Does crypto currency can save the economy?

[Quantum X]

In third world country we can see that many are suffering from poverty and desire financial freedom. After cryptocurrency had been discovered it is now became the center of attraction and a country like Cambodia is now adopting bitcoin and built its own blockchain with its digital currency-like called bakong.

I believe such adoption is for the fact that there is more chance of making profit while leading the country into a modern way of payment system. What I'm thinking, even they have such opportunity for profit and modernization we can't deny the fact that losing could also be their future since crypto currency is volatile.

Do you think cryptocurrency can elevates the economy of a poor country despite its volatility.

[Gurujebs]

It's going to be such a hard decision for many countries to channel some of their reserves into Bitcoin but if the value of bitcoin can keep growing without collapse that we used to have in the past, its really an incredible opportunity but as I said, it's dangerous because you can't predict Bitcoin movements sometimes. We all saw that crash that happened last year march during pandemic, once traditional markets is affected, crypto becomes too.

[Mas Bro]

For now, Cryptocurrency cannot improve a country's economy. Because there are still many countries in the world that have not legalized cryptocurrency transactions. Moreover, investing in cryptocurrency is high risk, because market movements are unstable and difficult to predict. That's why many countries don't want to invest in cryptocurrency. Cryptocurrency is a digital money investment for individuals.

[Gurujebs]

May be for a short period of time. It's a pure gambling for an economical nation to put a part of it reserves in cryptocurrency.
Perhaps, they can do it in bull run but we all know what bitcoin can do and can undo. All institutions are here for the gram and as soon as it makes a u turn, they will leave.

[Furious 7]

In my opinion so far if for a country that is trying to develop cryptocurrency, it is better that the country needs to provide space for a trusted exchange first. once everything is set up and running well. let's say Cambodia is making its own crypto, but on the other hand this is not yet the reason that the economy can be resolved. Cambodia needs to stimulate and be friendly between the people there and world exchanges, such as legalizing cryptocurrency exchanges for 1 year. to see the extent of people's enthusiasm for crypto. if there is improvement, then feel free to make crypto yourself. Haven't we seen many countries make their own crypto and end up not as expected. because it has not fully interacted with large investors around the world.

[Dreamer]

Yes, Cryptocurrencies can save the economy! The government charges a tax from business owners, and many teenagers are now owning different businesses because of the profit that they earned from crypto "a side business".  In my country there are many college graduates who joined the crypto world in 2017 including me, 90% of us have managed to start our own business apart from crypto and we pay tax to our government. So because we invested in crypto in 2017, we are now helping in growing our country's economy by paying tax to the government as business owners.

[DrBeer]

Unfortunately bitcoin and cryptocurrencies in general, cannot change or improve the economy. Bad economy is not a consequence of the choice of settlement currency or currency technology, but of the mistakes of the government, ministers, heads of the central bank, who instead of solving problems are engaged in populism, corruption and similar processes that kill the economy. And if the conventional local currency is replaced by bitcoin, NOTHING will change.
So, unfortunately, this idea is a deep misconception. And imagine - if it was a real solution, would countries stall and not accept bitcoin and cryptocurrencies to replace the fiat system? Would everyone have solved their problems and lived happily ever after?! But...? no one is doing it.

[Peter90]

Unfortunately bitcoin and cryptocurrencies in general, cannot change or improve the economy. Bad economy is not a consequence of the choice of settlement currency or currency technology, but of the mistakes of the government, ministers, heads of the central bank, who instead of solving problems are engaged in populism, corruption and similar processes that kill the economy.

You are right, politics decide about economy.

But the state of the "money system" of a country impacts its economic system - I'm thinking about inflation, the depreciation of the currency of a country: Money losing purchasing power with time, forcing individuals and businesses to take decisions - also economical decisions - that they would have not taken otherwise.

So, can cryptocurrency - not only Bitcoin! - help to improve the the money system of a country? i.e. the "quality of what is accepted as money" in a country?
I think they can!

