Crypto in the Developing World: A Blessing or A Curse?
During the global expansion of our world, it has come to the attention of many as to the increasingly disparaging difference in convenience and economic well-being between developing countries, especially when it comes to our finances. Part of that has to do with the shortened scales of job opportunities or governmental policies, either from their own governments or outside interference that place citizens at a disadvantage when it comes to their quality of life. However, part of that distinction is how cryptocurrency has, monetarily speaking, upended the ways some of the lives of those individuals operate within their monetary lifestyles. Whether this monetary workaround of exchanging digital currency without the supervision of the developing governments presiding over them is a good or bad thing, however, is still yet to be seen.
Cryptocurrency is, simplifying it to its broadest terms, a way of exchanging domestic currency, often through one’s bank account or otherwise, and converting that legal tender into a share of uninsured, decentralized currency that works under blockchain technology in order to make monetary transactions without the supervision of a centralized banking system. The biggest thing that may spring to mind is that, so long as two users operate within the same currency, there are no significant processing wait times or exchange fees for the currency to change from one nation to another, at least not governmentally speaking. This is to say that, using blockchain technology, I could take a select number of my share of bitcoin in my bitcoin wallet, and, if the conditions are met, semi-anonymously pay for a good or service to someone internationally at little to no additional service fee to process the transaction. This isn’t to say that any crypto transaction is untraceable, but each transaction is not under governmental regulations or otherwise, as cryptocurrency investments are treated as commercial commerce.
With every new technology, however, especially when considering our world’s developing countries, there's going to be an influx of confusion, turmoil, and likewise abuse of its system as to how it’ll interact with us in our daily lives into the foreseeable future. Given how blockchain technology is newer than even the idea of artificial intelligence, according to an article by the Journal of Contemporary Eastern Asia, the biggest hurdle that bitcoin and cryptocurrencies like it are going to face will be justifying a practical, not just theoretical, need to implement it that will outweigh the negatives and environmental cost of the technology. This need is especially important considering how much cryptocurrency can negatively impact not only the environment, but more impoverished developing societies of the world as well.
An example of the use of crypto can be found in Venezuela, a country known for various inflationary economic issues. However, using blockchain technology, the country was able to develop their own state-sponsored crypto called Petro, a coin that in theory is meant to represent a financial stand-in for monetary value that’s backed by the country's oil reserves. The coin was launched in 2018, as heard from a news broadcast from National Public Radio, Inc., but critics of the project had often attributed it as a risky venture, given how the oil the coin was meant to be backed by had not even been mined from the ground yet. Despite its uses as an alternative to the framework of central banks, crypto still can be at risk of questionable governmental interference, depending on its origin.
Another recent large-scale expansion of the use of crypto and, likewise, blockchain technology for impoverished nations can be found in a program under the handle of CardanoAfrica. The aim of the project is to create an introduction to financial identities for billions of people not connected globally with online identities. In 2021 the initial phase of the project originates in Ethiopia from an educational standpoint. The minister of education, H.E. Getakun Mekuria, introduced a project collaboration with Cardano developers where five million secondary school students, as well as teachers, will gain access to digital tablets powered under Cardano blockchain technologies that will allow for a better tracking of the students’ intelligence and growth curve that can be used as a more accurate measurement for universities than simple tests issued once or twice a year. This program simultaneously aims to improve education as well as establish a digital identity for Ethiopian citizens early on in their lives, which will then be able to more efficiently develop into a financial identity later down the road which will allow for more open-door decision making.
Ethical critics and worried investors, however, have brought up the idea that perhaps it is simply that Cardano needs Africa more than Africa needs Cardano, an arguably more capitalistic concern that Cardano needs a reliable consumer base to promote the longevity of their blockchain technology over a large period of time. It can be reasonable to question if Cardano will really be successful in lowering the poverty rate of Africa, or if Cardano simply feels the need to subject a ripe consumer base.
