Cryptocurrencies are digital currencies that are exchanged and recorded on blockchains. It does not require central intermediaries (i.e. banks) for transactions.Blockchain is a decentralized technology spread across many computers that record transactions. Cryptocurrencies have gone global in attempts to replace the current financial system. People look at cryptocurrencies from various perspectives. Developing countries are some of the largest users of cryptocurrencies. Cryptocurrencies are gaining so much traction in developing countries that some announced them as legal tender and are used in innovative ways.
10 Innovative Ways Cryptocurrencies are Used in Developing Countries
Developing countries are using cryptocurrencies in E-commerce where retailers accept customer payments in cryptocurrencies. Cryptocurrencies access to a larger customer base, secure, fast and cost-effective payment processing, and end-to-end traceability of payment transactions.
- Lending and borrowing
Cryptocurrency financing allows crypto investors to borrow loans in cash or cryptocurrencies by offering cryptocurrencies owned by them as collateral. Crypto lending enables the lender to remain the owner of the crypto asset. Crypto lending allows lenders to earn passive income from their crypto investment.
- Digital Art
Digital art uses the technology of NFTs in such a way that each work of art or artistic creation is linked to non-fungible tokens (NFTs).NFT is a digital asset or token that is unique and not interchangeable with another digital token.NFT can be used to record ownership of virtually any digital item.NFTs present a great investment opportunity and have numerous use cases. NFTs are cost-effective and time-friendly. NFTs can be used as a record of ownership on blockchain where artists can get the moment of their items and how they were minted, sold and resold.
The crypto gaming industry has seen a boom in developing countries, Play-to-Earn (P2E) games are a type of game that allows players to earn winnings. The concept is that players should be rewarded for their skills and time, by entwining gaming and cryptocurrency, the notion of monetizing the gaming experience has been made possible. Play-to-Earn driven gaming platform and offers players a new opportunity to earn money while gaming. Play-to-earn games are transforming the traditional gaming model and redefining what it means to play.
- Cross-border transactions
Cryptocurrencies play a vital role in ongoing digital transformation. It can strengthen the cross-border payment system by offering a decentralized way of making payments and enhancing transparency. Cross-border payments face many challenges that can be easily achieved with blockchain technology, it will reduce the risk of fraud and will be a more transparent way of making payments. Crypto donations with the help of blockchain technology have supported Ukraine. Since the beginning Ukraine has attained $225 million in donations in cryptocurrencies. Most donations are received in USDT $83 million and then ether $79 million, Bitcoin donations contribute $41 million and the rest of the amount was made by other cryptocurrencies.
- Private transactions
Cryptocurrencies in developing countries are used in private transactions which protects the user identities. When users transact using private currency their personal information is not attached to the transaction and their identity is less likely to be stolen or compromised. For example, Monero is a privacy-focused coin where every user is anonymous by default. The sender, receiver and the amount of every single transaction are hidden. Monero uses Stealth Addresses, Ring Signatures and RingCT technologies to make the transactions confidential and untraceable. Its main goal is to provide privacy and security to users.
Developing countries are embracing cryptocurrencies in the travel industry which increased security and privacy. Traditional payment methods like credit cards and bank transfers are vulnerable to fraud and hacking. Crypto transactions on the other hand are secured by blockchain technology which makes them virtually impossible to hack or temper with. This gives travellers peace of mind when booking travel-related services online. Cryptocurrency is helping to make travel more affordable. With the value of cryptocurrencies fluctuating, travellers can often find better deals on travel-related services when they pay with digital currencies. Some travel-related businesses are now accepting cryptocurrency as a form of payment, which allows travellers to pay for their trips without having to convert their digital currency into fiat currency.
- On-chain governance
Cryptocurrencies offer a more refined way to implement new policies on a network. Blockchain has DAOs (Decentralized Autonomous Organisations), allowing you to stake crypto coins in exchange for voting rights. On a blockchain, the community can distribute governing power among its stakeholders via these tokens. This is called On-Chain governance. By owning governance tokens, you get the authority to alter a network’s protocol.
- Asset tokenization
Asset tokenization can turn assets either real or virtual into a digital token that enables a digital transfer of ownership and storage without the need of a third party or central authority. Tokenization is changing the ownership dynamics, by converting assets into digital tokens on a blockchain where ownership becomes divisible and shielded by the blockchain technology. Asset tokenization allows fractional ownership, making high-value assets more accessible. Asset tokenization allows for the fractional ownership of the properties, tokenization can be used for valuable art pieces and collectibles allowing fractional ownership.
- Attracting Foreign Investments
Cryptocurrencies can present a promising investment opportunity for foreign investors in developing countries. They offer a means to bypass traditional banking intermediaries, which can be expensive and time-consuming. By enabling seamless investments cryptocurrencies have the potential to attract more investments and help boost economic growth in developing nations.
Cryptocurrencies have the potential to revolutionize the economies of developing countries by providing access to new sources of capital and enabling more efficient and secure transactions. Developing countries are using cryptocurrencies in various innovative ways that can enhance economic growth and improve the standard of living for their citizens.
Frequently Asked Questions (FAQs)
How are cryptocurrencies created?
The process of creating cryptocurrencies is called mining. Transactions are validated and mining performs the validation process and creates new cryptocurrency.
Are all cryptocurrencies created through mining?
Not all cryptocurrencies come from mining instead developers create new currency through hard fork.
How do crypto transactions proceed?
Transaction in Crypto proceeds over the blockchain, which is a decentralized form of transaction that does not include third party.
Which country became the first country to make Bitcoin legal tender?
El Salvador became the first country to make Bitcoin legal tender, which allows Bitcoin to be used as a means of payment in the country.