How Bitcoin Can Help Growth in Developing Economies

by James · November 21, 2022

Many developing countries have undoubtedly had their share of economic struggles. Some of these nations have unstable and unreliable fiat currencies. Consequently, they are embracing Bitcoin to see if the cryptocurrency can boost their economic growth. Examples of countries that have legalized Bitcoin as legal tender include El Salvador and the Central African Republic. Even Honduras, one of Central America’s fastest growing and most robust economies, has embraced Bitcoin. If you find a profitable cryptocurrency, make sure you start trading Bitcoin through Bitcoin loophole

Perhaps Honduras is the latest nation to surprise some experts by embracing Bitcoin. This economy has had some problems and introducing Bitcoin can help solve them. In 2018, about 16.5% of Hondurans survived on no more than $1.90 a day. However, natural disasters, including two hurricanes, affected the country, exacerbating the number of individuals in poverty. The Covid-19 pandemic also affected this country’s economy. The poverty rate rose to 73% in 2021, and the extreme poverty rate reached 53%. And this marked the highest poverty rate in this nation since 2005.

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Causes of financial struggles

Most developing countries that have embraced Bitcoin depend on trade and agriculture. Therefore, their economies struggle when something like a pandemic or natural disaster affects these sectors. For example, the Covid-19 pandemic affected business in most countries due to travel restrictions.

Also, a country like Honduras faced two significant hurricanes in 2019. The agricultural sector accounted for less than 30% of the workforce in 2019, responsible for around 12% of gross domestic product. The country’s trade with the United States accounts for approximately 41% of its business annually. By the end of 2020, her bilateral trade revenues exceeded $9 billion.

How Bitcoin Can Help With Financial Struggles

Embracing Bitcoin can benefit developing countries in several ways. Some of these nations hope that accepting Bitcoin will lure investors and attract more tourists. El Salvador and Honduras are neighbors. Therefore, these countries hope that accepting Bitcoin will provide more business opportunities across borders and even in the international markets.

Bitcoin shows significant potential for commerce and financial security. More people are flocking to platforms to buy and sell this cryptocurrency. Some people also prefer Bitcoin because of its low transaction fees. Therefore, some developing countries hope that the low costs will attract and encourage investors and locals to use cryptocurrency.

Low transaction costs are particularly beneficial to the poor because they help them avoid the additional costs of conventional financial service providers. However, Bitcoin implementation has challenges, especially technological barriers in some places. Some of these challenges may include setting up crypto wallets.

But if these nations overcome the technological challenges, they can create employment and trade opportunities. Moreover, they can diversify the economic base of the economy. And this diversification can increase security in the future should agricultural and trading foundations become difficult or shaky.

The economic future

People may not accept much Bitcoin in some countries. That’s because Bitcoin’s rollout and adoption is happening in a few regions. Some people are also skeptical of Bitcoin’s economic benefit, especially after noting El Salvador’s difficulties a few weeks after embracing the cryptocurrency.

However, Bitcoin helps some people, even those in rural areas, to participate in economic activities. That’s because they can access capital without much of a struggle. They can also engage in Bitcoin trading, which can bring some profit. Bitcoin also gives traders access to international markets and economies. Thus, Bitcoin can help more people trade internationally and stimulate economic growth.

Nevertheless, developing countries need to improve their infrastructure to ensure that people in rural areas can access the internet, set up crypto wallets and access Bitcoin via crypto exchanges. That way, these nations can help their citizens benefit from this cryptocurrency.