Tangentially speaking, at least concerning the talk of cryptocurrency being used as a method of digitally identifying a person, worries are bound to spring up when talking about the securities of such technologies on a massive scale. Blockchain technology is revolutionary, yes, but it's not completely efficient, and it's also had incidents crop up in its past of people taking advantage of its structure to siphon millions upon millions of dollars’ worth of the asset to their own wallets. On June 17, 2017, according to journalist Benjamin Dean, an amount somewhere between 45 million and 77 million dollars’ worth of Ethereum had been transferred from the Decentralized Autonomous Organization’s central account to an unknown source, and Ethereum’s value had the pleasure of dropping 50% thereafter. Situations like these are worries because the person doing so technically didn’t exploit any hacking or code in Ethereum’s system to do so. They simply operated within the rules of Ethereum’s autonomous rules of its own structure. The key problem being displayed here is that programmers of blockchain technology can program a system to be perfect, but they can’t exactly control if the program will be used outside of its original intentions unless a better governing body is established. Imagine if a catastrophe like this were to happen when widespread usage of crypto financial systems has already been established in impoverished countries, where 45 million dollars of hard-earned money from people already below the poverty line are washed away in a single day?
Another risk of the commercial hype resulting from Crypto, most notably concerning the ever-popular Bitcoin, is the impact that it’s had on our climate as a result of the sheer number of computers emanating heat in order to mine the coin. In the process of mining additional bitcoin, complex computer servers will work at near full capacity to provide the energy required for computers to solve advanced mathematical equations for the bitcoin-creating process. Each year, Ethereum mining consumes about 26.5 terawatt-hours of electricity, with Bitcoin taking around 91 terawatt-hours of electricity. To give you an idea of how much electricity 91 terawatt-hours is, that’s about 0.5% of all the electricity used on the planet each year. That may not sound like much, but according to an article by Business Insider, that’s enough electricity to power the entire state of Washington. Concerning climate change itself, the effects of the increased weather catastrophes that result from the global phenomenon are most heavily felt by those in developing nations, where a national average increase of even one degree can cause typhoons, hurricanes, and floods to destroy impoverished peoples homes with more frequency and higher intensity than ever before.
To reel things back in though, I can’t say for certain if crypto and blockchain in the developing world will be the next step forward for the great opportunity-equalization of our fellow man, but it's something we’ll need to consider the effects of in the case that crypto becomes more developed and more widespread than even its creators ever thought imaginable.
Works Cited
Senner, Richard, and Didier Sornette. “The Holy Grail of Crypto Currencies: Ready to Replace Fiat Money?” Journal of Economic Issues, vol. 53, no. 4, Routledge, 2019, pp. 966–1000, https://doi.org/10.1080/00213624.2019.1664235.
Mavilia, Roberto, and Roberta Pisani. “Blockchain and Catching-up in Developing Countries: The Case of Financial Inclusion in Africa.” African Journal of Science, Technology, Innovation & Development, vol. 12, no. 2, Apr. 2020, pp. 151–163. EBSCOhost, doi:10.1080/20421338.2019.1624009.
Han Woo Park, and Bulent Ozel. “The Rise of Blockchain Technology: Overcoming Theoretical Poverty and Its Implications for Developing Countries.” Journal of Contemporary Eastern Asia, vol. 18, no. 2, Winter 2019, pp. 1–8. EBSCOhost, doi:10.17477/jcea.2019.18.2.001.
"Venezuela Set To Launch The Petro, Its New Cryptocurrency." Morning Edition, 20 Feb. 2018. Gale In Context: Opposing Viewpoints, link.gale.com/apps/doc/A529610059/OVIC?u=san25259&sid=bookmark-OVIC&xid=d5468f1d. Accessed 22 Nov. 2021.
Dean, Benjamin. "Blockchain Networks Lack Adequate Governance to Protect Against Attacks." Gale Opposing Viewpoints Online Collection, Gale, 2021. Gale In Context: Opposing Viewpoints, link.gale.com/apps/doc/TIZQSG927820442/OVIC?u=san25259&sid=bookmark-OVIC&xid=46760a80. Accessed 22 Nov. 2021. Originally published as "Without smarter governance, blockchains will fall victim to more attacks," The Conversation, 14 July 2016.
Kim, Eugene. “Bitcoin Mining Consumes 0.5% of All Electricity Used Globally and 7 Times Google's Total Usage, New Report Says.” Business Insider, Business Insider, 6 Sept. 2021, https://www.businessinsider.com/bitcoin-mining-electricity-usage-more-than-google-2021-9.
co-founder, Statement by Cardano. “Cardano May Need Africa More than Africa Needs Cardano as the DEFI Battle Heats Up.” Business Insider, Coin DCX, 14 Oct. 2021, https://www.businessinsider.in/investment/news/cardano-may-need-africa-more-than-africa-needs-cardano-as-the-defi-battle-heats-up/articleshow/87013141.cms.
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