Stablecoins and Blockchain: Empowering Underserved Regions and Reshaping Finance

Written by Katarina Kupcikova

Blockchain technology is proving to be a transformative force in addressing social and economic challenges, particularly in underserved regions and developing countries. As of 2023, the global investment in blockchain for social impact continues to rise, with initiatives focused on leveraging stablecoins and blockchain solutions to drive financial inclusion, transparency, and economic empowerment.

Financial Inclusion Through Stablecoins

In many developing countries, traditional banking systems are often inaccessible to large segments of the population. Stablecoins, a type of cryptocurrency whose value is pegged to a stable asset like the US dollar, are emerging as a vital tool for financial inclusion. These digital currencies offer a reliable means of transacting and saving money without the need for traditional banks. Startups in Southeast Asia, such as Coins.ph, are utilizing blockchain to provide mobile financial services, enabling individuals to access banking, remittances, and even cryptocurrency transactions. This initiative integrates underserved populations into the global economy, unlocking opportunities for economic growth and stability.

Bypassing Forex Restrictions and Enabling Cross-Border Transactions

Stablecoins offer a practical solution not only for small and medium-sized enterprises (SMEs) but also for individuals in developing countries. Cryptocurrencies, particularly those pegged to USD, are commonly used for remittances to countries where accessing banks is difficult and remittance fees are exorbitantly high. Public blockchains, which underpin stablecoin transactions, facilitate rapid and cost-effective cross-border transactions without intermediaries. This borderless nature of blockchain technology enhances trade efficiency and reduces transaction costs, empowering both businesses and individuals to engage in global commerce more seamlessly.

Transparency and Accountability in Supply Chains

Blockchain's impact extends beyond finance into areas like supply chain transparency and ethical trade practices. Initiatives like IBM's Food Trust utilize blockchain to track food products' journey from farm to store shelves, ensuring consumers have access to sustainably sourced goods. Similarly, Everledger employs blockchain to trace the origins of high-value goods, such as diamonds, verifying ethical labor practices and protecting workers in developing countries. Use cases also extend to luxury items like wine and cars, where blockchain ensures authenticity and origin transparency.

Reshaping Savings and Economic Stability

The adoption of stablecoins and cryptocurrencies in countries like Kenya, Nigeria, Venezuela, and Vietnam reflects a growing trend of consumers turning to blockchain-based assets to preserve their savings amidst economic turbulence. By utilizing stablecoins and participating in decentralized finance (DeFi) ecosystems, individuals and SMEs gain access to flexible liquidity options, enabling them to manage capital needs more effectively. Stablecoins allow people from these countries to have access to USD and secure their savings in a much more stable currency compared to their national currency, which tends to devalue significantly over time.

Blockchain technology, particularly through stablecoins, is reshaping how we address social and economic challenges in underserved countries. From fostering financial inclusion to promoting transparency and ethical practices, blockchain-based solutions are unlocking new pathways for economic empowerment and sustainability. As these technologies continue to evolve and gain traction, their potential to drive positive social impact across the globe becomes increasingly evident, ushering in a future where technology and social responsibility are intertwined for the greater good.