[DrBeer]

Unfortunately bitcoin and cryptocurrencies in general, cannot change or improve the economy. Bad economy is not a consequence of the choice of settlement currency or currency technology, but of the mistakes of the government, ministers, heads of the central bank, who instead of solving problems are engaged in populism, corruption and similar processes that kill the economy.

You are right, politics decide about economy.

But the state of the "money system" of a country impacts its economic system - I'm thinking about inflation, the depreciation of the currency of a country: Money losing purchasing power with time, forcing individuals and businesses to take decisions - also economical decisions - that they would have not taken otherwise.

So, can cryptocurrency - not only Bitcoin! - help to improve the the money system of a country? i.e. the "quality of what is accepted as money" in a country?
I think they can!

I'll give you my opinion
1. I still do not think that cryptocurrency can improve the monetary system. Why ? The answer is simple - try to simulate a real situation, and let's discuss - what changes will happen and how ?
2. What I agree with - that PART of the population that wisely invest their savings in local currency, in crypto-assets, can lead and they will not only not lose but also earn on this process. But the volatility and unclear legislative position of cryptocurrencies in general, can play a cruel joke.

Now everyone is waiting for the approval of spot ETF bitcoin. If it happens, the market will grow, and those who invested now will profit. But... what if the approval is denied? And such a chance exists and is quite realistic ! Then there will be a loss from investments. The same will happen if the state adds bitcoin to its currency reserves, for example. Only the potential losses of the state will be much larger, in case of a negative development of the situation

[Peter90]

I'll give you my opinion
1. I still do not think that cryptocurrency can improve the monetary system. Why ? The answer is simple - try to simulate a real situation, and let's discuss - what changes will happen and how ?
2. What I agree with - that PART of the population that wisely invest their savings in local currency, in crypto-assets, can lead and they will not only not lose but also earn on this process. But the volatility and unclear legislative position of cryptocurrencies in general, can play a cruel joke.

Now everyone is waiting for the approval of spot ETF bitcoin. If it happens, the market will grow, and those who invested now will profit. But... what if the approval is denied? And such a chance exists and is quite realistic ! Then there will be a loss from investments. The same will happen if the state adds bitcoin to its currency reserves, for example. Only the potential losses of the state will be much larger, in case of a negative development of the situation

I appreciate always opinions, particularly when they come from someone with the nickname DrBeer   


Cryptocurrencies can improve the economic system by improving the monetary system.
How, you ask.

For example, giving to unbanked and underbanked people the opportunity to transfer money electronically.
Imagine the business options that open for them!

A second example: facilitating cross-border payments.
For un- and underbanked workers who work abroad these transfers (Western Union etc.) are very expensive.
Imagine how much more wealth could flow in in countries with a considerable portion of work emigrants, and how much of that wealth could turn into business initiatives!

A third example: overcoming religious barriers.
Debt/interest banking is prohibited in muslim communities.
Now think of cryptocurrencies that are not debt/interest based i.e. cryptocurrencies that are shariah compliant.
Imagine the opportunities for muslim societies deriving from the access to new banking instruments.





Let's talk about a real case: Indonesia
This is what a gold-backed stablecoin (Kinesis) can do for the economy of Indonesia.


Challenges

Poor financial access
Across the nation of Indonesia, an estimated 70-80% of all citizens are unbanked or underbanked. These Indonesian citizens are left stranded outside of the financial system, deprived of financial access. Unable to save funds securely, the unbanked and underbanked live with no financial security.

Exploitative remittance services
Limited remittance provision in the region provides Indonesian citizens with no cost-effective solution for cross-border payments. As a result, Indonesians citizens are left at the mercy of costly and profit-centric providers, with remitters in the region charged an average fee of 5%.

Non-inclusive financial services
With 86.7% of the Indonesian population belonging to the Islamic faith, a large percentage of citizens find themselves excluded from traditional interest-bearing or debt-associated financial services for religious reasons.


