Widening the user base, raising awareness about digital currencies and simply getting the cryptocurrency industry noticed and legitimized around the world are challenges that have existed since the launch of Bitcoin seven years ago. While many people have good ideas regarding the path to take to achieve this, a trend is forming with increased use in areas where there is turmoil in the fiat monetary system itself. Are the problems in India and Zimbabwe a clue as to where the answer for digital currency adoption will be found?
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While Bitcoin has only been around for seven years, it has made some great strides into global recognition, having millions of regular users on every continent on the planet. However, while it has come so far, Bitcoin, and digital currencies in general, still have a long way to go if it is to achieve to achieve the global ubiquity that the industry hopes for. This does not only apply to Bitcoin though, while it remains by a long way the most used, the same journey is being taken by alternative cryptocurrencies at a lower level. The challenge facing the digital currency industry has always been to find ways of successfully encouraging higher levels of engagement with the wider audience.
However, recent years has seen a start of a trend that could be an unplanned answer, and one which is gathering pace. The growth in popularity of Bitcoin in regions where there is chaos or uncertainty in the fiat monetary system has been recognized before, during the capital controls imposed in Greece and the hyperinflation of Venezuela use of Bitcoin rose significantly. Now we are seeing similar again, as problems strike in India, China and Zimbabwe.
In India especially the entire monetary system was thrown into utter turmoil as overnight and without warning, the two biggest bank notes in circulation, the 500 and 1000 rupee notes (worth around $7.5 and $15 respectively) were simply announced as no longer legal tender, thus worthless. The only option to holders of the notes is to turn them in to banks within the next 50 days, to deposit the funds into accounts. The move, the government says, is to tackle corruption and the black economy, and the plan is to later introduce a range of new notes with tighter supply controls.
The two notes in question make up a significant majority of all the currency in circulation, and with a restriction on ATM withdrawals to the equivalent of $30 a day also included in the measures, there is essentially a move to funnel cash into the banks and out of circulation going on. With millions of India’s poorest largely unbanked and reliant on cash, the short-term problems could be significant.
There has been a corresponding rise in Bitcoin use, but until the full effects of this move become clear it is too early to draw conclusions. What is clear is that the unbanked of India represent a significant market that the industry could offer genuine help to, and this is perhaps an area that should be explored further.
China is also enduring issues, with the Yuan currently at a 7-year low against the Dollar, and again significant funds has been put into Bitcoin, with Chinese investors often using it as a hedge bet against their own currency. The Chinese government has made frequent attempts to restrict access to and use of Bitcoin, but have so far been unsuccessful.
Zimbabwe is another, the hyperinflation here has already seen Zimbabwe’s citizens move to foreign currencies, notably the US dollar, but that is not a long-term solution to their problems. However, economist Phillip Haslam has written in the African Mail and Guardian that Bitcoin itself offers the stable currency alternative Zimbabweans are looking for. Not only does it avoid the hyperinflation problems, it is an international payment platform as well, ideal for local traders who rely on foreign sales.
While Bitcoin, nor any digital currency, is really in a position to take over from a state issued currency completely, there is certainly a forming trend that in areas where the Fiat system breaks down, increasing numbers of people are prepared to trust in Bitcoin as the solution. In many areas, such as Zimbabwe and the poorest of India, there are people who need an alternative, and are waiting for someone to introduce them to it. That is job this industry was created for.