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The following is a guest post from Alexander Mamasidikov, CEO of CrossFi.
The world of financial transactions is transforming, driven by the rise of Web3 payment solutions. Although this development is being observed globally, it is particularly notable that developing countries are at the forefront of this change.
This proactive approach reflects the agility and adaptability of these economies and positions them at the forefront of financial innovation. From the revolution in decentralized money transfers to the democratization of payment instruments, the rise of Web3 payments in developing countries heralds a seismic shift in the way we perceive and manage financial transactions.
As they navigate the uncharted waters of DeFi, these countries are poised to leapfrog established economies like the United States, ushering in a new era of vibrant global economics.
The change in money transfers
Developing countries have long grappled with the challenges posed by costly and inefficient economic systems when it comes to financial inclusion. Traditional methods often involve high transfer fees exceeding 10% or morelong processing times for cross-border payments of up to 5 business days and limited accessibility for the unbanked, who often do not have a permanent address, government identity documents or regular income.
Of course, all of this disproportionately affects underserved communities. Yet the emergence of Web3 technologies is reshaping this landscape, providing a lifeline to those previously excluded from the TradFi ecosystem.
One of the most significant impacts of everyday use of Web3 payments in developing countries is to revolutionize the way money transfers work on macro and micro scales. Whether it's buying a meal, paying rent, or sending money across borders, this transformation not only streamlines the process of sending and receiving money, but also reduces the reliance on intermediaries, thereby mitigating the KYC standards and delays associated with banks.
It is quite encouraging to see that the ability to use cryptocurrency payments is beneficial for business owners, as businesses that have adopted cryptocurrency payments have seen an average return on investment (ROI) of 327% and witnessed an increase of up to 40% in new customer acquisition.
Worldwide, we are witnessing compelling examples of successful implementations of Web3-based money transfers in developing economies, such as Brazil. From P2P crypto exchanges to DeFi protocols facilitating cross-border transactions, these platforms offer unprecedented transparency and security, restoring trust in previously suspect financial systems.
Indeed, the transition to Web3 payments is extremely promising for developing countries. By removing barriers to accessing financial services and fostering greater financial inclusion, these innovations are paving the way for economic empowerment and resilience. As developing countries harness the transformative potential of Web3 payments, they are not only bridging the gap with their developed counterparts, but also emerging as pioneers in the continued evolution of global finance.
Harnessing Web3 Payments for Inclusive Global Prosperity
The rapid adoption of Web3 payments in developing countries is propelled by a convergence of economic, regulatory and local factors, each contributing to the acceleration of this trend. At the same time, the implications of this adoption extend far beyond these countries' borders, helping to reshape trends in global economics and finance.
The adoption of Web3 payments in developing countries is not simply a matter of convenience but a response to pressing economic and social imperatives. In countries plagued by hyperinflation, such as Venezuela and Argentina, where traditional currencies have faltered, cryptocurrencies offer a lifeline, providing a stable store of value and a hedge against economic volatility.
Likewise, concerns about financial freedom and government overreach are driving adoption in places like Afghanistan, where the ability to freeze assets can have dire consequences, particularly for marginalized groups like women.
The regulatory environment in many developing countries is increasingly conducive to the adoption of Web3 technologies due to the dire need for alternative solutions.
Recently, South Africa's FSCA clarified cryptocurrency regulations, triggering formalization efforts. Recognizing the potential benefits of cryptography, members of the African Union in many regions, they continue to take proactive steps to create frameworks that support innovation and investment in space.
By providing clarity and regulatory certainty, these initiatives encourage the development of a vibrant ecosystem of Web3 solutions, further fueling adoption and driving economic development.
Grassroots movements and entrepreneurial initiatives where people who are not crypto natives continue to adopt Web3 solutions are playing an increasingly crucial role in the adoption of Web3 payments worldwide. From community projects to innovative startups, these initiatives demonstrate the ascending demand for alternative financial solutions that address the unique needs and challenges faced by individuals and businesses in developing countries.
Popular crypto adoption continues to rise in lower-middle-income (LMI) countries, with their total adoption surpassing pre-bull market levels as of Q3 2020.
It's worth knowing 40% of the world's population live in LMI countries, more numerous than any other single-income category. As these grassroots movements grow, they are leading the charge into a new era of global Web3 adoption. Get ready because the revolution is just beginning and the whole world is starting to notice.
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