The Ongoing Crisis Is Stirring a Crypto Awakening in Developing Nations

We are a long way from mass adoption, but the circumstances driving this nascent demand in the developing world, not only for bitcoin but also for stablecoins and other cryptocurrencies, bring the human benefits of this new form of money into stark relief.

If you can't get dollars and you don't trust your local currency, bitcoin and stablecoins start to look attractive, either as a hedge against future inflation or as a payments or remittances solution.

It's no wonder that Africa's biggest economy is the biggest contributor to the pickup in the continent's peer-to-peer bitcoin exchanges.

Previously, on-chain bitcoin fees - currently around $3 per transaction - were too high to sustain the kinds of micropayments made for these many small tasks.

Developing-country demand for bitcoin still seems less based on its role as a payments vehicle than on its appeal as a gold-like speculative asset and store-of-value, an especially valuable proposition in places threatened by hyperinflation.

"What people want in Nigeria or in Venezuela isn't really bitcoin but the U.S. dollar," says Alejandro Machado, a colleague of Carlson's at the Open Money Initiative.

For Machado, the solution doesn't lie in Ethereum-based stablecoins like Tether, USDC or Dai, but in leveraging the liquidity that he says only bitcoin can provide.

Through a sophisticated strategy for trading and hedging bitcoin, Valiu offers access to a digitally executed contract whose value holds steady against the dollar.

What started as a footnote in the larger protests surrounding the killing of George Floyd - a photo of a person whom we can only conclude is a bitcoin bro, or at least aspires to be one, held up a sign with the slogan "Bitcoin will save us" - became a cautionary tale.

The image predictably went viral, drawing the ire of people inside and outside of the crypto community for pushing crypto gospel at precisely the wrong time.