Bitcoin has emerged as humanitarian aid for foreign workers
Those facing economic challenges or restrictive banking laws in their home countries use these characteristics to store value, transmit value, use as currency. These characteristics are by definition “money”. Here are some key points:
- Bitcoin for Remittances: Before Bitcoin, foreign workers would typically use international transfer companies like Western Union or MoneyGram, which often charge high fees. Bitcoin offers a cheaper alternative, with some exchanges charging as low as $1 per $1,000 sent. This makes it an attractive option for low-wage migrants looking to save on commission fees.
- Bypassing Traditional Banking Systems: Many foreign workers, especially refugees, lack access to traditional banking services due to a lack of proper documentation or closed banks. Bitcoin allows these individuals to bypass traditional financial systems and receive aid directly, providing a way to send and receive money without the need for a bank account.
- Case Study: Nigeria: Bitcoin attracted many Nigerians due to the devaluation of the naira, hyperinflation, and restrictive banking laws. Traditional banks imposed spending caps and charged high fees on international transactions, limiting Nigerians’ ability to access higher wages or send money abroad. Bitcoin offered an alternative pathway, enabling Nigerians to participate in the global economy more freely.
- Humanitarian Aid: Bitcoin can facilitate humanitarian aid by reducing corruption and dependency on government-controlled systems. For example, during the Myanmar revolution, Bitcoin allowed for direct donations to activists without the need for middlemen, reducing the risk of corruption.
- Blockchain for Transparency: Blockchain technology, which underpins Bitcoin, can provide transparency and traceability in transactions, making it easier to track how aid is distributed and used. This can help ensure that funds reach those in need and are used effectively.
- Scalability Challenges: While Bitcoin shows promise, it still faces challenges related to scalability. As adoption grows, the demand for quick and efficient transaction processing increases, necessitating advancements in blockchain technology to fully realize its potential as a viable alternative to fiat currencies.
These points highlight how Bitcoin can serve as a humanitarian alternative for foreign workers, offering a more accessible and cost-effective way to manage finances and receive aid.
Foreign Sovereign Monetary Policies
Several countries are considering or have already begun using Bitcoin as a reserve asset. El Salvador was the first to adopt Bitcoin as legal tender and has been purchasing it as a treasury reserve asset since 2021. Other countries like Brazil, Poland, Russia, and Japan have also expressed interest or initiated discussions about creating a national Bitcoin reserve. For example, Brazil has proposed legislation to incorporate Bitcoin into the Treasury to reduce exposure to exchange rate fluctuations and geopolitical risks.
Bitcoin for Third World
Bitcoin has shown potential in empowering individuals in third-world countries by providing access to financial services and reducing the impact of inflation on their economies. Here are some key ways Bitcoin can benefit the neediest populations:
- Access to Financial Services: Bitcoin enables individuals who are unbanked or underbanked to participate in the global economy. With just an internet connection and a crypto wallet, people can engage in transactions and store value without needing traditional banking infrastructure, which is often lacking in developing regions.
- Lower Remittance Costs: Bitcoin and other cryptocurrencies facilitate cheaper and faster international money transfers compared to traditional banking systems. This is particularly beneficial for families in developing countries who rely on remittances from abroad, as it reduces transaction fees and speeds up the transfer process.
- Counteracting Inflation: In countries with high inflation rates, Bitcoin can serve as an alternative store of value. Its decentralized nature means it is not subject to the same market fluctuations as fiat currencies, offering a hedge against inflation and currency devaluation.
- Decentralized Finance (DeFi): Through DeFi platforms, Bitcoin and other cryptocurrencies can provide financial services such as lending, borrowing, and trading to those who might not have access to traditional financial products. This can help individuals manage their finances more effectively and potentially increase their economic opportunities.
- Empowerment Through Sovereignty: Bitcoin empowers individuals by giving them control over their financial transactions and assets without the need for intermediaries. This can be particularly impactful in regions where trust in government institutions is low or where financial systems are unstable.