Sometimes Dismissed as a Fad in Advanced Economies, Crypto Holds More Appeal in Countries With a History of Financial Instability (ft.com) 70
In advanced economies, cryptocurrencies are viewed by many in the financial world with suspicion -- the domain of zealous "crypto bros" and a speculative and highly volatile fad that can only end badly. Regulators in Europe and the US have issued stark warnings about the dangers of trading crypto. But in the developing world, there are signs that crypto is quietly building deeper roots. Especially in countries which have a history of financial instability or where the barriers to accessing traditional financial products such as bank accounts are high, cryptocurrency use is fast becoming a fact of daily life. Financial Times: "While everyone was paying attention to [Tesla chief executive] Elon Musk's tweets, and which institutional investor or CEO was saying what they thought about bitcoin, there was this entire story unravelling in emerging markets around the world that's really powerful," says Kim Grauer, director of research at Chainalysis, a leading data company in the sector. "There's a massive crypto footprint in many of these countries ... [and] a massive amount of entrepreneurial opportunity." Chainalysis ranks Vietnam first for crypto adoption worldwide -- one of 19 emerging and frontier markets in its top 20, with only the US among advanced economies making an appearance at number eight in 2021. "It's very striking this year, [adoption] is a story of emerging and frontier markets," adds Grauer. Separate data from UsefulTulips.org, tracking bitcoin transactions on the world's two biggest peer-to-peer crypto trading platforms, show that in the past few weeks, sub-Saharan Africa has overtaken North America to become the geographical region with the highest volume of this kind of crypto activity.
[...] Emerging markets are fertile ground for cryptocurrencies, often because their own are failing to do their job. As a store of value, as a means of exchange and as a unit of account, national currencies in some developing countries too often fall short. Unpredictable inflation and fast-moving exchange rates, clunky and expensive banking systems, financial restrictions and regulatory uncertainty, especially the existence or threat of capital controls, all undermine their appeal. Nigeria, Africa's most populous country, is a case in point. Its impatient, youthful population has to contend daily with high unemployment, the vagaries of black market currency exchanges and capital controls. As the price of oil, the country's main export, dropped during the pandemic and further squeezed dollar supply, many businesses were unable to pay foreign suppliers and lenders, almost leading to the default of a World Bank-backed power plant that provides a tenth of Nigeria's electricity. For individuals sending or receiving remittances or billing customers, the lack of dollars is a constant headache.
[...] Emerging markets are fertile ground for cryptocurrencies, often because their own are failing to do their job. As a store of value, as a means of exchange and as a unit of account, national currencies in some developing countries too often fall short. Unpredictable inflation and fast-moving exchange rates, clunky and expensive banking systems, financial restrictions and regulatory uncertainty, especially the existence or threat of capital controls, all undermine their appeal. Nigeria, Africa's most populous country, is a case in point. Its impatient, youthful population has to contend daily with high unemployment, the vagaries of black market currency exchanges and capital controls. As the price of oil, the country's main export, dropped during the pandemic and further squeezed dollar supply, many businesses were unable to pay foreign suppliers and lenders, almost leading to the default of a World Bank-backed power plant that provides a tenth of Nigeria's electricity. For individuals sending or receiving remittances or billing customers, the lack of dollars is a constant headache.
Isn't this obvious? (Score:5, Insightful)
If you have access to a historically stable currency, then jumping to a new currency that's unstable has a high opportunity cost.
But if you only have access to a currency that's highly unstable and backed by a government whose previous currencies became nearly worthless, then jumping to a new currency that's unstable has less opportunity cost.
This should be obvious.
Next week we can discuss how those with poor credit history are much more likely to use high-interest loan services such as pawnshops, while those with good credit history will avoid such services.
Re: (Score:2)
Re:Isn't this obvious? (Score:5, Insightful)
Re: (Score:2)
Even IN THE USA - there are nearly 25% of the households without bank account.
