Most of the innovation and blockchain development we know and love was done in developed nations. Countries like South Korea, Japan, China, the United States, and the United Kingdom are at the forefront of the nascent industry. However, we cannot ignore the participation of developing nations in developing new technologies, as well as the impact that blockchain has had on these countries.
In this article, we will discuss several factors that have been revolutionized or are being implemented in developing nations all over the world as we speak, giving them an edge over their “competitor” countries.
Not long ago, countries who industrialized or embraced the ever-growing tech industry managed to generate significant revenue for their coffers and brand themselves global economic powerhouses.
With the UK operating factories all over the world and the US possessing valuable tech firms like Apple, no developing nation truly had a chance to squeeze into this “VIP Club” of economically strong nations, whether due to political turmoil, lack of resources, or most importantly, lack of independence.
This has culminated in developing nations relying on their developed counterparts for importing daily necessities as well as other consumer goods, thus raising living costs while falling behind on innovation.
Before blockchain, no technology has had the potential to become a focal point in these developing nations and act as the catalyst for their future economic strides. These days, we can very easily say that every developing nation has the opportunity to tackle the blockchain industry with all its might and become a globally recognized player in this sector. So much so that the existing tech outsourcing culture, as well as growing institutional interest in BTC in the developed world, have heavily centralized in these countries.
Considering that most of the world will be switching to a blockchain-based system, it’s completely possible for developing nations to use blockchain as their “oil” while remaining stable in the process.
Another important argument about developing nations engaging in blockchain technology is the accessibility to a safe haven. Many developing nations struggle with currency exchange rates. Almost every single one of them has serious inflation, which not only prevents individuals from accessing the global markets but also makes it harder to conduct international business.
An importer must keep prices down in order to be accessible to the majority of the population. This creates a question of whether importing something is even worth it. This impacts the retirement savings of people in developing countries, a responsibility that often falls to the government.
Overall, it’s a never-ending cycle that developing countries fail to overcome.
The perfect example of this is Venezuela, where the local currency has been rendered worthless by hyperinflation. As a result, Venezuelans use Dash as a means of exchange, knowing that it’s much more reliable than the Bolivar.
Furthermore, it’s the only currency they can receive foreign transactions with, thus allowing them to survive in an already goods-deficit country.
If we go back in time, we can pretty much assign blockchain solutions to many Asian countries as well. Take Thailand for example. When the Baht was unpegged from the US dollar due to dwindling resources and an economic boom in the United States, the government failed to maintain a desirable exchange rate, sending the value of the Baht plummeting to the ocean floor.
People’s savings were reduced nearly four-fold, precipitating a chain reaction of capital flight that led to the 1997 Asian financial crisis. The only way out was the travel industry, which still keeps the country on its feet. Having a decentralized “reliable” currency to switch to could have supported local families from losing most of their wealth.Having access to such a currency now makes for a perfect alternative, even if the government fails in its fiscal or monetary policies.
However, there are other examples where a safe haven currency would not be as beneficial as many believe it to be.
Take Laos for example. The country decided to take a completely different approach to their crypto regulation, banning crypto transactions and exchanges completely.
According to the Central Bank’s announcement, the popularization of cryptocurrencies would put the local fiat currency in danger, which is the correct assessment.
Extensive adoption of cryptocurrencies during a financial crisis could potentially worsen the situation if the government was already passing relative fiscal and monetary policies.
In Laos’ case that is exactly the issue. Being an ASEAN country next to one of the largest trade routes, having its currency devaluate extensively would tie it to the Chinese Yuan, even if cryptocurrencies started dominating the country.
Cutting the event at the roots seems to be the way to go for now, until the Lao kip gets back on its feet.
Vietnam is also at a crossroads. Given that a trade deal was made between the United States and China, it’s very likely that the Vietnamese dong will rise in value due to more trade participation.
Because of this, the government will want to make an exception in cryptocurrency regulations. Unlike Laos, the Vietnamese Ministry of Finance has three options: a grey zone where trading is fully permitted, complete prohibition to allow the Dong to circulate more freely, or, the best approach, prohibiting cryptos from entering a market above a certain threshold.
This way, major international businesses would still benefit the local currency, while the inner workings of the country could move to a more digitalized and “blockchainized” system.
Another issue that plagues developing nations, an issue which is often the source of stagnant development, is corruption. Local authorities tend to take most of the FDI and pocket it for personal gain. This has been seen almost everywhere: post-Soviet nations, African nations, the ASEAN region, and South America.
Having most of the FDI come through a blockchain-based pipeline removes any and all kinds of attempts at misappropriating the funds. Why? Because all of it would be recorded directly on smart contracts that can be publicly audited by the international community: NGOs, foreign investors, lawyers, and regular citizens. There would be nowhere to hide.
Thus, corrupt politicians would be ousted much faster and a more “trustworthy” system installed for future investments.
Overall, blockchain is a tool for developing nations to guarantee their economic development for both short and long terms. It’s an opportunity to solve all of the issues plaguing their countries at the moment, as well as to take a leading role in a globally recognized industry.
About Asia Blockchain Review
Asia Blockchain Review is the largest initiative for media and community building in Asia for blockchain technology. It aims to connect all blockchain enthusiasts on a regional scale and facilitate the technological foundation of blockchain through a range of group discussions, technical workshops, conferences, and consulting programs.
Our goal is to cultivate and encourage a collaborative community for our members to gather, share their experiences and endeavors in the blockchain space, and brainstorm the potential uses of blockchain technology.
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Giorgi is a software developer from Georgia, but spends most of his time blogging about blockchain technology. He focuses more on the legal and regulatory aspects of the technology. He is currently in the middle of drafting an appeal to the Georgian government to dedicate funds to the development of the blockchain.
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