Close Cookie Preference Manager
Cookie Settings
By clicking “Accept All Cookies”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage and assist in our marketing efforts. More info
Strictly Necessary (Always Active)
Cookies required to enable basic website functionality.
Made by Flinch 77
Oops! Something went wrong while submitting the form.

Unbanked: What does crypto mean for developing countries?

James Caunt




October 18, 2022

Unbanked: What does crypto mean for developing countries?

What do you think about when you hear the word “cryptocurrency?” For many people, especially those in advanced, stable economies, it can evoke feelings of skepticism and mistrust.

As a relatively new and highly volatile addition to the financial system, crypto is often dismissed as a passing fad, a shadowy world of impenetrable technology and wild speculation. However, in the developing world, it’s a different story. In places where the traditional banking system is either ineffective, expensive, or not accessible at all, crypto represents an opportunity. A chance to participate in a global peer-to-peer economy with nothing but an internet connection and a freely-available digital wallet. And it’s fair to say that people are grasping this opportunity with both hands.  

Widespread adoption

Take the 2021 Global Crypto Adoption Index, for example. This study set out to measure which countries have the highest levels of cryptocurrency adoption. Not just by traders and other market professionals but by ordinary people who are choosing to make crypto a part of their everyday lives. The results are enlightening, with emerging markets like Vietnam, Pakistan, Nigeria, Argentina, and Venezuela all featuring prominently in the top 10. Might there be an underlying cause for this?  

Well, it seems like crypto is quickly becoming an attractive option for residents of countries that have struggled with corruption, conflict, high inflation, and general economic instability in the past. It has proven to be an accessible and efficient (if volatile) alternative to poorly-managed fiat currencies, and a way for ordinary people to participate directly in the global economy without intermediaries who might not always represent their best interests.  

In the past decade, internet usage in developing countries has increased dramatically, laying the foundation for the current cryptocurrency boom. More people around the world now have access to the tools and knowledge required to take their finances into their own hands. With this trend set to continue, we can expect to see crypto take root in the developing world at a rate equal to, if not faster than, advanced economies.

How crypto benefits developing countries  

Let’s take a closer look at some of the advantages of cryptocurrency for people in the developing world:

It’s a hedge against inflation

It’s revealing that many of the countries with the highest levels of crypto adoption have also suffered from high inflation rates in their local currencies. Cryptocurrencies like Bitcoin and Ethereum have built-in deflationary mechanics, meaning that they either have a limited supply (in the case of Bitcoin) or ‘burn’ tokens in times of high network activity (in the case of Ethereum). This helps holders to retain the value of their capital in times of hyperinflation and continue to trade goods and services in a more stable global market.  

It lowers barriers to participation in the global economy

Now, for example, a copywriter from Lahore can receive direct, instant payment in Bitcoin from a client in Los Angeles without the need for SWIFT codes, a government-issued ID card, or a bank account. This means lower transaction fees, no payments to unnecessary intermediaries, and no exposure to unpredictable exchange rates in local currencies. Crypto means fewer barriers to economic activity and a chance for entrepreneurs across the developing world to sell their services at fair prices.  

It can reduce corruption

Built upon transparent and immutable blockchain technology, the use of cryptocurrencies can help to reduce the opportunities for corruption. For example, if payments for things like humanitarian aid and development projects are made in Bitcoin, every transaction can be verified on a publicly available record. Nothing can be altered or falsified, and there are no unnecessary middlemen involved to take a cut. This ensures that funding is delivered directly to the right people in a fast and efficient way.    

It provides financial services to the unbanked

There are currently two billion people worldwide who can’t access financial services. Many lower-income people in developing countries live without an official address (think slums in megacities such as Lagos, Sao Paolo, Mumbai, etc.) and without government-issued IDs, excluding them from the traditional banking system. Crypto helps by providing the unbanked with access to things like loans, lending, and credit—unlocking liquidity that puts food on the table and offering the potential to start a family-sustaining business.  

