chinese citizen, as well as enable the central banks to freeze an individual’s assets should they threaten party doctrines. However, blockchain could help destabilize authoritarian regimes.

How Blockchain Works to Destabilize Authoritarian Regimes

The blockchain, which Satoshi Nakamoto created in 2008, is an encrypted digital network that records information in a decentralized database. Nakamoto’s invention has paved the way for cryptocurrencies such as Bitcoin, Litecoin and Cardano to revolutionize the financial sector. The nature of cryptocurrency is such that governments cannot manipulate them nor monitor them; they are secure, private and resistant to authoritarian fiscal policy. Cryptocurrency “takes control of people’s monetary futures away from governments and places it in the hands of individuals,” said Ross Gerber, the CEO of Kawasaki Wealth and Investment Management. Nicolas Maduro cannot print crypto coins like the Venezuelan bolivar. Miguel Diaz-Canel and the Cuban government cannot intercept remittances that go to one’s crypto-wallet. Vladimir Putin cannot surveil transactions on encrypted trading platforms. Additionally, Xi Jinping cannot freeze crypto-accounts. Cryptocurrencies are actively destabilizing authoritarian regimes.

Laws Against Peer-to-Peer Exchanges

It should come as no surprise, then, that Algeria, Bolivia, Egypt, Iran and Russia have passed laws restricting peer-to-peer exchanges. Perhaps none have cracked down harder than China’s President, who enacted a comprehensive ban in September 2021. However, such legislation is more symbolic than practical, as cryptocurrency usage persists in each of the aforementioned nations. Alexei Navalny, a notorious Putin-critic and opposition leader, raised more than $300,000 with Bitcoin after the administration jailed him. Something similar happened in Nigeria; the government froze the assets of activists protesting a violent police force but they received supplementation through an infusion of cryptocurrency from supporters. “The only way to ‘shut down’ cryptocurrency is to disconnect the internet,” said David Yermack, a professor at NYU, adding that a government might just as well attempt to ban the sun from rising.

How Blockchains Can Revolutionize Information

The utility of Nakamoto’s blockchain with regard to destabilizing authoritarian regimes is more than fiscal. In the same way that Bitcoin revolutionized the financial world, so too will blockchain search engines revolutionize information. Such innovations offer trustworthy alternatives to state-run propaganda machines that specialize in misinformation. Readers will have “access to unbiased information online, as well as more ownership of their personal data and real digital privacy,” said Colin Pape, the founder of a decentralized search engine. With the groundbreaking technology, civilians living under authoritarian rule can circumvent these information blockades by logging into an encrypted web browser, verified by users around the globe in much the way that crypto miners authenticate Bitcoin exchanges, that tracks for credibility and accuracy.

The technologies that can destabilize authoritarian regimes are at the world’s disposal. It is essential to encourage their adoption and use in countries that lack freedom. Thanks in part to Nakamoto’s invention, authoritarianism could someday be a relic of the past, and poverty with it.

– Thomas Willhoite
Photo: Flickr
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El Salvador: The First Country to Use Bitcoin as Legal Tender

Bitcoin as Legal TenderOn Wednesday, June 9, 2021, El Salvador made history by becoming the first country to authorize the use of bitcoin as legal tender. President Nayib Bukele’s proposal to utilize the currency was widely popular in Congress. The votes came to 62 out of 84 in favor of instating a law to adopt bitcoin as the country’s legal tender. The introduction of bitcoin will greatly help the facilitation of remittances sent back home from Salvadorians living abroad. This is important as one in four Salvadorians live abroad. In addition, more than $2 out of every $10 in the country’s economy comes from remittances. Therefore, incorporating bitcoin as legal tender should only improve access to financial resources throughout El Salvador’s marginalized communities. Shortly before the bill was passed, President Bukele tweeted about the economic benefits of having bitcoin as legal tender: “It will bring financial inclusion, investment, tourism, innovation and economic development for our country.”

The Benefits of Bitcoin

The authorization of bitcoin as legal tender may be a developing trend across emerging economies. This is because bank penetration and access to traditional financial institutions are remarkably low. In El Salvador, more than 70% of the population lacks any connection to traditional financial services. It is due to these circumstances that Salvadorians have found themselves so reliant on remittances. In the past year alone, remittances contributed a fifth of El Salvador’s total GDP. With the domestic economy so dependent on remittances, it is clear why Bukele would craft a bill intended to ease the process for sending money back home from abroad.

