Here is an article written by an Emerging Money Alumni, Craig Mellow who correctly points out how Bitcoin could be characterized as an Emerging Market. Those of us who have toiled in Emerging Markets over our careers see a lot of parallels with the whole Bitcoin movement.
Have a read:
Why Bitcoin Is Right at Home in Emerging Markets
A store of value in nations with weak currencies could prove very popular, and “a good alternative to hoarding TV sets.”
To Wall Streeters, Bitcoin may look like tulip bulbs for millennials. but for long-suffering citizens of Venezuela or Zimbabwe, the cryptocurrency is emerging as a lifeline. In those countries, where the currencies really are fiat and hyperinflation eats a paycheck in a matter of days, Bitcoin’s funky, invisible peer-to-peer regulatory backbone can seem safe by comparison. “We’re seeing an uptake of millions of bolivars a week,” says Gavin Serkin, editorial director at OnFrontiers, a London-based consulting firm. In a country like Venezuela, “it’s a good alternative to hoarding TV sets and other stuff you don’t need.”
Less desperate corners of the developing world are also turning on to crypto. Werner van Rooyen, who runs marketing for a Cape Town–based Bitcoin brokerage called Luno, reports recent demand spurts in Nigeria, Malaysia, and his native South Africa, all driven by weakening national coin. “Bitcoin is finding its first function as a store of value like gold,” he says. “Young people want an asset that can travel with them, not one they have to hide in a vault.”
Replacing jewels under the mattress is just the start of synergies between cryptomoney and emerging markets, enthusiasts maintain. Billions of developing-world residents are unfettered by “legacy” technology (i.e., bank accounts) and prepared to “leapfrog” into virtual money. Systems like M-Pesa, the bankless financial network provided by Kenyan cell operator Safaricom, are backed by national currency for now, but they could shift to crypto with little disruption.
ONLINE CURRENCIES are well suited for the foreign remittances that underpin many emerging economies, disrupting pricey cash transfer services like Western Union. Bitcoin “mining”—accumulating a cryptostash by brokering others’ transactions—is concentrated in locations like Siberia or the Persian Gulf, which combine cheap electric power for servers with underemployed brain power.
One of Bitcoin’s strengths, that the number in circulation is permanently fixed at 21 million, could also be a weakness if and when crypto goes more mainstream. There is no central bank to expand the money supply as more users adopt it. But younger currencies like Ethereum could pick up the slack.
The reaction of emerging market governments has been mixed. China banned cryptocurrency trading last month, following several unregulated “initial coin offerings” that lured risk-loving Chinese investors. South Korea followed suit.
But some regional financial centers see crypto as a way to increase their global sway. In March, Singapore made a digital token backed by its dollar available for trading via Ethereum, and Dubai has vowed to transfer all state records to blockchain. India’s policy remains undeclared, though cryptofans are hopeful, given Prime Minister Narendara Modi’s predilection for the digital. “If they tokenize the rupee, that brings in a sixth of the planet,” enthuses Floyd DCosta, Bangalore-educated co-founder of Singapore consultant Blockchain Foundry.
In mid-October, Russia said it would create a cryptoruble, presumed to be more of an attack on the U.S. dollar-dominated world order than a blow for business speed and transparency. “A cryptocurrency that could go around the dollar would be a dream come true for the Russians, Iranians, and lots of other countries,” says Daniel Doll-Steinberg, chief executive of London-based angel investor Blockchainsmokers.
One way or another, some blending of global blockchain capabilities with legacy state regulation is a likely way forward for the crypto movement, and emerging markets are poised to be important adopters.
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