It makes sending and receiving remittances cheaper and easier

Remittances provide a crucial source of income for many people in the developing world. In Lebanon, for example, remittances make up over 50% of the country’s entire GDP. Currently, sending funds across borders is costly and inefficient, with people having little choice but to pay high fees to third-party brokers such as Western Union. Currently, the global average cost of sending $200 is 6.9% of the remittance, a limit on their potential that crypto could help to eliminate. The average price for a Bitcoin transaction, for example, is currently just $2.03. Newer blockchains such as Solana have even lower fees, ($0.00025 per transaction) and offer the opportunity to transfer stablecoins like USDC. Stablecoins are pegged to assets such as the US dollar and provide a solution to the volatility of other cryptos like Bitcoin and ETH.

Potential drawbacks  

Of course, there are plenty of risks involved too. Let’s look at some of the drawbacks of widespread crypto adoption in the developing world:  

Price volatility

Cryptocurrencies are still in their infancy as financial assets. With little regulation and oversight in place, they attract speculative trading strategies that can lead to wildly fluctuating price cycles. People in developing countries, especially those excluded from traditional financial services, are the least able to afford to take any risks with their money. Those who do might find the value of their money rapidly diminished during down cycles, compounding the vulnerability and instability of being bankless.

Lack of regulation and political support

Political acceptance of cryptocurrency varies widely across the developing world. El Salvador, for example, has embraced it as legal tender and is encouraging people to use it for day-to-day transactions. This is the exception rather than the norm, however, with other countries proving to be more skeptical. Algeria, Bangladesh, China, Egypt, Iraq, and Morocco have banned cryptocurrencies outright. Meanwhile, Nigeria has introduced the eNaira, a digital version of its own currency, in order to try and find a middle ground. Despite recent moves toward regulation, cryptocurrencies remain a legal grey area in most developing countries. There is a large divide between the popularity of cryptocurrencies, particularly with the younger population, and the desire for governments to exert control over the local economy.  

Loss of financial sovereignty

Cryptocurrency is decentralized and global by nature. This means that it lies largely outside the jurisdictions of governments, with things like crypto exchanges, digital wallet providers, and stablecoin issuers headquartered in developed countries. This puts developing countries at a disadvantage and increases the challenges of regulation, adding another layer of complexity to already difficult economic conditions. And what happens if the crypto market takes a sudden downturn? Vulnerable citizens who have exchanged their local currency for crypto might find their assets have evaporated, creating an added burden for governments that are fighting to keep poverty at bay. With all of this in mind, the decision for some developing countries to ban crypto outright becomes more understandable. For crypto to truly benefit developing countries, it needs to be properly regulated to work hand-in-hand with the traditional financial structures already in place.

Lack of local crypto infrastructure

El Salvador aside, there is still a lack of options for crypto holders to use their chosen currency in everyday life. People still need to exchange their crypto for their local currency to buy food and services and to pay their bills. Crypto P2P payments are becoming more common in places like Nigeria, but these lie largely within the informal economy and the black market. Many countries lack the infrastructure to collect taxes from crypto businesses and earnings, meaning that the state misses out on crucial revenue that could help with things like healthcare, education, and other services.

Case study · Venezuela

"As Venezuela's economy regresses, crypto fills the gaps."—Brian Ellsworth,

Gripped by sanctions and hyperinflation, Venezuela’s economy has been in a state of crisis for years. With banks and businesses heavily restricted and unable to function normally, crypto has begun to fill the gaps and provide an alternative for things like sending remittances, protecting income against inflation, and facilitating everyday transactions.  

The government has embraced the use of cryptocurrencies by its citizens, creating comprehensive regulation and tax laws that allow for easy trading via P2P platforms. Certain international exchanges are also free to use, and there’s even the option to spend crypto in many stores and restaurants.

