There is a popular belief in the cryptocurrency community that countries suffering from severe inflation and fiat currency devaluation have huge demand for Bitcoin. Many optimistically assume Bitcoin and other digital currencies will not only save economies like Venezuela’s but revolutionize developing countries in Africa. However, the facts suggest Bitcoin is far less popular in these nations than anticipated.
Although some Venezuelans use Bitcoin, per capita transaction volume pales compared to developed countries. While those in high-inflation countries can use digital currencies for remittances and investment, little evidence shows most consumers or businesses use them regularly for transactions. On-the-ground reports from Venezuela reveal Bitcoin use is much lower than often portrayed.
So why do emerging markets not adopt digital currencies at scale despite Bitcoin outperforming some fiat currencies? The gap between expectations and reality is vast. Several issues must be addressed to increase Bitcoin’s popularity in high-inflation and developing economies.
Infrastructure Challenges: Networks, Power, and Technology
Unstable infrastructure in many developing countries cannot reliably support online payments or Bitcoin mining. Poor user experiences with online payments diminish trust in digital systems.
Power outages and network failures are common in parts of the developing world where even basic communication needs go unmet. For example, most Nigerians only have 2G or 3G mobile coverage. Network downtime frequently interrupts mobile payments, with 57% of Bangladeshi and 50% of Indonesian mobile payment agents reporting failed transactions due to network issues.
While electricity access is widespread in some developing countries, quality is poor. Only 18% of Nigerian power lines provide consistent electricity. Venezuela experienced nationwide blackouts in March and July 2019, with smaller, intermittent outages ongoing.
Unreliable infrastructure means mobile network transactions often fail, diminishing trust in digital payments. Frequent interruptions also enable online fraud.
Some governments ban or intentionally disrupt the Internet, interfering with Bitcoin. In 2019, 122 Internet shutdowns occurred in 21 countries, costing the global economy $8 billion. Uganda “accidentally” cut Internet access around 2016 elections, depriving 35% of citizens’ mobile payment access.
Older mobile operating systems and devices in developing countries are less compatible with Bitcoin. A 2019 pilot by Coinbase and Zcash in Venezuela found “75% of Venezuelan users still use Android 4…[and] intermittent power outages mean cryptocurrencies require Internet and electricity to run.”
Security risks reduce trust in digital payments and Bitcoin where crime rates are high. Estimates indicate 110,000 phones are stolen monthly in Venezuela, where people carry dummy phones or vary routines to avoid theft. While Bitcoin allows remote remittances, lacking safeguards on platforms like LocalBitcoins expose users to scammers.
Increasing Bitcoin Popularity: Rethinking Solutions for Emerging Markets
Bitcoin primarily attracts those skeptical of traditional institutions. Gaining broad trust in complex systems like blockchain is challenging. However, people tend to trust face-to-face transactions between acquaintances over anonymous Internet systems. Several solutions could boost Bitcoin adoption in emerging markets:
Optimize digital wallets for older devices with limited storage. If downloading a wallet means deleting other apps, people likely won’t use it consistently.
Enable privacy when accounts are shared across users on one phone. This ensures individuals don’t expose each other’s financial data.
Allow offline transactions to protect against network failures. Enabling payments when infrastructure is disrupted builds resilience and trust.
Implement USSD to support basic feature phones. Despite poor mobile infrastructure, Unstructured Supplementary Service Data technology could enable mobile payments in parts of Africa and Asia with primarily feature phones.
Design for less technical and older users. In Venezuela, over 4.5 million young, technologically adept people have fled. The remaining population is older with less technical expertise. Some high-inflation African countries have the opposite demographics with younger populations. Solutions must accommodate both.
While difficult, establishing Bitcoin in emerging markets could have huge impact where fiat currencies are most troubled. Technical solutions are straightforward but require rethinking priorities and goals. Optimizing for older devices, enabling offline transactions, implementing USSD when possible, and ensuring both privacy and usability across demographics could finally deliver Bitcoin’s promise to the world’s unbanked populations.
Conclusion
In nations like Iran, Venezuela, Argentina, and Zimbabwe, Bitcoin price spikes and high trade volumes create an illusion of popularity. While failing fiat currencies create conditions for Bitcoin to spread, outdated infrastructure and immature trading environments present major roadblocks.
Progress requires those building the future of finance to understand life without stable electricity or Internet as a sobering reality, not temporary setback. Only by developing inclusive solutions and alterative technologies for those left behind technologically will Bitcoin finally prosper where most desperately needed. With empathy and persistence, cryptocurrency leaders could craft a more just and equitable financial system serving all of humanity.
The frustrations of infrastructure networks are easy to ignore from a position of privilege but catastrophic for the marginalized. Until digital currency solutions work as well on a basic phone in a jungle as an iPhone in an air-conditioned office, they remain consigned to tools of speculation, not liberation or pragmatic use. Thoughtful solutions addressing infrastructural, economic and usability challenges in the world’s most troubled corners could finally unfold cryptocurrency’s promise of decentralized finance for all.
Transitioning populations from failing national currencies to cryptocurrencies is a monumental task demanding technical expertise, cultural sensitivity and on-the-ground partnership with local leaders. Simplistic assumptions that countries like Venezuela will swiftly adopt Bitcoin en masse due to escalating inflation often underestimate the daunting realities of life without infrastructure or institutional trust. With sustained collaborative efforts optimizing technology and education for the marginalized, cryptocurrency could eventually provide economic freedom to billions for whom it remains an empty promise. But Bitcoin will not magically save any nation without the patient work of adapting solutions to complex human needs.
The challenges of infrastructure, security, usability and trust that limit Bitcoin in struggling economies can seem intractable but solvable with determination and resourcefulness. Every underserved community has unique strengths and challenges, so solutions must address specific cultural and environmental conditions. By facing difficulties with compassion instead of presumption, the crypto community could craft decentralized financial systems serving all humanity.
With innovation and empathy, cryptocurrency leaders could design robust networks and technologies inherently resilient against infrastructural instability. By listening to and learning from unbanked populations in emerging markets instead of dictating what they need, blockchains yet to fulfill their promise of true financial accessibility and empowerment globally. When cryptocurrency at last serves the marginalized, it begins decentralizing the power and wealth of nations where most needed. But that mission remains unfinished so long as underserved communities remain unable to access supposedly open financial networks. With resolve and a shared dream of economic justice, the gulf between privilege and poverty could narrow into history. Crypto may hold solutions, if only leaders sustain the will to understand life on the other side.