A Chinese family pays the tuition for an American private school in Bitcoin. A Kenyan working in Germany sends a shipment home, avoiding a large commission. Cambodian villagers buy supplies from the market via a QR code instead of piles of cash.
"In Africa, you may have to fly a suitcase full of cash to trade with the neighboring country," says Ray Youssef, CEO of Paxful, the peer-to-peer cryptocurrency exchange. "Bitcoin frees your money from that financial prison."
Crypto usage is expanding in two ways in emerging and frontier markets: bottom-up through increasingly user-friendly exchanges like Paxful or Binance, and top-down as governments roll out official digital currencies. . An unlikely pioneer in this category is Cambodia, whose Bakong system has attracted six million users since its launch a year ago, says Claire Wilson, a partner at Asia-based consultancy Holland & Marie.
The bottom-up movement is more what the founders of Bitcoin probably had in mind. Nigerians, for example, have flocked to crypto transfers for the roughly $ 25 billion they receive annually from family members abroad, Youssef says.
This avoids an official exchange rate that can be 30% lower than the real exchange rate on the black market. South Africans use crypto to exceed their government's limit of one million rand ($ 68,300) on capital exports per year.
China, which combines global trade reach with strict capital controls, could dwarf other jurisdictions in its appetite for alternative crypto trading. "We are finding many use cases related to importing goods where China is the counterpart," says Kimberly Grauer, research director at Chainalysis, which follows global crypto trends.
Governments from Beijing to Abuja have fought against such erosion of their prerogatives. They have now "begun to appreciate and explore the benefits of crypto" for their own use, Wilson says.
A key reason is to reach the 1.7 billion adults around the world who do not have a bank account, according to World Bank figures. Roughly 70% of Cambodians are unbanked, but most can now connect to a digital network via cell phone.
Thailand should introduce a digital currency next year, and neighbors like Indonesia and Malaysia are not far behind. Not to mention China's digital yuan, which is supposed to be available domestically in 2022. "The technology for digital currencies probably already exists," says Wilson. "I hope Asia responds quickly in the next five years."
An accelerating combination of upward and downward crypto expansion is underway in another unexpected geography: El Salvador, which made Bitcoin legal tender last month. Paxful's Youssef smells opportunity in a country where remittances provide a fifth of gross domestic product. "People were a little scared at first, but now their hearts and minds are open," he says.
Other observers see more misery for Salvadorans, as the value of Bitcoin moves and advances with the mood of distant First World investors. "Forcing the use of Bitcoin on people in a low-income country is not a good policy measure," says Paola Subacchi, who teaches international economics at Queen Mary University of London.
Regardless of how El Salvador's experiment works, digital money is finding applications beyond gambling, with emerging markets leading the way.