“Cryptocurrencies here in Venezuela are quite useful," explains Santiago, a 22-year-old from Caracas. "Platforms like Binance Pay are available in more shops every day, and you can pay with Bitcoin or stablecoins. In the P2P market, you can convert your Bolivars into USDT to protect your wages from the daily price changes of buying dollars on the street. I also find it very useful since it’s like having a modern bank account but without the need to go to a physical location to present your documents."

In 2018, the government created a national cryptocurrency called the "Petro," which is supposedly stable and backed by the country’s vast oil reserves. So far, however, it hasn’t been a success.  

According to some sources, the Petro is centralized, lacks transparency, and has been badly managed. In other words, it lacks pretty much everything that makes a cryptocurrency useful and attractive. Despite this, the Venezuelan government still sees the Petro as a potential means to “reset” the country’s economy and escape sanctions. It has announced initiatives like creating “Petro Zones” to encourage its use for commerce and is using it to pay pensions. These moves have yet to pay off, however, as Venezuelans prefer more established cryptocurrencies such as Bitcoin and USDT.  

These come with risks, however, as Santiago experienced firsthand.  

“My life improved incredibly when I started trading crypto in 2021,” he told “I was able to make an investment of $900 after selling my car and make a profit of $6,800, which helped my family and my partner a lot at that time. But due to inexperience, trading with risky coins, and thinking that the market only went up and up, I’ve since lost all my capital in the recent crash,” he explains. “It is what it is.”  

Santiago’s story is a common one across the developing world. To many, crypto promises an escape from poverty and an easy way to participate in a fast-growing global economy. But while the opportunities do exist, the risks are huge for inexperienced and vulnerable traders. Most people are simply unprepared for the inherent price volatility of crypto.  

That said, despite his harsh lesson, Santiago sees crypto as the future in Venezuela. “I still believe in crypto as a better alternative to our current economic system,” he concludes.  

“Even though I've lost everything, including my means of transportation, I'm working hard to invest again in this bear market. I have a duty to help my family, and I see crypto as a great opportunity. It’s a very promising and useful technology.”

Case Study · Nigeria

Nigeria ranked 11th in the top 20 countries according to the Chainalysis’ 2022 Global Crypto Adoption Index.

Nigeria has chosen a different path in its crypto journey. Despite over 33.4 million residents trading or owning crypto assets, the government has banned individual and business users of cryptocurrencies from accessing the formal banking system.  

In 2021, it issued its own central bank digital currency, the eNaira, in order to combat illegal activities such as tax evasion and to promote financial inclusion in a country where half of the population has no access to traditional banking services. However, much like the Petro in Venezuela, this government-backed digital currency is yet to capture the imagination of the general public.  

“People don't trust it much, it hasn't proven to be reliable so far,” says Elijah, 29, from Lagos. “Plus, the government isn't really promoting it much. Shops were supposed to start offering it for payments, but that hasn’t happened in my area, at least. People prefer Binance and crypto like Bitcoin for P2P payments and aren’t ready to stop using cash.”

With the value of the Naira continuing to depreciate, people are turning to crypto to protect their assets from inflation, despite the banking ban. According to KuCoin’s Into The Cryptoverse report, 52% of Nigerian crypto investors are now allocating over half of their assets to cryptocurrencies.  

This trend looks set to continue, with over 70% of Nigerian crypto investors planning to increase their cryptocurrency investments over the next six months. A largely young population is driving the change, and the bank ban, while well-intentioned at the time, has had the unintended effect of pushing more crypto transactions into the shadows and away from regulatory scrutiny. It even played a role in some of the protests that erupted across the country in recent months.  

“The government is made up of older people who don't understand crypto and feel threatened by it,” Elijah told “One of the issues raised during the protests was the police harassing youths, including those with crypto assets. We just want to be free to buy, sell, and send crypto as we please, without interference. They can tax it if they want. But banning won’t achieve anything. We will always find a way.”  