Through cryptocurrency, Salvadorians will be able to send money to impoverished loved ones at a more affordable and quicker rate. No longer will those working in the global north have to rely on remittance firms. Rather, converting local currencies to and from bitcoin requires only an informal broker.

President Bukele will use significant domestic resources to help train the Salvadorian population to carry out bitcoin transactions. El Salvador’s commitment to cryptocurrency will not only forecast the future relevancy of cryptocurrency but act as a case study for other emerging economies that may be interested in eventually adopting bitcoin as legal tender. “The market will now be focused on adoption through El Salvador and whether other nations follow,” said Richard Galvin of crypto fund Digital Asset Capital Management. “This could be a key catalyst for bitcoin over the next two to three years.”

Moving Forward

In the past, people have criticized bitcoin mining for its harmful environmental footprint. However, El Salvador has made a concerted effort to ensure its bitcoin operation uses complete renewable energy. President Bukele has repeatedly stated that El Salvador’s state-run geothermal energy mechanisms will convert power derived from volcanoes for bitcoin mining. Scorching steam generates the power that can spin turbines and generate electricity. Going forward, bitcoin holds enormous potential in driving renewable energy projects across the world, especially in emerging economies.

– Conor Green
Photo: Flickr

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Cryptocurrency in Africa: The Future of a Continent’s Economy

cryptocurrency in AfricaCryptocurrency in Africa has become increasingly popular over the last couple of years, as many people become more interested in the possible economic benefits that can come from the new technology. Cryptocurrency is entirely digital money that uses a decentralized system. As a result, there is not one entity with complete authority over the process. The whole system works over the internet allowing transactions to happen anywhere in the world with no government regulation. Bitcoin, created in 2009, is the leading cryptocurrency company in Africa. There are a variety of users, from individuals to small businesses, that use the technology for investments, banking and payment transfers across borders.

Why Cryptocurrency is So Popular in Africa

In April 2019, Google Trends data showed that Nigeria had the world’s most searches for Bitcoin. Also in 2019, South Africa has the highest volume of cryptocurrency ownership compared to internet users. It was found that 10.7% of internet users in South Africa owned Bitcoin compared to the worldwide average of 5.5%.

In 2020, despite the global economic uncertainties, COVID-19 brought by businesses closing and people not working, Bitcoin trading has continued to increase in Africa. In May 2020, Nigeria had the highest trading volume in one week at $7.2 million, its third-best P2P trading week. Kenya was second with another record week by trading $1.6 million. South Africa came in third exchanging $1.1 million in a week.

Cryptocurrency in Africa mainly gained wide popularity because of high inflation rates across the continent. In 2018, South Sudan saw rates of 83.5% compared to the previous year. Other countries like Nigeria, Ghana and Zimbabwe, who printed $100 trillion notes worth only $40 in 2015, also experienced double-digit inflation rates. These hyperinflation rates had many citizens doubting the economic services of their central banks and governments.

Benefits of Cryptocurrency

In an effort to protect their money from the economic turmoil in their country, Africans started transitioning to Bitcoin. Since companies like Bitcoin have no single domain, the money inside the company is not affected by a single country’s inflation rate, which allows the citizens of African countries to protect their money from a failing economy. As a result, trust for these cryptocurrency companies builds.

Cryptocurrency in African also gives its people the ability to make cross-border payments. Some African countries have a history of fraud which had caused problems with international money transfers. In Nigeria, PayPal banned citizens from receiving money from other nations because of the country’s problems with fraud. However, cryptocurrency allows these citizens to transfer and receive money from anywhere around the world without the high fees that other money transfer companies usually have.

Cryptocurrency companies are blockchain technology that stores public records in a decentralized system. This also makes it impossible to alter transactions and assets. Many African countries use this new technology, through companies like Bitcoin, to elevate their status. They also use this technology to continue pushing their economy up to a level playing field with other nations. In 2019, Kenya and Nigeria announced plans to work more closely with these companies. These countries hope that by regulating cryptocurrency companies and their technology, the governments can begin bringing its people out of immense poverty and start becoming a greater global power.

– George Hashemi 
Photo: Flickr