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Many developing countries have undoubtedly had their fair share of economic struggles. Some of these nations have unstable and unreliable fiat currencies. Consequently, they are embracing Bitcoin to see whether the cryptocurrency can boost their economic growth. Examples of countries that have legalized Bitcoin as a legal tender include El Salvador and the Central African Republic. Even Honduras, one of Central America’s fastest growing and robust economies, has embraced Bitcoin. If you are finding 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 struggles, and introducing Bitcoin could help address them. In 2018, around 16.5% of the Hondurans survived on not more than $1.90 a day. However, natural disasters, including two hurricanes, affected the country, exacerbating the number of individuals in poverty. Also, the Covid-19 pandemic affected this country’s economy. The poverty rate rose to 73% in 2021, and the extreme poverty rate hit 53%. And this marked the highest poverty rate in this nation since 2005.
Reasons for Economic 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 instance, the Covid-19 pandemic affected business in most countries due to travel restrictions.
Also, a country like Honduras faced two significant hurricanes in 2019. Its agricultural sector accounted for less than 30% of the workforce in 2019, responsible for around 12% of the Gross Domestic Product. The country’s trade with the US accounts for approximately 41% of the business annually. Towards the end of 2020, her bilateral trade earnings exceeded $9 billion.
How Bitcoin Could Help with Economic Struggles
Embracing Bitcoin could benefit developing countries in several ways. Some of these nations hope that accepting Bitcoin will entice investors and attract more tourists. El Salvador and Honduras are neighbors. Therefore, these countries hope that accepting Bitcoin will bring more business cross-border opportunities and even in the international markets.
Bitcoin shows significant potential for trade and economic security. More people are flocking platforms to purchase and sell this cryptocurrency. Also, some people prefer Bitcoin due to its low transaction fees. Therefore, some developing nations 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 extra charges by conventional financial service providers. However, Bitcoin implementation has challenges, especially technological barriers in some places. Some of those challenges may include setting up crypto wallets.
But if these nations overcome the technological challenges, they can create employment and trade opportunities. Also, they can diversify their economies’ financial foundation. And this diversification could enhance safety in the future should agricultural and trade foundations become difficult or falter.
The Economic Future
People may not widely accept Bitcoin in some countries. That’s because Bitcoin’s rollout and adoption occur in a few regions. Also, some people are skeptical of Bitcoin’s economic benefit, especially after noticing 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 struggle. Also, they can participate in Bitcoin trading, which could bring some profits. Also, Bitcoin enables traders to access international markets and economies. Thus, Bitcoin can help more people trade internationally and spur economic growth.
Nevertheless, developing nations must improve their infrastructures to ensure 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.
Image by Eivind Pedersen from Pixabay
