Decentralized payments is a gateway to economic development | Opinion

As a researcher with a background in economics and a personal experience of working in the fintech industry, I find the shift towards web3 payments in developing countries to be an incredibly exciting development. The potential for these innovations to bridge the gap between developed and developing economies, as well as provide financial inclusion and resilience, is immense.

The landscape of financial transactions is undergoing a significant shift, fueled by the surge of innovative web3 payment solutions. This transformation is gaining traction globally, yet it’s most striking in developing countries where they are taking the lead. Their forward-thinking stance not only showcases their flexibility and readiness to embrace new trends but also establishes them as pioneers in financial technology.

In simpler terms, the emergence of web3 payments in developing countries signifies a significant transformation in how we handle financial transactions. This evolution goes beyond just improving decentralized money transfers and extends to making payment instruments more accessible. As these nations explore the unexplored territory of decentralized finance (DeFi), they have the potential to surpass traditional economies like the US, paving the way for a new, agile era in global economics.

The shift in money transfers

In the financial sector of developing countries, there have been long-standing issues with costly and inefficient economic systems. Conventional methods come with high transfer fees exceeding 10%, prolonged processing times for cross-border transactions reaching up to five business days, and restricted accessibility for the unbanked population who often lack permanent addresses, official identification documents, or consistent income. These challenges disproportionately impact marginalized communities. However, the advent of web3 technologies is transforming this situation, providing a viable solution for those previously isolated from the Traditional Finance (TradFi) system.

In developing countries, the integration of daily web3 payments can bring about substantial changes in both large-scale money transfer systems and everyday transactions. For instance, instead of going through intricate processes for sending or receiving money, people can easily buy groceries, pay rent, or even transfer funds across borders with ease. This shift not only simplifies the process but also decreases dependency on intermediaries, thus eliminating associated banking Know Your Customer (KYC) requirements and potential delays. Additionally, crypto payment acceptance has proven beneficial for businesses in these areas. A study revealed that businesses adopting cryptocurrency payments achieved an average Return on Investment (ROI) of 327% and attracted up to 40% more customers.

In various parts of the world, there are inspiring instances of effective web3 money transfer solutions emerging in developing countries, including Brazil. These innovative platforms encompass peer-to-peer crypto exchanges and decentralized finance (DeFi) protocols that enable seamless cross-border transactions. By providing unmatched transparency and security, these services aim to revive trust in formerly distrusted financial systems.

As a crypto investor, I’m excited about the potential shift towards web3 payments for the developing world. By breaking down financial barriers and increasing accessibility, these innovations are paving the way for economic empowerment and resilience. Developing countries that adopt web3 payments will not only close the gap with developed nations but also lead the charge in the global finance evolution.

Harnessing web3 payments for inclusive global prosperity

In developing countries, the swift embrace of web3 payments is driven by a unique blend of economic, regulatory, and grassroots influences. Each factor is pushing this trend forward at an accelerated pace. Simultaneously, the consequences of this adoption transcend national boundaries, influencing the global economic and financial landscape in significant ways.

In developing countries, the shift towards web3 payments is not just about making transactions more convenient, but rather a necessary response to pressing economic and social issues. In countries grappling with hyperinflation, such as Venezuela and Argentina, traditional currencies have lost their value, leaving cryptocurrencies as a reliable alternative for storing wealth and shielding against economic instability. Furthermore, in areas like Afghanistan where there are worries about financial autonomy and government interference, the adoption of web3 payments offers an essential means to safeguard assets, particularly for vulnerable groups like women, who may be disproportionately impacted by asset freezes.

As a crypto investor, I’ve noticed an exciting shift in the regulatory landscape of many developing countries towards embracing web3 technologies. South Africa’s Financial Sector Conduct Authority (FSCA) recently clarified their stance on cryptocurrencies, which has ignited formalization efforts throughout the region. This proactive approach by African Union members recognizes the immense potential benefits that crypto and web3 solutions can bring.

Non-experts in cryptocurrency are significantly contributing to the global spread of web3 payments through grassroots efforts and entrepreneurial ventures. These initiatives, which range from locally driven projects to groundbreaking startups, illustrate the strong demand for financial alternatives tailored to the distinct requirements and obstacles encountered by people and businesses in underdeveloped regions.

Grassroots cryptocurrency usage has experienced significant growth in lower-middle-income (LMI) countries, surpassing previous market levels by Q3 2020. With over 40% of the global population residing in LMI countries, this trend is paving the way for a new wave of web3 adoption worldwide. Prepare yourself as this movement gains momentum and garners increasing attention on a global scale.

Decentralized payments is a gateway to economic development | Opinion

Alexander Mamasidikov

Alexander Mamasidikov serves as both the founder and CEO of CrossFi. Recognized for his expertise in crypto and digital marketing, Alexander has established the IEO Agency and collaborated with more than 72 international fintech and blockchain initiatives. In his position at CrossFi, Alexander not only guides the development direction for the entire ecosystem but also spearheads the company’s marketing efforts in the industry. Furthermore, he functions as the chief visionary and team coordinator for CrossFi.

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2024-05-05 15:46