For quite some time, the world has seen some advancement in the trade that isn't fiat based. Crypto has established itself as another important way of trading. However, while many developed countries have embraced the use of crypto, some developing countries are yet to fully adopt its usage.
For instance, countries like mine (Nigeria) do not believe in trades with crypto and have placed a ban on associating it with any of their banking activity. This, however, isn't going so well in my opinion. Looking at the present form of the economy, and the inflation that has hit it, I'm of the opinion that crypto could be a solution.
As we know, many countries, especially developing ones, use the US dollar as the main accepted form of trade internationally. This, in turn, hasn't helped their own local currency and most times, the ugly nature of the economy keeps causing the local currency to depreciate, which results in inflation since most of these nations live by importation.
Full Adoption of Crypto Could Save Developing Countries
The major problem faced by developing countries is bad leadership and mismanagement of funds. With crypto and blockchain technology, developing countries could be more accountable with their funds since transactions in the blockchain can be tracked and are open for everyone to see. This will foster trust in business dealings and improve transparency in leadership.
Secondly, crypto will simplify inter-country transactions and provide a lesser transfer fee. With crypto, money can often be transferred cheaper than central bank-issued currencies, because using crypto allows global financial transfer without an intermediary institution. This elimination of intermediaries increases the speed of transfers thereby, making way for smoother business transactions.
One of the fears of developing countries like mine is that crypto can easily be used for fraudulent activities and could be the easiest means of funding terror attacks. While this can be considered true, blockchain technology is working so hard to eliminate such threats but there are still some privacy coins with untraceable transactions.
Crypto Can Help Stop Inflation
Fiats are central bank controlled, and most times due to what they intend to achieve, they create a scarcity of a particular trading pair which takes a negative effect on the other.
For NGR Naira, scarcity of Dollars results in buying the available ones at a high rate, thereby affecting negatively the value of Naira. This Excessive devaluation causes inflation because Nigeria as a country is a consuming and not a production nation.
This is also the case in many other developing countries. With excessive devaluation in their currencies, trades against other fiat require much of their currency which increases import duties and increases the cost of commodities. Crypto can help solve this problem since it's not CBN controlled.
In conclusion, it will be more advantageous to adopt the usage of crypto both locally and internationally, this will save many developing countries from fund mismanagement and bring about transparency in governance and stability in their local currencies.
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