The Indonesian population
260+ million

Population Unbanked or underbanked
70-80%

Active smartphone users
80%+


Solution

Mobile financial access
Through POS GOLD (*), Kinesis is delivering the financially underserved citizens of Indonesia, low-cost mobile access to vital financial services for payments and savings, in the stable value of physical gold.

Fair remittance provision
Indonesian citizens will require only a smartphone and internet to access instant, inexpensive cross-border payments. With a flat, <1% fee for international payments, the application presents citizens with a fair alternative to remittance provision in the region.

Shariah-compliant financial services
POS GOLD is supported by the Sharia Supervisory Board formed by the National Sharia Council. The Sharia-compliant platform enables Indonesia’s predominantly Islamic population to manage their wealth in debt and interest-free gold bullion via mobile device.



(*) PT Pos Gold is part of the app of the state-run national postal service, PT POS.




"As the value of Kinesis cross-border payments replaces costly remittance providers, additional wealth will flow into the Indonesian economy, through citizens purchasing essentials and investing in wealth creation activities. Over time, Indonesia will experience a rise in living standards and inclusive, sustained economic growth, which betters every member of society."

https://kinesis.money/projects-indonesia

[DrBeer]

...
I appreciate always opinions, particularly when they come from someone with the nickname DrBeer   

Cryptocurrencies can improve the economic system by improving the monetary system.
How, you ask.

For example, giving to unbanked and underbanked people the opportunity to transfer money electronically.
Imagine the business options that open for them!

A second example: facilitating cross-border payments.
For un- and underbanked workers who work abroad these transfers (Western Union etc.) are very expensive.
Imagine how much more wealth could flow in in countries with a considerable portion of work emigrants, and how much of that wealth could turn into business initiatives!

A third example: overcoming religious barriers.
Debt/interest banking is prohibited in muslim communities.
Now think of cryptocurrencies that are not debt/interest based i.e. cryptocurrencies that are shariah compliant.
Imagine the opportunities for muslim societies deriving from the access to new banking instruments.

Let's talk about a real case: Indonesia
This is what a gold-backed stablecoin (Kinesis) can do for the economy of Indonesia.

Challenges

Poor financial access
Across the nation of Indonesia, an estimated 70-80% of all citizens are unbanked or underbanked. These Indonesian citizens are left stranded outside of the financial system, deprived of financial access. Unable to save funds securely, the unbanked and underbanked live with no financial security.

Exploitative remittance services
Limited remittance provision in the region provides Indonesian citizens with no cost-effective solution for cross-border payments. As a result, Indonesians citizens are left at the mercy of costly and profit-centric providers, with remitters in the region charged an average fee of 5%.

Non-inclusive financial services
With 86.7% of the Indonesian population belonging to the Islamic faith, a large percentage of citizens find themselves excluded from traditional interest-bearing or debt-associated financial services for religious reasons.

The Indonesian population
260+ million

Population Unbanked or underbanked
70-80%

Active smartphone users
80%+


Solution

Mobile financial access
Through POS GOLD (*), Kinesis is delivering the financially underserved citizens of Indonesia, low-cost mobile access to vital financial services for payments and savings, in the stable value of physical gold.

Fair remittance provision
Indonesian citizens will require only a smartphone and internet to access instant, inexpensive cross-border payments. With a flat, <1% fee for international payments, the application presents citizens with a fair alternative to remittance provision in the region.

Shariah-compliant financial services
POS GOLD is supported by the Sharia Supervisory Board formed by the National Sharia Council. The Sharia-compliant platform enables Indonesia’s predominantly Islamic population to manage their wealth in debt and interest-free gold bullion via mobile device.

(*) PT Pos Gold is part of the app of the state-run national postal service, PT POS.