I wasn't referring to struggling economies, as something tells me there are plenty of people in unstable or third world countries who don't even know what "autopay" is.
I'm talking about those who have access to banking systems, make enough money (I've had a bank account since I was making $3/hour), and still choose to put their money in the mattress. Yes, I want to know the actual reason 25% of first-world elitist American households are unbanked, because I doubt it's due to lack of income or access to ban
Re: (Score:3)
Re: (Score:2)
Actually it is. Bank accounts come with costs. Especially if you are bankrupt (i.e. have a bankruptcy) and possibly no job.
Uh, those with no income or no money, don't really have a need for a bank, so let's try and keep this relevant instead of driving right out to the middle of the cornfield in search of a strawman.
Also you may be undocumented. Not sure how much paperwork you need in the USA.
The fact that they are considered "undocumented" instead of "illegal", created a problem that shouldn't exist in the first place. Not going to address that strawman either, as that has far more to do with immigration than banking regulation.
But yes, the number is shocking, particularly as we talk about HOUSHOLDS. So, it is a whole household where noone has a bank account...
Yeah, the number is shocking, especially when you consider a massive amount
Re: (Score:2)
Uh, those with no income or no money, don't really have a need for a bank, so let's try and keep this relevant instead of driving right out to the middle of the cornfield in search of a strawman.
Those people definitely need a bank account. My job literally requires me to have one, they're not going to send me cash or a check. Or maybe they could have friends or family wire them some cash.
Re: (Score:2)
Uh, those with no income or no money, don't really have a need for a bank, so let's try and keep this relevant instead of driving right out to the middle of the cornfield in search of a strawman.
Those people definitely need a bank account. My job literally requires me to have one, they're not going to send me cash or a check. Or maybe they could have friends or family wire them some cash.
Uh, we were both referring to people with no income and no money, and have probably been surviving that way for quite some time now. I wasn't forcing you to justify why people should use a bank if they literally have no valid reason. I'm more questioning the actual reasons 25% of households in the US don't use banking services, because we're certainly not advertising a 25% no-job-no-income statistic in the US. You've already validated that your job requires you to have one, so bring forth the reasons and
Re: (Score:2)
Actually microloans [theguardian.com] are how things are done. For practically every problem there's a solution. [kiva.org]
Re: (Score:1)
"Underbanked" accounts for 80% or more of that statistic you mentioned. Someone decided that anyone who doesn't have enough bank accounts or who used some other form of financial tool in the past few years is "underbanked". They counted people and came up with a number and judged that those people aren't banking enough and so lumped them into a statistic.
*It is totally false that 25% of people in the USA do not have a bank account.*
Re: (Score:2)
In El Salvador, some 70% of citizens are unbanked" You seriously think they CHOOSE to be unbanked?
Yes, I do think they choose that.
They are so because banks, even if they have access to them, do not deal with them as they are too poor to make it worthwhile.
This is nonsense you made up. I have been to El Salvador, I've spent a lot of time in banks there.
Re: (Score:2)
Are you stupid or something? https://www.microbilt.com/news... [microbilt.com]. Even IN THE USA - there are nearly 25% of the households without bank account. This is pretty much in the news regularly. Also "smartphone" Is not what I said. > Also, why do people still do this? Because if your next bank branch is a day travel away and you are a farmer in i.e. a rural area in india, you may find out that no, the bank does not even deal with you IF you spend 2 days going there. You show the exact same attitude that is the problem - looking at things from a first world elitist perspective. Let's look at El Salvador. You know, the country that just added Bitcoin as legal tender.... From https://theconversation.com/bi... [theconversation.com] " In El Salvador, some 70% of citizens are unbanked" You seriously think they CHOOSE to be unbanked? They are so because banks, even if they have access to them, do not deal with them as they are too poor to make it worthwhile.
And do you think of those 70% of Salvadorans, they have reliable access to a phone and phone service?
