The heart and soul of any nation’s economy would be relentlessly ruled by its monetary policy. The majority of poorly banked countries show weakness in the value of their currency against the dominant USD coin. In particular, the cause of the depreciation in value would be due to pathetic economic fundamentals in these countries.
For example, El Salvador went bankrupt after failing to rule monetary sovereignty using the USD. In addition, more than 70% of unbanked population in the country and increased reliance on remittances has opened the door for Bitcoin adoption. In addition, economically backward countries such as Panama, Ecuador, and Zimbabwe, where the USD is legal tender, await the adoption of Bitcoin in the near term.
Why would Bitcoin adoption be inevitable for many countries?
While countries like China, the United States and the United Kingdom are working undercover to introduce their virtual currencies. Countries with larger, economically weak unbanked populations are building their legislative procedures to accept Bitcoin as legal tender.
The Bitcoin mandate allows fast, secured, and reliable payment across borders, it is interesting to note that investors do not need to hold bank accounts, thus solving the majority of financial problems. Crypto analyst Arcane Research has revealed some exciting analysis, where he hopes for a gradual increase in cryptocurrency adoption.
If at least 10% of the population of economically backward countries started adopting Bitcoin by 2030. That would be around more than 50 million investors of these countries over the next ten years. In addition, Bitcoin transactions made on Lightning networks are fast, secure, reliable and more easily confirmed than those executed directly on its blockchain. Therefore, economically drained and unbanked countries with more than 50 million new users could contribute, annual flash payments for household spending and remittances through $ 1 billion by 2030.
How could the adoption of Bitcoin act as a hedge against the financial crisis?
The challenge for the majority of poor countries is to resolve and stabilize the economic crisis. Therefore, countries tend to peg their fiat to the US dollar, especially if the primary source of income is dollar-related. Especially the oil rich countries Venezuela, Iraq, and Nigeria peg their fiat currency to the USD because their main source of income comes from oil trades paid in dollars.
At the same time, the recent CPI report highlights the gradual rise in the inflation rate to 6.2% from October 2020 to October 2021. This decision mainly resulted in a change in the mindset of American citizens, where people started using crypto to increase their purchasing power. However, El Salvador which went bankrupt quickly beat the cards to Bitcoin. On the other hand, Panama is actively working to pass the Bitcoin bill as legal tender.
Collectively, there has been a clear illustration of the poverty-stricken country’s motion towards cryptocurrency adoption. Since monetary anchors lead to an increase foreign influence on them. In addition, he would become prone to imbalance while taking care of the nation exports and imports. However, the sustained growth of Bitcoin has become a boon to tackle the financial crisis facing financially weak countries.