Bitcoin is gaining in popularity as it rises in price. But it’s most popular among a certain group of people—younger, upper middle-class, technology minded folks—at least in the U.S. But what about everyone else?
Today we’ll take a look at who actually buys Bitcoin both in the U.S. and throughout the world to discover if it’s a currency best used by the ultra-wealthy, or if folks, more like the Money Under 30 crowd can make a dent in the Bitcoin world.
It’s all about access to technology
Bitcoin is a virtual currency. If you don’t have access to decent technology, Bitcoin is virtually useless (pun intended). That said, many people have access to some kind of technology—even if it’s just a smart phone.
Apps like Coinbase allow you to buy and sell digital currencies like Bitcoin. They offer free digital wallets to store your currency in. With this app, all you need is a phone and a credit or debit card to start buying.
Of course, this is just speaking in terms of the U.S. Bitcoin is a global currency, but does it make sense everywhere?
In other countries, lower class populations flock to mining pools
In some countries, mining pools have become increasingly popular and help individuals earn more money than traditional jobs. Venezuela is a good example.
Venezuela has a rapidly deteriorating economy, with ridiculously high inflation rates. Families are rationing basic goods like toothpaste, people are slaughtering zoo animals for food, and children are starving to death. The one utility the country still has in abundance is electricity, and that’s only because the Socialist government heavily subsidizes it. And Venezuelans are taking advantage.
This makes it easy to lend computing power to Bitcoin mining pools, and workers are then paid in Bitcoin. The money these miners earn in the meantime is enough to comfortably take care of their families.
Another example is Zimbabwe. There are many reasons Bitcoin is so popular in Zimbabwe, but the main one is due to a lack of hard cash. Zimbabwe relies on imported currencies—including U.S. dollars. But, in the absence of its own form of currency (the Zimbabwean dollar was abandoned in 2009), the government and individuals turn to Bitcoin.
A cryptocurrency analyst in Zimbabwe says: “It looks like people trust bitcoin more than anything else to maintain the value of their money. That is what’s propelling the price.”
But some poorer countries just can’t make Bitcoin work
Again, it’s important to remember that Bitcoin is a cryptocurrency. It exists online. No access to technology means no access to Bitcoin. But there are other reasons Bitcoin may not work for some countries. In fact, Bill Gates has something to say about that.
“…the poor shouldn’t have a currency whose value goes up and down a lot compared to their local currency. Second is that if a mistake is made in who you pay then you need to be able to reverse it so anonymity wouldn’t work.”
This isn’t too say, however, that no cryptocurrency would work for the poor.
Gates goes on to say that some countries already use digital currencies. He cites Kenya as an example.
“In Kenya M-pesa is being used for almost half of all transactions. Digital money has low transaction costs which is great for the poor because they need to do financial transactions with small amounts of money. Over the next five years I think digital money will catch on in India and parts of Africa and help the poorest a lot.”
Since many countries rely on wire transfers from family and friends overseas—which have very high fees—Bitcoin is a cheaper and sometimes safer alternative.
It’s also not worth it for banks to set up in scarcely populated areas where only small amounts of money are stored. So digital currencies, and ways to access these currencies, are a better resource for poorer countries.
Overall, there seems to be an idea that cryptocurrencies will help the poor…eventually
So, there does seem to be a general idea that Bitcoin will eventually be beneficial to low-income populations. Cryptocurrency specialists believe it well help for a few specific reasons:
They reduce fees
As mentioned above, those who have family overseas will benefit greatly from the lack of fees associated with cryptocurrencies.
Rebit is a good example of a site that lets people send money to the Philippines in the form of bitcoins. You can send money from the U.S., as well as a handful of other countries.
Cryptocurrencies may be able to reduce corruption
Bitcoin is often touted as being anonymous. However, it’s not entirely. This means, with the right police work, hackers can be identified.
While small amounts of money are relatively anonymous, large hacks and cases of corruption can be identified much more easily.
Banking becomes easier with cryptocurrencies
There are a number of projects currently trying to deliver internet and other forms of technology to developing countries. Google’s Project Loon is a good example. With this technology, cryptocurrencies will be much easier to access.
Cryptocurrencies, including Bitcoin, are constantly in flux. But, compared to the inflation of local currencies, cryptocurrencies offer a decent alternative.
The answer to the question “is Bitcoin just for the rich,” is mostly no. Poorer countries definitely have access to Bitcoin, and it has helped immensely. But it’s access to technology that stops many from using Bitcoin. As technology and internet access expands across the globe, Bitcoin may be the answer to bank access in developing nations.
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