Bitcoin and Global Money Flows: The Hidden Routes of Growing World Economies

Despite the interconnected nature of today’s transnational economies, each locality has unique infrastructures, many of which don’t play well with each other. From banking partners and local regulations to the payment methods and currencies used in each region, every move between different financial networks is typically slow, costly, and frustrating—if it’s possible at all. These inefficiencies in global trade not only affect speed and price, they also exclude large parts of the world from participation. But there is a way to bring the world together: build business on a fast, cheap settlement layer, ideally with a neutral, globally accepted currency.

Fortunately, this technology already exists in the form of cryptocurrencies and decentralized ledgers. With no barriers to entry or trade, cryptocurrencies are already interoperable within and across national economies. In the example of BitcoinWe also have a globally recognized store of value and can benefit from low-cost, high-speed transactions for anyone, anywhere, at any time.

Let’s explore what this borderless global economy makes possible.

Better infrastructure allows for pond expansion

No business can grow beyond the size of its total addressable market, any more than a fish can grow beyond the size of its pond. This is especially true in developing economies, where local businesses are constrained by serving their immediate community. Historically, this has been due to local infrastructure constraints and a lack of gateways to global trade – but cryptocurrencies bypass these issues entirely.

For comparison, consider a simple element of international payments: currencies. In a system based on separate national currencies, managed by traditional local financial institutions, interoperability requires that one or both parties to an agreement agree on a settlement currency, bear exchange costs, and adapt their activities to the availability, requirements, and risks presented by each intermediary at each stage of the transaction.

The neutral settlement layer that Bitcoin and other cryptocurrencies provide makes using traditional rails uneconomical. Because Bitcoin requires no exchange, moves quickly and cheaply, omits the need for local financial infrastructure, and is not beholden to banks or nation states, it stands out as a superior medium of exchange. While already compelling, the true value of cryptocurrencies emerges from their network effects: operating on a single global standard maximizes global economic access and market efficiency, regardless of jurisdiction or fiat regime.

Businesses now have a whole new opportunity to increase the size of their global addressable market by adopting cryptocurrencies as a payment method – and we’re seeing many already doing so. With this standard, an e-commerce site in India can instantly and easily do business with a buyer in the US, Colombia – or even in the middle of the Atlantic Ocean, provided they have an internet signal. Unrestricted by local infrastructure and powered by a globally accepted currency that travels easily, businesses are finally free to grow and thrive – and where businesses have been slow to adapt, customers are forcing the problem from the ground up.

What is happening among the new entrants into the global economy?

As cryptocurrencies break down barriers to new economic activities, some of the most creative and in-demand financial use cases are coming from those who have been excluded from global commerce the longest. In Asia, Africa, and Latin America, cryptocurrencies are becoming increasingly popular methods for sending money to friends and family, protecting wealth from local currency fluctuations and inflation, and managing international payments. More interestingly, where nations or businesses have been slow to adopt cryptocurrencies, individual users are pushing the issue in creative ways.

When centralized exchanges fail to meet the needs of local economies and payment methods, users turn to peer-to-peer (or “P2P”) marketplaces and a number of decentralized exchanges.

Some users still buy cryptocurrencies in person with cash, despite the dangers — ignoring the benefits of escrow and dispute resolution support provided by top P2P marketplaces.

In Vietnam, consumers are changing the way they consume foreign products through P2P commerce and cryptocurrencies. By purchasing discounted Western gift cards with bitcoins, then buying beauty products at Sephora or pet products at Petco for 20-30% less, or buying gift cards from luxury stores for on-site purchase when traveling abroad, Vietnamese consumers are using a neutral settlement layer to reshape their local consumption habits.

At the same time, specialized service economies like India, Poland, and the Philippines are using the neutral settlement layer to market their solutions globally at competitive rates. By selling engineering or customer support services for Bitcoin or stablecoins like USDT, skilled local talent enters the global workforce and, in doing so, enriches local economies through increased consumption of well-paid remote workers, paid by increasingly competitive and forward-thinking global companies.

The future is already here, it’s just not evenly distributed yet.

As cryptocurrencies continue to reshape global finance, countries like Vietnam and Ghana have the opportunity to leapfrog traditional financial rails and connect the skills of their workforce, the goods and services of their companies, and the hopes of their people to the growth of the global economy.

As the West struggles with the euphoria of Bitcoin ETF In the United States and the European Union, cryptocurrencies are being scapegoated for the euro’s underperformance. Those who stand to gain the most from the promise of Bitcoin’s neutral settlement layer aren’t making headlines. They’re people like Hillary in Kenya or Don in El Salvador, each increasing their financial security and community impact in ways they could never have dreamed of before Bitcoin. If we do our jobs right, not only will the global neutral settlement layer that Bitcoin provides grow, but more importantly, stories like these will become the norm.

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(Disclaimer: The opinions expressed in this column are those of the author. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

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