Cryptocurrency's Impact on Developing Countries

Cryptocurrencies are digital or virtual currency that are protected by encryption in digital currency trading. Cryptocurrencies are decentralized in nature, and understanding the general advantages and disadvantages presented by cryptocurrencies to their users in comparison to fiat currencies such as the naira and dollars issued by central banks is necessary to fully comprehend the impact of cryptocurrencies on developing countries.

It's also worth noting that all cryptocurrencies run on the blockchain, with bitcoin being the first ever crypto currency to exist and the largest cryptocurrency in terms of market capitalization as well as recognition and acceptability. Cryptocurrencies have long been regarded as a tool to aid in the development of developing countries. This article focuses on the impact of cryptocurrencies on developing countries, therefore it considers not only individual impacts but also the influence of cryptocurrencies on enterprises, with the goal of demonstrating the potential of cryptocurrencies.

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The advantages and disadvantages of cryptocurrency in comparison to fiat currency

• As some would want to point out, cryptocurrencies have their dark side. However, its advantages and impact on emerging countries cannot be overstated. As a result, we'll compare the advantages and disadvantages of crypto currencies to fiat currencies, which are based on a centralised financial system.
• The first benefit we'll consider is its openness; bitcoin transaction records are freely available on the blockchain and accessible to anybody, ensuring that transactions cannot be altered by people or groups. As a result, the risk of fraud and corruption is considerably reduced when using cryptocurrency.
• Because cryptocurrencies are not regulated by the government, they avoid superfluous fees such as the electronic transfer service charge, lowering transaction costs significantly when compared to fiat currencies. Because they don't require a physical structure, nor do they necessitate the services of personnel and the wages that come with them, the costs associated with them naturally evolve into modest transaction fees.
• Another advantage of cryptocurrencies in global finance is their ability to serve as a quick and secure mode of payment, making cross-border transfers more prompt and convenient. Because of the reduced transaction time and costs, cross-border payments are the most important use case for cryptocurrencies. Because cryptocurrencies are decentralised and not regulated by governments, and because they have no geographical restrictions, they can permit global transactions at very low costs without the use of a middleman.
• In addition, cryptocurrencies promote financial inclusion, which has a significant influence on underdeveloped countries that lack basic banking services. When compared to banks and other financial organisations, cryptocurrency is considerably more accessible and comes with a simple to use platform with few requirements. Furthermore, there are numerous tools and services that make cryptocurrency use more accessible to the unbanked.
• However, because of the ease of cross-border payments and the anonymity that cryptocurrencies provide, their users can aid in money laundering and terrorist activities. In contrast to fiat currency, where money must go through banks and individual identities must be vetted through KYC, cryptocurrency's independent border payment makes it easy to move money across border, even money obtained through illegal activities and money intended to fund terrorism, without interference from financial institutions or government regulation.

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