"As the value of Kinesis cross-border payments replaces costly remittance providers, additional wealth will flow into the Indonesian economy, through citizens purchasing essentials and investing in wealth creation activities. Over time, Indonesia will experience a rise in living standards and inclusive, sustained economic growth, which betters every member of society."

https://kinesis.money/projects-indonesia

Let me be clear - do not consider me a crypto-pessimist I am more of a pragmatist who believes it is better to know the real situation and take into account the real risks than to "hang in the clouds", which I think is unacceptable for financial management....

It is very pleasant to hear an ARGUMENTED answer, with a wide coverage of problem areas ! Quite a rare answer ! Thank you ! +

And I will comment, from my own point of view.

1. about "people who are unbanked and underbanked". Both agree and a bit, in my opinion, controversial. To clarify.
- If we are talking about people who don't have the technical ability to use banking apps, they are also "useless" for the crypto world, since cryptocurrency is the ONLY technological solution for any crypto action.
- I agree - there are people who can't, don't want to, don't have the ability to deal with banks. Yes, cryptocurrency can be a substitute for them. But. Provided that cryptocurrency becomes an official means of payment. Otherwise, in light of the regulation of cryptocurrencies, he will be EXPECTED to work with the banking system. because you can buy products, pay for services can only fiat currency. And withdrawal of funds from the exchange - only to card accounts.

2. "It is estimated that 70-80% of all Indonesian citizens are unbanked or underbanked." - ok, a real problem. But can I clarify - what are the CAUSES of this state of affairs ? Leaving aside the specific problem of interest aversion, according to the creed, banking services are not only interest on loans. It is primarily banking transactions - from payroll to payments.  What is the problem with that ? Is it about p.1 ?

3. "Not being able to save safely". There is a subtle issue here. Saving money, if we are talking about inflation, is in a sense getting .... additional interest from the growth of the value of some asset, by means of which a person tries to compensate for the loss of value, for example, of the local currency. Isn't that contrary to the religious canons? Please do not take this as an attempt to "play on religious feelings", just a really contradictory nuance, at least for me.

4. Is cross-border payments really such a big problem for Indonesian residents ? Perhaps it's just the banking system is "really greedy" ? I have in Ukraine, cross-border transfers, the cost of these services is quite in line with your expectations.

The second issue is the cost of transactions in the network for example bitcoin. Let's be honest - I do not think that there will be a mass need for ordinary people to transfer amounts of tens of thousands of dollars. Most likely it will be in the range of 50-500 dollars. And here is the problem - the cost of the transaction can be commensurate with the transfer itself, and this has no effect on the network load.

I see the alternative solution as CBDC - it's a blend of a standard financial system, with the benefits of blockchain technology, and minimal end user hardware requirements.

Another reason why cryptocurrency won't be able to help is trivial - most likely the government will simply not allow the realization of a parallel financial system that the government can't control.

PS You know, previously, while my country was at peace, I traveled often and a lot, including being in the beautiful country of .... Indonesia So I didn't get the feeling that banking services are underdeveloped or underutilized. ATM, card payments - everything was available and I used it without any problems.

[DrBeer]

deleted

[Peter90]

Let me be clear - do not consider me a crypto-pessimist I am more of a pragmatist who believes it is better to know the real situation and take into account the real risks than to "hang in the clouds", which I think is unacceptable for financial management....

It is very pleasant to hear an ARGUMENTED answer, with a wide coverage of problem areas ! Quite a rare answer ! Thank you ! +

And I will comment, from my own point of view.

1. about "people who are unbanked and underbanked". Both agree and a bit, in my opinion, controversial. To clarify.
- If we are talking about people who don't have the technical ability to use banking apps, they are also "useless" for the crypto world, since cryptocurrency is the ONLY technological solution for any crypto action.
- I agree - there are people who can't, don't want to, don't have the ability to deal with banks. Yes, cryptocurrency can be a substitute for them. But. Provided that cryptocurrency becomes an official means of payment. Otherwise, in light of the regulation of cryptocurrencies, he will be EXPECTED to work with the banking system. because you can buy products, pay for services can only fiat currency. And withdrawal of funds from the exchange - only to card accounts.

