A Birds-Eye Look At The Global Cryptocurrency Revolution
The products originally of America's tech industry, Bitcoin and other digital currencies have since been adopted around the world. Nigeria, Vietnam and the Philippines now have some of the highest rates of cryptocurrency use, and many local entrepreneurs and governments are trying to cash in by building their own domestic coins.
Not all of these attempts have been successful. But some are providing innovative solutions to adapt to specific needs and forge local competitors in the global economic marketplace. From Cambodia to El Salvador, here are five examples of where crypto could prove to be the currency of the future.
In 2018, Afro was created with the goal of becoming Africa's first cryptocurrency, with founders that include lawyers, tech experts and artists. While Afro has only signed a treaty with one African country, Côte d'Ivoire, it now boasts 10,000 transactions a year. And there are other African cryptos looking to gain ground across the continent, including NuruCoin and Akoin (yes the coin of Senegalese-American singer Akon).
- Fondation Afro is currently in talks with central banks in countries including Benin, Burundi, Cameroon and Tanzania. The absence of clear regulations, together with fears around the instability of crypto has slowed its development. And yet, unlike in the rest of the world, small commerce, rather than financial traders, has led much of cryptocurrency's growth in Africa. As David Nataf, the co-founder of Fondation Afro, tells Jeune Afrique, "We are laying the foundations. It's a bit like when the internet started out, it's brand new."
- Afro has set its sights on Nigeria, Rwanda and South Africa, where large populations might be interested in a currency that more easily facilitates remittances, an important component of many African economies. Cryptocurrencies can speed up transfers and lower transaction costs. Exchanges can be conducted with just a smartphone, which is significant given that they are the main (if not only way) many across the continent access the internet.
- Fears of pirarcy persist — note the case of the two South African brothers who disappeared with $3.6 billion from their crypto investment platform. But technology like Afro could potentially help the 80% of Africans who don't have bank accounts "leapfrog" in terms of development by going past traditional monetary systems.
With some of the world's most advanced digital currencies, many Asian countries are looking at how technology can fortify existing currencies and payment systems. These central bank digital currencies (CBDCs) provide a more formalized (and potentially stable) way for paperless transactions, but also raise fears around government surveillance.
- In October 2020, Cambodia launched a blockchain-based mobile payment system called Bakong, named after the Angkor Wat temple. The digital wallet facilitates payments with QR codes and even works for those without bank accounts. Serey Chea, managing director of the National Bank of Cambodia, tells Le Monde, "Our goal is for this platform to help strengthen financial inclusion and reduce social inequalities, as very few people have a bank account in the countryside [more than 75% of the population lives in rural areas]."
- When it comes to the world's second largest economy (and the place that invented paper money), China is hoping its e-yuan can be a powerful competitor to Bitcoin. China has already cracked down on cryptocurrency mining and the e-yuan is a departure from the governmentless cryptocurrencies that aren't bound to local laws or monitoring — essentially eliminating the anonymity of crypto purchases. In October 2020, a test run of 10-million e-yuan was given to 50,000 Shenzhen residents to spend in 3,300 partner shops. Since then, 200-million e-yuan have been distributed.
- Elsewhere, the Philippines has approved 17 cryptocurrency exchanges and, similar to many African countries, many are focusing on facilitating remittances. Satoshi Citadel Industries created its remittance unit Rebit to support the some 2.3 million Filipinos working abroad sending billions of dollars of money back home each year. Given that the Philippines and many other developing economies still have smaller demands for Bitcoin, the returns can end up being greater than the invested amounts.
Amidst economic turmoil caused by the pandemic and widespread inflation, many Latin American countries are exploring the potential of cryptocurrencies for more durable development. Politicians from Paraguay to Mexico have even taken part in the "laser eye" meme to express their support of this technology.
- In June 2021, El Salvador became the first country in the world to adopt Bitcoin as its legal tender. The goal is to help the struggling Central American country (which has experienced low GDP growth) through modernization and digitalization. President Nayib Bukele — the man behind the "Bitcoin law" — says he hopes El Salvador will become a hotspot for Bitcoin mining, supported by its vast geothermal resources. The government is even offering $30 in Bitcoin to any citizen who starts using its new crypto wallet, Chivo.
- El Salvador is not alone in the craze, with many of the region's largest economies leading the charge: In Brazil, the Mercado Bitcoin exchange traded $5 billion in the first quarter of 2021, and the Bitso (Mexico) and Ripio (Argentina) exchanges are also expanding. Brazil also announced early this year that it's launching a Central Bank Digital Currency.
- On a broader level, Latam Coin Protocol is hoping to improve the regional economic outlook with its Latam Coin. More than just a cryptocurrency, Latin Coin Protocol also includes a charity with the goal of social and productive development. Given that Latam Coin launched just this past June, it's too early to tell if it will prove to be a powerful crypto player.