I've not been to El Salvador, but I've been to Colombia, to the Philippines, Dominican Republic and a variety of other places. You'll find a lot of the population don't have access to reliable phone service because they don't have bank accounts or credit cards. If their phone breaks, the do not have the money to replace it... In fact a lot of them are renting the phones from street dealers who will reposs
Re: (Score:2)
Well it kinda falls in the same area. Those countries with a strong and stable economy tend to have more people who will also tend to trust to keep their money in the banks. If you have money, banks are a good place to put your money in, if you don't have enough money, banks are worse than keeping your money under your bed.
If you don't have a lot of money banks are horrible, they charge you for not having enough money in your account (you are poor so we will charge you), banks will have overdraft fees whe
Re: (Score:2)
My credit union has a minimum of $5.00, common in the credit union industry. Check deposits are immediately available up to a limit somewhere in the 1000's. It's an area where fr
Re: (Score:2)
Oh. please. WMZ has been around for over 20 years, and has none of bitcoin's deflationary or computational drawbacks. It has a phone app. You don't need a bank account. So why is everyone talking about Bitcoin like its going to solve some problem that WMZ can't? One answer is that people who are heavily invested into Bitcoin are desperately looking for a reason for it to exist, so they will latch on to any story that sounds like BTC is useful to anyone, and amplify it. Another answer is affluent spec
Re: Isn't this obvious? (Score:2)
Since you're shilling for WMZ anyway, you should provide a link to this magic product that offers zero-or-low fee international payments that no has heard of.
Re: (Score:2)
I'm not shilling, I'm just providing an example of a non-bank, non-credit card, non-crypto electronic payment system.
You could have googled this yourself, but here you go: wmtransfer.com [wmtransfer.com]
And here's the wikipedia article on it [wikipedia.org]
Re: Isn't this obvious? (Score:2)
Sounds fine.
If you live in a former soviet state.
Like the American banking system is fine.
If you live in state operating under the American banking regime.
But if you are looking for international payments without an approved list of nations you have to exchange with, then stick with Bitcoin.
Re: (Score:2)
Oh, for sure. A $200 cost per transaction actually -does- make sense if you are trying to do an international money transfer that the government thinks is illegal. But I thought we were talking about electronic payments in a local economy, like what the article is about.
Re: Isn't this obvious? (Score:2)
but no bank account and definitely no credit card
Prepaid debit cards. Just watch the line at the grocery store counter on payday. People with nothing more than a handfull of cash (and often no English skills) scoop these things up.
Re: (Score:2)
If prisoners can find an economic solution [youtu.be] poor people can as well.
Re: (Score:2)
Depends (Score:2)
Depends on the currency. Bitcoin has retained it's value much better than the Venezuelan Bolivar over the last 10 years, even going back before the current trend of hyperinflation that started in 2016.
https://steemit.com/bitcoin/@c... [steemit.com]
Useless graph [Re:Depends] (Score:2)
This is fucking useless. This is somebody posting with the intent to bamboozle, not to explain.
Re: Depends (Score:2)
Bitcoin has retained its value better than ALL national currencies over the past 10 years. Also better than gold and all common asset classes.
Re: (Score:2)
Another thing has retained it's value and hence it's popularity. Lotteries.
Re: (Score:2)
This is misleading. Bitcoin has experienced wild deflation - a bitcoin now buys a lot more than it did ten years ago.
Which is why bitcoin is exciting to many people as an investment. But for financial transactions, one tends to want more predictability. For example, one would be in serious trouble if ten years ago, they took out a mortgage in bitcoin.
Re: (Score:2)
That doesn't inspire confidence. (Score:2)
The Hypocrisy Of It All (Score:2)
"In advanced economies, cryptocurrencies are viewed by many in the financial world with suspicion -- the domain of zealous "crypto bros" and a speculative and highly volatile fad that can only end badly."
Advanced economies? You mean the ones that we stupidly re-defined as Too Big To Fail? The economies that are so advanced that Quantitative Easing is considered perfectly normal function, as is running the money printing presses 24/7?