2. "It is estimated that 70-80% of all Indonesian citizens are unbanked or underbanked." - ok, a real problem. But can I clarify - what are the CAUSES of this state of affairs ? Leaving aside the specific problem of interest aversion, according to the creed, banking services are not only interest on loans. It is primarily banking transactions - from payroll to payments.  What is the problem with that ? Is it about p.1 ?

3. "Not being able to save safely". There is a subtle issue here. Saving money, if we are talking about inflation, is in a sense getting .... additional interest from the growth of the value of some asset, by means of which a person tries to compensate for the loss of value, for example, of the local currency. Isn't that contrary to the religious canons? Please do not take this as an attempt to "play on religious feelings", just a really contradictory nuance, at least for me.

4. Is cross-border payments really such a big problem for Indonesian residents ? Perhaps it's just the banking system is "really greedy" ? I have in Ukraine, cross-border transfers, the cost of these services is quite in line with your expectations.

The second issue is the cost of transactions in the network for example bitcoin. Let's be honest - I do not think that there will be a mass need for ordinary people to transfer amounts of tens of thousands of dollars. Most likely it will be in the range of 50-500 dollars. And here is the problem - the cost of the transaction can be commensurate with the transfer itself, and this has no effect on the network load.

I see the alternative solution as CBDC - it's a blend of a standard financial system, with the benefits of blockchain technology, and minimal end user hardware requirements.

Another reason why cryptocurrency won't be able to help is trivial - most likely the government will simply not allow the realization of a parallel financial system that the government can't control.

PS You know, previously, while my country was at peace, I traveled often and a lot, including being in the beautiful country of .... Indonesia So I didn't get the feeling that banking services are underdeveloped or underutilized. ATM, card payments - everything was available and I used it without any problems.

I think that was the longest posting I ever saw in this forum 
My postings are sometimes long too, but mostly because I copy and past   



I'm going to reply later, at the moment I'm going to just quote a posting of mine, as a second example of how cryptocurrencies can improve the economy of one - in this case of a whole block of countries

Currently - starting the 1st of January - Russia has the presidency of the BRIC organisation (I hope I'm not wrong).
If they are serious with this gold-backed stablecoin idea, I think they'll propose it in the next months within the organisation.

This stablecoin should be used in order to settle surplus/deficits in international trades between BRIC countries.
This would be a solution for the fact that those countries don't trust each other's national currencies.
Using gold - the most trusted currency in the world - as settlement medium would boost international trades within BRIC countries.

Now you say Fine but in this case too it's about a gold-backed crypto. So can you give also examples of how cryptos can improve economies, other than gold-backed cryptos?
No 
I'm sure there are such instances but I'm not knowledgeable enough.


My theory - please don't ask me examples for that  -  is that the smoother the financial system works, the better for businesses and in general for the economic system.
The economic boom in Europe during the Renaissance and the 17th century was substantially supported by the birth and growth of a modern banking system, first with the banks in Florence, Italy, then in Germany etc.

Cryptocurrencies - thanks also to blockchain technology - can in my view help to overcome flaws of the current banking system.

Also, as long as the instability - in terms of purchasing power - of a currency impacts economic decisions of individuals and businesses, thus hindering economic development, cryptocurrencies can overcome the instability of a national currency through some mechanisms, e.g. - like BTC - making impossible to multiply arbitrarily the quantity of a currency in circulation.


( as I said, I'm going to reply to your posting later)

[DrBeer]

.....

Thanks for the reply + !
I would love to hear your detailed opinion !

