By Laurence Newman, Co-Founder of Coinmama

Bitcoin is a harbinger of financial freedom—freedom from poverty, inflation, and corrupt regimes. Unlike fiat currency, it plugs people directly into a global economy, enables peer-to-peer transactions, and protects wealth from unstable monetary policies and seizure by governments. As adoption continues to grow—we’re already at nearly 40 million bitcoin wallets—the cryptocurrency economy will expand, enabling true financial freedom for the global population.

Connecting with the Unbanked

In the poorest parts of the world, governments and aid organizations have struggled with how to connect people without government-issued identification or postal addresses into traditional banking systems. While mobile banking and cellular service have helped close the gap in recent years, 1.7 billion people remain unbanked. These billions experience a lack of freedom related specifically to poverty: Their exclusion from the global economy makes it nearly impossible to change their circumstances. Bitcoin will change that.

If their only recourse is through traditional banking solutions, even those offered through mobile services, the unbanked will likely remain so. Institutional requirements designed by and for the developed world, such as drivers licenses, leave rural populations disconnected from the global economy. Traditional banking comes with costs and access requirements that Bitcoin does not.

In the first place, cryptocurrency and DeFi platforms have proven much friendlier to digital identity solutions, which are critical to the fight against poverty. Digital IDs enable new methods for proving legal identity and, as it relates to banking, performing know your customer (KYC) requirements. Additionally, digital IDs facilitate remote access to crypto exchanges and can be processed through blockchain technology in more secure ways. Once plugged into global crypto-economies, people can exchange value peer-to-peer without government oversight or steep fees associated with wire transfers.

The use of cryptocurrency for remittances is a bellwether. In countries where remittances are critical to survival, crypto has taken off as a means of transfer and exchange. One third of Nigerians use or own cryptocurrency, with Vietnam and Philippines not far behind. As over one billion people without access to official proof of identity gain access to legally recognized IDs through innovative programs such as ID2020 (though there are many others, some nationally sponsored) and mobile use continues to grow, we will doubtless see deeper penetration of cryptocurrency throughout the developing world.

Helping People to Thrive Even In Spite of Inflation

In addition to poverty, many of the populations around the world gravitating toward cryptocurrency are faced with unpredictable monetary policy and related inflation. Consider the countries with the greatest percentage of people gravitating towards crypto currencies. Nigeria leads the pack, followed by countries like South Africa, Argentina, Turkey and others with inflation rates at 11% or higher. These populations are organically adopting bitcoin and other cryptocurrencies as their preferred medium of exchange. The shift may yet become more formal.

In the past, the US dollar played a critical role in protecting the exchange of wealth from hyperinflation associated with struggling fiat economies. Cambodia, Honduras, Somalia, Panama, and El Salvador, to name a few, all accept USD alongside their local currencies.

However, defense spending, recessions, and COVID-19 have led to a sharp increase in US public debt, undermining confidence in the US dollar and contributing to inflation. As of this year, El Salvador accepts bitcoin in addition to the dollar and the colón. Other countries may follow suit, replacing the USD as the lingua franca of the global economy.

The US dollar isn’t alone. Customers of Laiki Bank in Cyprus experienced financial loss to the tune of €3.4 billion during the 2013 Eurozone crisis. The event, known as the Cyprus Haircut, triggered a bitcoin gold-rush of sorts. However adoption occurs, the appeal of cryptocurrencies to people in emerging economies is clear: it gives people freedom to operate outside the restrictions placed on them by either wildly unpredictable inflation. With people protected from swings in the value of local currency, we will see average GDP per capita rise and stabilize as the number of bitcoin wallets continues to grow.

Regime Resistant

Bitcoin offers a third and critically important avenue to financial freedom. It allows people living in totalitarian regimes to hedge against the possibility of having their financial assets seized. Fiat currencies can be confiscated at any time and require banks underwritten by federal governments to validate their exchange. Not so with bitcoin.

When people store value in fiat currencies, governments can pressure dissidents by freezing their assets, cutting off their income and livelihood. Ultimately, this discourages people from voicing unpopular opinions that might enact civil and political change. Because bitcoin is both an asset and a monetary transaction log, people can free themselves from the threat of oppression by using it as a store of value and means of payment. This will ultimately allow people to act with greater confidence against oppression but also protect their wealth when they do so.

Freedom Can’t Be Bought… But it Can Be Disseminated

The global stage is set for a crypto-revolution that will result in reduced poverty and financial censorship. Global adoption of Bitcoin is up, with 20% of all 38 million wallets added in the last year. Global acceptance is up across populations, particularly amongst women who are typically key driving economic activity in emerging economies. While early bitcoin adopters made news with stories about their net worth increasing exponentially overnight, bitcoin will make history by becoming a true global currency capable of ushering in an era of financial freedom our world has never before experienced.

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