As far as things "ending badly", the global financial crash of 2008 should be a good reminder of just how unstable "greenback goons" have made traditional markets, and we're poised and staged to do that again because inherent corruption did fuck all to prevent it from happenin
Re: The Hypocrisy Of It All (Score:3)
I prefer debt funding with QE over WW3.
SOlid economy (Score:2)
I prefer debt funding with QE over WW3.
I prefer a solid economy with regulations to prevent crashes over both debt funding QE and WW3.
Re: (Score:2)
It is advanced and stable economies, not perfect ones.
So with the current set of inflation we are freaking out because our grocery bills went from $150 a week to $175 a week. which isn't great, as that is higher than the amount of increase of income I had gotten. However, in these unstable economies it would be closer to $150 a week for food would jump up to $300 or $400 a week for food.
Also with many of these too big to fail companies, we had the economy in place to prop them up, with still a rather min
Re: (Score:2)
Also with many of these too big to fail companies, we had the economy in place to prop them up, with still a rather minor (in the grand scheme of things) hit to our total economy.
Speaking of propped up economies, are you purposely ignoring the fact that the US National Debt has increased 280% since the taxpayer funded bailouts of 2008?
If that is seen as "minor" in the grand scheme of things, then the obscenely wealthy United States would be able to pay it off at any time.
Re: (Score:2)
Advanced economies? You mean the ones that we stupidly re-defined as Too Big To Fail?
This tells me you don't understand about that which you speak.
Re: (Score:2)
Advanced economies? You mean the ones that we stupidly re-defined as Too Big To Fail?
This tells me you don't understand about that which you speak.
Why is that? Because Too Big To Fail is a legitimate financial tool they've taught for 20 years at Harvard? Bankruptcy courts now recognize that as a valid reason when you file for Chapter 7/11 protections? America would have somehow fallen over and died if not for Chevrolet making shitty products that barely compete? The Untouchables in the banking industry deserved those protections after financially screwing over an entire planet in 2008? I mean, I can only hope your point goes well beyond some lame
Re: (Score:2)
Re: (Score:2)
You stated that economies are tagged as too big to fail. That is false. Companies and banks are sometimes considered too big to fail because it would hurt economies. That is why I say you don't understand about that which you speak.
In other words, you actually did insist on reducing this down to a bullshit grammatical argument while ignoring every other valid point stated. Wow.
Some companies that were bailed out, would not have hurt American "economies" to the level of justifying that action. Corruption justified it, not common sense or math. Same reason no one in banking went to prison after 2008.
This just in (Score:3)
Desperate people believe in miracle cures.
Re: (Score:2)
Or just hard work. [youtu.be]
Re: (Score:2)
Wow, what a selling point (Score:5, Funny)
Try crypto! It's better than a Nigerian bank!
Re: (Score:3)
Re: (Score:2)
Actually if you are in Nigeria, that is a serious selling point for you. ... reality is that Nigeria has a failing central bank and failing currency and is exactly a country where people prefer to deal in crypto.
Sure, in much the same way that if you're being swept down a river, a piece of driftwood is a life saver. The point is, that isn't a good argument for making driftwood standard river crossing gear. Once your primary means of accomplishing a goal has a catastrophic failure, ANYTHING is better.
Re: Wow, what a selling point (Score:2)
It's a good argument for dropping driftwood in the river when you see someone floating by.
It's much more likely (Score:2)
Retire (Score:1)
I made a big bet on Bitcoin and it's working out nicely. I'm glad a chose to go all in several years ago. I've always considered the savings I used as being "gone." Even if BTC drops to zero I still won't lose any sleep over it.
Re: (Score:3)
I bought some crypto with my government stimulus money. So it's money I never had. So far, my investment has doubled, then fallen below what I bought it for, and is now headed back up. I figure I will hold it for 20 years or so and see what happens.... If only I had thought to buy it with my Roth money....