[Peter90]

1. about "people who are unbanked and underbanked". Both agree and a bit, in my opinion, controversial. To clarify.
- If we are talking about people who don't have the technical ability to use banking apps, they are also "useless" for the crypto world, since cryptocurrency is the ONLY technological solution for any crypto action.
- I agree - there are people who can't, don't want to, don't have the ability to deal with banks. Yes, cryptocurrency can be a substitute for them. But. Provided that cryptocurrency becomes an official means of payment. Otherwise, in light of the regulation of cryptocurrencies, he will be EXPECTED to work with the banking system. because you can buy products, pay for services can only fiat currency. And withdrawal of funds from the exchange - only to card accounts.

Ok, misunderstanding about unbanked and underbanked 

Un- and underbanked are people who - for whatever reasons - don't have or have limited access to banking services.
I'm not talking about banking apps but about banking services in general.



Indonesia: according to statistics most of the population - particularly in rural regions - use the postal service for money transfers.
But there isn't a postal office at every corner. So they have to travel to the next postal office. In rural regions that's not a 30 minutes journey on a highway.

Unbanked: If you don't have a bank account, where do you keep your money?
Underbanked: If your bank account allows you only to send/receive money but no options of buying financial products, how do you protect your money from inflation?
How do you invest your savings?



One of the biggest sources of capital inflows into Indonesia are Indonesians migrant workers.
A considerable part of them either don't have bank accounts or their families in Indonesia don't have bank accounts, so they use Western Union, MoneyGram & Co.

How much do Indonesians pay for sending money to Indonesia?

"Among Indonesians who often send money abroad, most are generally aware of the two primary costs in international transfers: the upfront transaction fee and the exchange rate. However, many are still unaware of the actual cost of remittances. Today, the global average fee of sending money abroad is at 6,3%. This means that transferring USD 1,000 (± Rp 15 million) to Indonesia still adds up to USD 63, equivalent to about Rp 1 million in fees.

While upfront fees are usually stated by providers, they often do not represent the total cost of the transaction. In fact, providers tend to add an undisclosed markup on the exchange rate, instead of using the fair, mid-market rate, resulting in consumers being unknowingly charged more than the initially advertised amount.

This issue recently became a topic of discussion on Twitter or X, after Ayudia Chaerani, also known as Ayudia Bing Slamet, an Indonesian actress, writer and musician, shared her experience of sending money abroad to her family and friends on the social media platform. “I remembered there was a time when I transferred money to my friends and family. I know there was supposed to be a fee but when the money arrived, it was less than what I received. If I had known about this, I would have found other ways to transfer money,” she tweeted."

newsroom.wise.com



Value of remittances sent to Indonesia from other countries or territories worldwide in 2021

9,4 Billions USD

So, average cost of sending money to Indonesia - according to Wise - 6,3%
Kinesis currencies transfer fee 0,45%
Calculate the difference and then multiply it by $9,4B

Please note: This are not capital inflows of some foreign hedge funds, this is additional money at disposal of Indonesian ordinary people.
Imagine the impact on the economy, particularly at the brick-and-mortar level.



"Indonesian foreign workers are also another group that encounters hidden fees.
Consumers sending money to Indonesia from abroad are paying a total of Rp 7,61 trillion, which includes Rp 4,76 trillion in transaction fees, and Rp 2,84 trillion in exchange rate margins.
Of the share of total fees paid on inward remittances to Indonesia in 2021, Saudi Arabia, which has the second-largest number of Indonesian workers, ranked first at 37.5%, followed by Malaysia (25.2%), United Arab Emirates (7.5%), and Singapore (4.1%)."

newsroom.wise.com

Using kinesis stablecoins the Indonesian migrants don't save only on transfer fees, they save also on exchange rate fees, as there are none: kinesis kau's get bought at gold spot price and get sold at gold spot price.
No spreads, no buy/sell fees, no exchange fees...

Again: Imagine the impact on the Indonesian economy of such amounts of additional capital at disposal of families and little businesses.


P.S. I had opened a thread in the Indonesian section of the forum hoping for some feedback but unfortunately until now none