Last week, we touched on cryptocurrency’s significant gains in 2024. Bitcoin reaching $100,000 despite all odds is no small feat. And of course, there is the U.S. Securities and Exchange Commission’s (SEC) approval of spot bitcoin and ether funds.
These big wins for crypto are only a portion of digital currencies’ increasing push towards widespread adoption. Of course, interest in bitcoin and other cryptocurrencies is not exclusive to developed countries.
There is El Salvador’s endorsement of bitcoin as legal tender in 2021. Other countries are likely to follow suit in the future.
The slower pace at which governments and financial institutions across the globe are coming to terms with the reality of blockchain technology as a digital transaction tool has not deterred citizens of countries in Asia, Africa, and Latin America from leading this charge, showcasing the practical uses of digital currencies in ways that extend beyond speculative investments.
Many across the globe turning to cryptocurrencies as inflation hedge
Economic instability has been an important driver of cryptocurrency adoption in developing economies. In Turkey, where a currency crisis has been tearing at the pockets of its citizens, many have turned to bitcoin as a hedge against rising inflation.
Argentina and Venezuela boast significant crypto adoption as well – where digital currency is seen as an alternative for storing value and for conducting everyday transactions – in light of both economies facing crippling economic challenges.
Could we start seeing cryptocurrencies like bitcoin replacing traditional investment vehicles like gold and the U.S. dollar in developing nations? Only time will tell.
Crypto is slowly taking over the world of remittances
The potential of cryptocurrency to streamline cross-border transactions has been a prominent topic of discussion in recent years.
The use of bitcoin and stablecoin as a money transfer tool is steadily on the rise, with almost a quarter of global remittances in 2024 delivered in the form of cryptocurrency. Nigeria and Kenya, where approximately 50% of total remittances sent are reported to be in crypto form, are at the forefront in Africa. In Latin America, cryptocurrency remittances increased by 12% from 2022 to 2023, according to reports.
What could be behind this developing trend, you may ask? Lower transaction fees, faster transfer times, and not having to deal with oftentimes stringent financial regulations of the banking systems in these countries.
Inter-border applications also shed light on the versatility of cryptocurrency for money transfers. In Nigeria, crypto adoption has served to facilitate swifter financial transfers from urban to rural areas. This has played a significant role in the country’s battle against malaria. Family members utilize bitcoin or other stablecoins to make payments directly at medical facilities. They can also exchange the digital currencies for cash with crypto agents or other community members holding digital currencies in their cities.
Don’t be surprised if you start seeing the travel sector disrupted by bitcoin as tourists and businesses in the hospitality industry begin adopting the use of digital currency to conduct cross border transfers, currency conversions, and payments.
Digital currencies promote financial inclusion
Cryptocurrencies have become a banking alternative for unbanked individuals, which represent around 1.6 billion of the world’s population. In regions with limited banking access and stringent banking regulations, the use of cryptocurrency represents an option to participating in both the local and global economies.
This is particularly advantageous as more of the global workforce is turning to the gig economy for work due to high unemployment in their countries, and developing countries start to slowly grapple with the fiscal implications of this reality.
Juan Portillo, a software engineer from South America, tells us about the applicability of digital currency:
Getting paid in crypto completely changed my freelance business,….. My international clients send stablecoins directly to my wallet. It’s instant, costs almost nothing and I can choose exactly when to convert to pesos for my daily expenses.
The widespread use of smartphones and growing internet penetration across the globe has proven advantages for those in developing countries to access and use cryptocurrencies for practical purposes rather than just for investment.
More practical uses of cryptocurrency may translate to more value
The tug of war between increased government centralization and everyday financial needs in developing economies has permitted cryptocurrency to surface as a backup financial instrument. For investors, these trends highlight the rising global demand and untapped potential for cryptocurrencies as a versatile financial tool.
Increased adoption in emerging markets will likely continue to fuel the global demand for cryptocurrencies, potentially driving up their value. Holding assets like bitcoin, Ethereum, or alternative digital currencies, can allow investors to benefit from this evolution.
Crypto’s practical use and accessibility as a payment and transactional tool might also serve to widen its use in other areas, which can potentially lead to a decrease in transaction costs and more price stability, further reducing the risk of holding cryptocurrency.
As developing countries persist in adopting crypto, U.S. regulators may respond with more policies friendly to digital currencies as to ensure competitiveness. This could allow for clearer rules and greater institutional adoption domestically.
Be part of the growing global trend
The rapid evolution in the cryptocurrency narrative, from being considered a speculative asset to gaining traction as a financial tool with real-life applications points to a growing potential of digital currencies to become much more integrated into our economies.
As we inch closer to this reality, investing in a digital currency IRA offers a powerful way to diversify retirement savings with cryptocurrencies. By adding crypto to your portfolio, you not only hedge against inflation but also tap into a rapidly expanding global market.
Get started now or reach out to a Digital Currency Specialist at (800) 299-1567 to learn more about investing in a digital currency IRA.