Deflation sucks (Score:2)
Bitcoin by design is depreciative. Which means it will be worth more tomorrow than today, and that leads to holding on to the currency, not spending it. If you base your business on it, you'll need to continuously decrease your prices, and pay your employees less to keep up with deflation. With a well structured loan, you would pay the lender back less than what you lent them. Its a very unstable and difficult to maneuver system, our world economy is based on inflation so everything will be odd and not well
Re: Deflation sucks (Score:2)
If Bitcoin became digital gold, you'd just get bitcoin certificates and fractional banking, just as happened with real gold.
Debt most of the time is as good as money and used as such with or without a central bank. It bears interest and people love interest, the amount of debt is unbounded though, so you can get inflation. When it stops being most of the time, then you get deflation without a central bank to print.
Re: (Score:2)
Bitcoin by design is depreciative. Which means it will be worth more tomorrow than today
Explain in detail why something that has zero intrinsic value will be worth more rather than less tomorrow. The fact is, a bitcoin's value is only what price someone else is willing pay for it and if someone comes up with a better alternative, the value of bitcoin will fall to zero.
With a well structured loan, you would pay the lender back less than what you lent them
This statement doesn't make any sense as the lender is not lent anything.
Its a very unstable and difficult to maneuver system, our world economy is based on inflation so everything will be odd and not well understood except for the most financially literate
Judging by the above, you are not financially literate. Inflation results in things costing less when paid for with a loan. Let's say you buy a house for
Everyone likes to get rich quick (Score:2)
Especially poor people.
For a means of exchange they prefer physical dollars though.
Re: (Score:2)
Re: Everyone likes to get rich quick (Score:2)
We hear what we want, what I hear is that venezuela is mostly dollarized.
Makes sense (Score:2)
When everything looks like a scam, it makes sense to invest in the scam that is at least making some money for some people.
Re: (Score:2)
Gravitas: Food crisis in Sri Lanka as Chinese debt mounts [youtu.be]
Hegemony indeed. Sounds like your facts about the world are outdated and out of touch.
Re: welfare scam (Score:2)
Diverse hegemony.
No it doesn't (Score:2)
Countries with financial instability are heavily correlated with countries who lack digital infrastructure to make use of crypto in any significant way. These countries gravitate towards trading in foreign currencies.
Re: No it doesn't (Score:2)
Then why do you see Africans trading digital phone minutes for goods and services? They have a digital infrastructure in place. What they don't have is the unmetered cheap Internet that makes ad-based services possible.
Limited potential (Score:2)
While there are some genuine use cases they are far less than all the hype. The problem with financially unstable countries is not the currencies themselves but financial policy.
It's like saying you need a Tesla to navigate your muddy roads. Theoretically you might have situation in which you are better off in a Tesla but if you just fix the bloody roads you'd be far better off.
Smart contracts, blockchain, immutability and transparency will help a healthy existing infrastructure. Some wannabe AwesomeCoi
Not unsimilar to the "smart contract" fad (Score:2)
Might make quite a lot of sense for somebody living where there is little rule of law and respect for the court system. Near-irrelevant for anyone living someplace sane.
Hm.... (Score:2)
Most of the countries who have no stable economic infrastructure are rife with corruption.
As this report shows, cryptocurrentices are taking root on certain countries who otherwise have no stable economic infrastructure.
That only means it is a scam. (Score:1)
Scams have a habit of being sold to the more incompetent economies that have a habit of falling for such things.
Next up: Some obscure African country announces a full switch to DogeCoin. (At least they have a sense of humor. :)
And starving people will eat half rotten food (Score:2)
Being desperate and using what's available doesn't add quality to what's available. It just makes the defects more tolerable than the alternative.
But... and bear with me because this is a radical idea... maybe we shouldn't insist that the entire world subsist on half-rotten food just because some people have been forced to. Maybe we should find a way to help the starving people get food that isn't half-rotten.