Cryptocurrencies, built on blockchain technology, are gradually being adopted worldwide as a disruptive payment method. They enable transactions from any location with internet access, eliminating geographical constraints and reducing reliance on traditional government-issued currencies.
When discussing regions active in the cryptocurrency space, many tend to think of technologically advanced Western countries or rapidly growing Asian economies. However, it’s also important to recognize the growing interest in digital currencies across many developing nations in Africa, Asia, and South America.
Platforms like LocalBitcoins offer a glimpse into global cryptocurrency market trends. Data from CoinDance reveals that since 2018, Venezuela has consistently ranked just below Russia in Bitcoin trading volume on LocalBitcoins—often rivaling the United States. Trading volumes in Nigeria have also frequently matched those of China, the United Kingdom, and other European markets.
Furthermore, as highlighted in a previous LongHash analysis, Peru, Iran, and Tanzania recorded the highest growth rates in cryptocurrency transaction volumes in 2018. Although their overall market share remains modest, the significant growth rates underscore Bitcoin’s rising relevance in these regions, even without adjusting for population or geographic size.
Recognizing this potential, several major cryptocurrency projects have begun focusing on these areas. For instance, Dash’s African team has centered its efforts on Nigeria, using television campaigns, printed materials, and local events to attract more users and merchants. Stellar has partnered with payment providers and telecom companies in Nigeria, Ghana, Kenya, and India to integrate its network, enabling users to benefit from fast and affordable transactions based on Stellar’s blockchain infrastructure. Launched in 2019, the dollar-pegged stablecoin Reserve also plans to expand into Venezuela and Angola.
High Inflation Rates
According to IMF inflation data from 2019, nine countries experienced inflation rates exceeding 20%, while 19 nations had rates above 10%. In these high-inflation environments, holding local currency often leads to a rapid loss of purchasing power. Traditional safe-haven assets like foreign exchange or gold are often inaccessible due to high barriers to entry within conventional financial systems. As a result, many individuals in these countries are turning to cryptocurrencies like Bitcoin to preserve value.
Limited Traditional Financial Services
In many less-developed economies, banking and financial services are underdeveloped and inaccessible to large portions of the population. However, mobile phone penetration in these regions often outpaces financial inclusion. In Africa, for example, a study from the University of Nairobi’s Development Institute revealed that mobile phone penetration exceeds 80%, and mobile payment users outnumber those with bank accounts by three to one. Since mobile and internet access are essential for using cryptocurrencies, the widespread adoption of mobile payments creates a fertile environment for digital currency growth. The absence of robust traditional financial infrastructure, combined with mobile connectivity, allows people to benefit from the efficiency, security, and affordability of crypto-based transactions.
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Governmental Openness
In countries experiencing prolonged high inflation, government monetary and fiscal policies often lose effectiveness. This has led many nations—including Venezuela, Argentina, Nigeria, Zimbabwe, and Uganda—to adopt relatively open or unregulated stances toward cryptocurrencies while expressing support for blockchain technology.
It’s worth noting, however, that government attitudes can shift. As cryptocurrency adoption accelerates, more comprehensive regulations may emerge. In February 2019, for instance, Venezuela introduced the Constitutional Decree on the Integral Cryptoasset System, establishing a national regulatory body (SUNACRIP) to oversee mining, trading, and issuance of digital assets. Unlicensed mining operations now face fines and equipment confiscation. Such regulatory developments introduce uncertainty for blockchain projects operating in these jurisdictions.
In summary, data and real-world adoption patterns indicate that cryptocurrencies are often embraced in developing countries characterized by high inflation, mobile technology penetration, and relatively open government policies.
If we were to frame cryptocurrency demand in terms of a hierarchy of needs—similar to Maslow’s model—the motivations in developed and developing nations would differ. In countries with strong financial systems, national currencies are generally stable and reliable, backed by sophisticated central banking systems and robust economies. Citizens in these regions may appreciate cryptocurrencies for their technological elegance, ideological implications, or innovative governance models.
In contrast, users in developing countries often seek in cryptocurrency what money has represented throughout history: a stable store of value, a reliable medium of exchange, and protection against depreciating local currencies. Crypto also offers access to financial services that are otherwise difficult to obtain and helps mitigate the effects of dollar-centric economic policies. From Silicon Valley engineers to workers in Zimbabwe, diverse groups are finding value in cryptocurrency—each for their own reasons.
Frequently Asked Questions
What makes cryptocurrency appealing in developing countries?
High inflation, underdeveloped banking systems, and widespread mobile phone usage make cryptocurrencies an attractive alternative for saving and transferring value. Many people use them to avoid local currency instability and access financial services.
How do governments in these regions view cryptocurrency?
Many governments are open to or neutral about cryptocurrency due to economic challenges, though regulatory approaches vary. Some are beginning to introduce regulations to monitor and control crypto-related activities.
Can cryptocurrencies replace traditional banking in developing nations?
While not a full replacement, cryptocurrencies offer supplementary financial services—especially in areas with limited banking infrastructure. They provide options for secure, low-cost transactions and store of value.
What are the risks of using cryptocurrency in high-inflation economies?
Regulatory changes, market volatility, and technical barriers pose risks. Governments may impose new restrictions, and users need basic digital literacy to safely manage crypto assets.
Which cryptocurrencies are most commonly used?
Bitcoin is widely recognized, but stablecoins and other transfer-focused cryptocurrencies like Dash and Stellar are also popular due to their low fees and stability (in the case of stablecoins).
How does mobile technology support crypto adoption?
High mobile penetration allows people to bypass traditional banking barriers. Mobile apps and payment systems provide the foundation for buying, selling, and transferring digital currencies.