Crypto Development in Developing Countries: The West Are in the Dark

If you recently read Bitcoin written in poetic, seemingly-profound thoughts, then you must have gone through a lot of crypto-twitter accounts. You have read tweets about what Bitcoin is, what it isn't, and what it will be in the future. While some who got into the world of cryptocurrency or specifically into what Bitcoin is, most wouldn't dive straight into its white paper. But those who did seem to collectively reach an, "Aha!" moment when they come to the conclusion that Bitcoin (or cryptocurrency) is the future.

It's different for those who dwell in advanced economies, where efficient, comparatively free, secure, and convenient value storage and transfer systems can already be found. Bitcoin to those advanced economists is nothing more than another of those value propositions. However, in order to fully understand how much of an impact something a cryptocurrency like Bitcoin is actively leaving, we have to look outside the blockchain and peek into the ends of the world where value transfer systems are nonexistent or deficient.

There is a reason why Bitcoin rose in both popularity and usage. Matt Ahlborg wrote that Bitcoin was seen as a utility instead of speculation to certain people in specific socioeconomic and geopolitical environments, thus driving its usage to the fullest and to its most active. Due to that statement, we will try to summarize what Ahlborg wrote in the article and also try to give our own thought on the notion that he proposed.

Ahlborg based his findings on the upwards trend of Bitcoin usage on the exchanges done through Localbitcoins.com (LBC). The reasons he chose LBC is because of the costly trading fee, compared to other low or feeless exchanges and because normally LBC is used by first-timers in the Bitcoin world. To him, the aforementioned reasons illuminated the data he was collecting to develop easement in writing the article and drafting the analysis and report.

Here's what we are able to deduce and summarize:

The research started by showing a chart of the breakdown of the top 15 countries that used Bitcoin in 2018. He charted the breakdown in the form of volumes and their equivalent USD value. The largest of the chart is Russia, followed by the United States and China. Tethering on the same level as China are Nigeria and Venezuela, which to Ahlborg is a surprising discovery given that the notion of cryptocurrency usage is on the stability of a nation's economy.

Next, he deduced three significant trends from a graph showing data pulled from LocalBitcoins.com on its quarterly volume staggered by region. The trends are:

In certain regions, speculation amounts are considerably high;

Developed countries in Western Europe and North America first showed promising volume that was triggered by the late 2013 bubble, but then they were overtaken by less developed and developing regions;

Trading in South and Central America fueled by Venezuela remained on a consistent uptrend regardless of bubbles,

So far, we can safely say that Bitcoin is not only used in countries with a lot of economic freedom, it is also used in less developed and developing countries with little to no economic freedom. It is also stipulated that the rises and falls (mostly rises) were because of a lot of political and economic crises like the periodic "banning" of Bitcoin in China, the M-Pesa revolution in Kenya, and the MMM ponzi scheme in South Africa.

It is proven that Bitcoin adoption was favorable in countries with monetary and financial restrictions, regardless if they are by local governments on their own citizens or by the international community on those local governments, and that its adoption rate depends on certain countries to spread over time. However, not all countries with the factors mentioned above full realize the adoption of Bitcoin into the economy. It is only when these countries manage to achieve escape velocity, have minimum threshold of internet penetration, smartphone penetration, and technical literacy is when a country can pave its way into the financial freedom of decentralized currency, countries like Nigeria, Venezuela, Ghana, and South Africa.

You would be reasonable to expect countries like India, Argentina, and Turkey to have higher levels of Bitcoin adoption compared to the rest but again, it depends on how a country (or a community) sees and utilizes a cryptocurrency to make it viable for transactions in said country. Reasons such as alternative methods in achieving wealth preservation, capital flight, remittance amongst others make it so that Bitcoin is not fairly needed in said countries.

In the earlier parts of Bitcoin's maturity (2013-2015), countries with high levels of economic freedom were adopted increasingly by the year but as the knowledge of Bitcoin and its adoption started to spread to developing countries, a trend began to surface, a trend that Bitcoin's utility is seen to be at its highest in countries that are economically oppressed. However, the data written into Ahlborg's article is still considered to be incomplete because he suggests that there are many outliers like countries with low economic freedom (Iran and Bangladesh) and countries with high economic freedom (New Zealand and the United Kingdom) that do not seem to fall into the equation that he created to determine Bitcoin's utility in a specific country.

Ahlborg also wrote out his concerns pertaining to the data and analysis in the article stating that as more user-friendly exchanges exist in developing countries, the more users will migrate from the expensive LBC exchange platform. But in contrast and classic irony surrounding Bitcoin and the exchanges that handle it, the user-friendly exchanges tend to suffer from governments that are inept or unwilling to adopt such commodities concerning cryptocurrency, or in this case a currency that is decentralized, in which those governments have no say on it.

All that is referenced above and quoted hence show that Bitcoin still has worlds of data and stats to discover. Though favouring the fact that Bitcoin is utilized more in developing countries, we should not diminish the fact that it is also still being used in developed countries in prominent percentages. What we can ultimately take from this is that Bitcoin is not only for those who know about it, it will soon be a currency that the whole world will be using in unity. Take it as Bitcoin fated to be the world currency in the future.