Despite the interconnected nature of today’s transnational economies, each locality is powered by unique infrastructure, much of which doesn’t play well with others. From banking partners and local regulations, down to the payment methods and currencies used in each region, every move between any set of financial rails is typically slow, expensive and frustrating – if it’s possible at all.
These inefficiencies in global trade don’t just affect speed and price, they also exclude large parts of the world from participating at all. But there is a way to bring the entire world to the table: build business on a fast and cheap settlement layer, ideally one with a neutral, globally accepted currency.
Luckily, it’s already here in the form of cryptocurrencies and decentralized ledgers. With no barrier to entry or trade, cryptocurrencies are already interoperable within and across national economies. In the example of Bitcoin, we also have a globally recognized store of value and can enjoy low-cost, high-speed transactions to anyone, anywhere, anytime.
Let’s explore what this borderless global economy makes possible.
Better infrastructure makes for larger ponds
No business can grow beyond the size of its total addressable market, any more than a fish can grow beyond the size of its pond. This is especially true of developing economies, where local businesses are constrained to serving their immediate community. Historically, this was due to constraints in local infrastructure and few on-ramps to global commerce – but cryptocurrencies leapfrog these issues entirely. For comparison, let’s look at one simple component of global payments: currencies. In a system built on distinct national currencies moved and managed by legacy local financial institutions, interoperability demands one or both sides of a deal agree on a settlement currency, incur exchange costs, and pace their business to fit the availability, requirements, and risks presented by each intermediary at every step of the transaction. The neutral settlement layer that Bitcoin and other cryptocurrencies provide make using legacy rails bad business. Because Bitcoin requires no foreign exchange, moves quickly and cheaply, omits the need for local financial infrastructure, and isn’t beholden to banks nor nation states, it stands apart as the top quality means of exchange. While already compelling, the real value of cryptocurrencies emerges from their network effects: operating on a single global standard maximizes global economic access and market efficiency, regardless of jurisdiction or fiat regime. Businesses today have a completely new opportunity to increase the size of their total addressable market to the world at large by adopting cryptocurrencies as a form of payment – and we see many already are. On this standard, an eCommerce site in India can instantly and easily do business with a buyer in the USA, Colombia – or even in the middle of the Atlantic Ocean, provided an internet signal. Unrestricted by local infrastructure and powered by a globally accepted currency that moves with ease, businesses are finally free to grow and thrive – and where businesses are slow to adapt, customers are forcing the issue from the ground up.
What’s going on among the global economy’s newest entrants?
As cryptocurrencies break down the barriers to new economic activity, some of the most creative financial use cases and highest demand levels are coming from those who have been excluded from global trade longest. Certainly across Asia, Africa and Latin America, cryptocurrencies are becoming increasingly popular methods of sending money to friends and family, preserving one’s wealth from local currency fluctuation and inflation, and managing international payments. Most interestingly, where nations or businesses are slow to adopt cryptocurrencies, individual users are forcing the issue in creative ways.
Where centralized exchanges fail to meet the needs of local economies and payment methods, users flock to peer-to-peer (or “P2P”) marketplaces and any number of decentralized exchanges.
Some users still buy cryptocurrencies in-person with cash, despite the dangers – ignoring the benefits provided by escrow & dispute resolution support provided by the best P2P markets.
In Vietnam, shoppers are changing the way foreign goods are consumed using P2P trading and cryptocurrencies. By buying discounted Western-originated gift cards with Bitcoin, then buying beauty products from Sephora or pet products from Petco 20-30% cheaper, or by loading up on gift cards to luxury stores for an on-site purchase during an international trip, Vietnamese consumers are using a neutral settlement layer to reshape their local consumption habits.
At the same time, strong expert service economies like those of India, Poland, and the Philippines are using the neutral settlement layer to market their solutions globally at competitive rates. By selling engineering or customer support services for Bitcoin or stablecoins like USDT, skilled local talent is entering the global workforce, and in so doing, enriching local economies with increased consumption from well-compensated remote employees, paid for by increasingly competitive, forward-thinking global businesses.
The future is already here, it’s just not evenly distributed yet
As cryptocurrencies continue to reshape global finance, countries like Vietnam and Ghana have the chance to leapfrog the buildout of legacy financial rails and connect the skills of their workforce, the goods and services of their businesses, and the hopes of their people with the growth of the global economy.
While the West wrestles with the euphoria of the Bitcoin ETF in the US and the European Union scapegoats cryptocurrencies for the under-performance of the Euro, those who stand to gain the most from the promise of Bitcoin’s neutral settlement layer aren’t making the news. They’re the likes of Hillary in Kenya or Don in El Salvador, each growing their financial security and community impact in ways they’d never dream of before Bitcoin. If we do our jobs well, not only will the neutral global settlement layer Bitcoin provides grow – but most importantly, stories like these are becoming the norm.