Nearly every single news piece that we see about cryptocurrencies has something to do with developed countries. It’s usually about them introducing a new regulation or some set of new guidelines that restricts the complete adoption of the technology.
The issue stems from the general interest of the crypto community, as a large majority of it comes exactly from those developed countries. This is due to most crypto early-birds hailing from countries like the USA, the UK, Japan, and various other developed economies.
In all this commotion it’s hard to find information coming out about developed countries making some kind of strides toward cryptocurrency adoption as the general community is not very interested.
And that’s the issue. Developed countries should be at the forefront of cryptocurrency adoption as it’s a perfect opportunity to tap into a young industry and make it their own while developed countries work to undermine it. Basically what I’m trying to say is that developed countries can profit from cryptocurrencies on a massive scale, here’s why.
Foreign Direct Investment
Almost every government of a developing country has mentioned at least once during their term that Foreign Direct Investments need to grow as much as possible. However, this statement is usually undermined from a clear lack of sustainable industries in the country. Things like natural resources and quality service companies are usually hard to come by in developing countries, which is why more than half of the FDIs go to the real estate market.
But there’s only so much the real estate market can grow in a small country, therefore governments need to focus on diversifying it as much as possible.
The best solution for this would be the introduction of state-accepted crypto payments. For example, imagine the country has started a new project where it focuses on re-vamping its agriculture sector. There would be very few investors willing or capable of committing to the risk of entering this market that can be affected by so many outside influences.
However, should the option of investing with cryptocurrencies be added, there will be a whole new idea of value provided by the investment.
Based on the fact that a large majority of crypto investors that managed to profit from the 2017 crypto craze are usually from Western countries or countries like China and Japan, they’d see their involvement in a developing country as “quite cheap” and especially beneficial as they can use their cryptocurrency portfolio.
Why would investors care?
Cryptocurrencies already have very limited liquidity, sure traders can simply cash them out and convert them into USD, but that’s not what was envisioned for cryptos in the very beginning. Crypto adoption entails that crypto holders can use their portfolios to make and receive crypto transaction in exchange for basic needs such as consumer goods, services, and even investments.
Having a country allow Foreign Direct Investment to be processed through cryptocurrencies is a major leap for people who hold 100+ Bitcoin and don’t really want to cash it out just yet.
Why would the country care?
Regardless of how we look at it, the country would indeed be getting foreign direct investment. Furthermore, having a legitimate country accepting payments in cryptocurrencies numbering in the millions could actually push the market forwards a little bit, therefore ensuring that the payments made will not be lost to extreme crypto market volatility.
The country will open a whole new unique selling point of their local industries, thus inviting foreign direct investment from people who may not have even thought about it in the past. It’s basically like an overblown marketing campaign for the country.
It could support the local inflation issues
One major issue that developing countries face on a regular basis is that they don’t have direct control over their own currency exchange rates relative to a strong currency, for example, the USD. To be more accurate about this statement I should say that it’s not about the country not having enough control over their currency, but other countries having more control.
Let’s take Georgia as an example, a small developing nation in the Caucasus that is neighboring Russia and is trading with it on a regular basis, in fact, it’s the biggest market for Georgian exports.
Recently that had some political controversy which caused Russia to impose some sanctions. The local currency plunged heavily relative to the dollar and the whole economy was in chaos. One of the sanctions imposed was about transactions to and from Georgia, therefore rendering most Georgian brands that work on exports useless.
Had the government had a large repository of cryptocurrencies, they could have exchanged this with the local brands in order to somehow allow them to make these transactions. When it comes to sanctions, or even worse, tariffs similar to what the US is doing with China, there is absolutely nobody willing to follow them besides the governments themselves, therefore the Russian firms would be more than happy to send and receive payments as long as economic partnerships could continue.
This is a very small case of what large cryptocurrency repositories or friendly crypto regulations in a country could do to the local economy. They can at least support it to have alternatives in times of crisis.
The introduction of a new job market
The next beneficial addition that can be more or less received from cryptocurrency adoption or friendly crypto regulations is a re-vamped job market. We’ve already seen that the more friendly a country is towards the blockchain, the more foreign companies are willing to start operations there as there is very little risk of things getting worse. There are already statistics on just how much the blockchain job market in 2019 has grown to new proportions.
This could lead to the introduction of high-paying jobs to a developing nation which could benefit from it immensely.
Furthermore, these large corporations subject themselves to local taxes, and the more profitable they are, the more they supply for the government. Basically, having a crypto-friendly environment entices foreign companies to move into the country for safety and cost-efficiency, and they’re more than ready to pay tax from their revenue for it.
In conclusion, what I can say is that the blockchain industry is like steroids for a developing economy. Adding them next to relatively low-paying and less efficient industries will boost the popularity even more, and judging by blockchain’s growing influence, give the developing nation a chance of achieving global standards in at least one industry to excel in.