It’s an old adage that necessity is the mother of all invention. This adage is especially true if you are from a region where financial technology and services are extremely limited, like the developing world. Economists say that a region’s economic viability is characterized by how fast and easily money can move to pay for goods and services, as well as labor alongside investments. Money dynamics is at the core of any region’s economy. Payment systems are the key mechanisms that set money in motion. Blockchain technology is a great tool that payment systems and financial institutions can use to stir up this dynamics and pave the way for economic development worldwide.
Recently, Mexico advanced a bill that regulates Bitcoin and related technology companies’ activities through the Central Bank. Agustin Carstens, the Governor of the country’s key financial institution stated that Bitcoin should be considered a store of value or a commodity. Mexico’s National Policy for Financial Inclusion incorporates this new legislation in an effort to utilize technological advances to reduce the cost of financial services and allow access to a broader base of the population. There is wide consensus across political parties that blockchain can really benefit the economy, particularly through remittances and other cross-border payments. Lawmakers are aware that this advancement could greatly grow foreign investment in the country.
The Mexican criteria for assessment is the growing market cap of cryptocurrencies as well as the underlying technological innovation of protocols. These benefits are included in the goals for the creation of a digital economy that reduces the use of physical cash, creating a transparent taxation process that works efficiently, creating a mechanism to automate regulation and auditing, and expanding the availability of affordable, high-quality financial services. In Mexico, regulation is a huge boost to crypto technology adoption, especially for cross-border payments, which rise to $775 billion USD in total, with remittances of $25 billion. Mexico is an advanced economy that would be critical in testing and trying all the new technological protocols and innovations that can be thought of in the crypto technology world. They are a pioneer in Central and South America.
Other Latin American countries are extremely advanced in cryptotech adoption. Venezuela’s “bitcoinization” is so far advanced that it is considered the first truly bitcoin economy. Overall, financial connectivity in South America is greatly increasing due to proximity to countries like the United States of America and Canada, because of trends concerning cross-border payments, access to mobile phones, and the widespread adoption of cryptocurrencies to hedge against poorly managed central banks that have driven inflation to unheard of proportions in countries like Brazil, Argentina, and Venezuela.
China and Japan lead the way in cryptocurrency adoption in Asia. Japan is a pioneer with their Bitflyer exchange becoming the world’s largest, owning almost 30% of the total global market and also has the highest percentage of registered businesses that accept crypto payments for goods and services of all countries worldwide. Japan is a highly educated population that readily adopts technology and greatly honors consensus and cooperation. Satoshi Nakamoto, the anonymous creator of Bitcoin, has a Japanese name. There is also, of course, Japan’s burgeoning debt crisis that may be driving cryptocurrency adoption to protect wealth. After Greece, Japan is the most debt-ridden country in the world. For the first time this past year, Japan’s Central Bank charged individuals to store the currency with negative interest rates and many national reforms, including higher taxes, may be inevitable. These reasons have driven Japanese citizens to embrace cryptocurrencies and blockchain technology.
China’s Wepay is opening the door to a cashless society through QR code integrations everywhere. However, WeChat is still heavily watched by the government. Many elite and educated Chinese are also keen to take their payments and money elsewhere as the government is cracking down on civil liberties and also manipulating to devalue their currency in order to keep exports high. In China, the devaluation of the Yuan leads to record losses for newly-minted millionaires. China is ready for a truly decentralized payments system.
India’s recent demonetization efforts took many small to medium-volume transactions done by cash digital. However, many Indian citizens do not trust corruption when it comes to close oversight over all their financial activities. Bitcoin trading volumes rose after the demonetization was announced by the Central Bank.
Africa has been the scene of incredible cryptocurrency adoption. An increasing number of African countries like South Africa, Nigeria, and Zimbabwe have shifted focus to cryptocurrencies as a means to secure wealth. Service providers such as Takealot, Bidorbuy and Kaizer Chiefs accept Bitcoin payments. Major cryptocurrency exchanges are already targeting Africa as the next big market, hoping to provide cost-effective financial services to a below-optimally served population.
2018 holds a great promise for global economies, with the possibility for many of them to embrace blockchain technology.
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