Nigeria has so far tried to take a “middle road” with crypto, aiming to capture and control the market with its own digital currency. However, with the eNaira generating little interest and the bank bans causing social unrest, the current status quo appears to be pleasing nobody.

With elections upcoming in 2023, crypto is set to become a hot issue. Elijah is hopeful. “We want to elect better people who can invest in crypto and tech solutions and fulfill the huge potential we have here.”

Case Study · Egypt

Up to 67% of the Egypt population above the age of 15 do not have bank accounts—World Bank report.

Egypt is one of only nine countries that have made it illegal to trade cryptocurrencies. Not to be deterred, however, are a large minority who choose to do it anyway. In fact, it’s estimated that over 1.7 million people, or 1.8% of Egypt’s total population, currently own cryptocurrency. So why do they take this risk?  

“It started during the pandemic,” says Mohammed, a 31-year-old crypto analyst from Cairo. “Before that, people thought I was crazy to waste time studying charts. But lots of people lost their jobs, and others started working from home during COVID. People started using VPNs to access Binance. They wanted to buy and sell crypto for quick money. Suddenly, hundreds of people were asking for my advice.”  

Egypt’s first ban on crypto occurred in 2018 when it was declared forbidden under Islamic Law. This made crypto culturally unacceptable, with religious leaders warning against the volatility and risks in the market, as well as threats such as money laundering, the financing of terrorism, and harm to the national economy.  

Then, in 2020, the Central Bank of Egypt stated that it is “prohibited to issue, trade, or promote cryptocurrencies or electronic money without obtaining a license from the Central Bank.” These licenses have proven to be extremely difficult to obtain, with those caught breaking the law subject to either imprisonment or a fine of up to ten million pounds ($530,000USD).

Mohammed is keen to stress that he doesn’t trade crypto himself, he only provides his analytical talents as a service. “I’ve found a way to make money from crypto without breaking any laws,” he says with pride. “A lot of my clients have made big money and traveled to places like Kuwait and Dubai to trade more freely. But I also know a couple who have been arrested. One guy is now in prison for mining Bitcoin.”

Egypt has a large unbanked population, with 67% of adults having no access to traditional financial services. It is also one of the top five receivers of remittances globally, receiving over $29 billion from abroad in 2019. Statistics like these, coupled with an economy battered by the pandemic and a drastic downtown in tourism, have created the perfect conditions for a thriving black market in crypto.  

Authorities have stressed the need to move towards a more inclusive financial system and have laid the foundations for a digital currency version of the Egyptian pound. The aim is to absorb the huge informal sector into the economy and transition Egypt into a cashless society.  

However, as we’ve seen in the cases of Venezuela and Nigeria, centralized digital currencies are not an easy sell to a public who are already using (and sometimes making valuable additional income from) the likes of Bitcoin.  

“My analysis has helped guys to support their families, start businesses, even buy a new car,” Mohammed concludes. “Sure, it’s risky. But for most people, especially those who use my services, the rewards are definitely worth it!”


Crypto offers a range of benefits to people in developing countries, providing them with direct, free access to financial services that might otherwise be out of reach. However, as we’ve seen, there are also considerable risks involved. Vulnerable people are exposing their limited assets to volatile and unpredictable markets, and governments are struggling to find ways to protect them with fair and appropriate regulations.  

Despite the risks, people across the developing world are turning to crypto as a means to escape corruption, inflation, and badly-performing local currencies. Some governments have responded by accepting the inevitable and integrating it into their economic systems. Some have banned it outright. And countries like Venezuela and Nigeria have already introduced their own centralized digital currencies—albeit with limited success so far.  

Whatever the future holds in terms of local rules and regulations, it seems like crypto is already deeply rooted in the lives of millions of people across the world. Far from being just a passing fad for “crypto bros” and other tech enthusiasts in advanced economies, it looks set to play an important role in global development for decades to come.