This post was written for ArabNet, and first appeared on their website.
In an earlier post, I introduced Bitcoin through storytelling, and briefly highlighted its benefits over conventional money and payment services. This time, let’s look at a few revolutionary applications of Bitcoin in The Middle East and the world. Read through until the end to hear about an exciting update.
The Rise of New Markets
Bitcoin is a technology that has the potential to redesign our global financial landscape from the ground-up, to better serve an increasingly digital and globally connected world. Here are only a few ways in which Bitcoin’s attributes can lead to major improvements.
According to the world bank, there is more than $500 billion that circles the globe through remittances (e.g., sending money back home to support your family). The average cost of these payments is more than 8%, and significantly worse in less developed countries–the countries that need it the most. That’s $40 billion that’s lost to fees in order to move the money around. And the Middle East is no stranger to these flows of money. The MENA region accounts for as much as 15% of that share.
A shift towards using Bitcoin for international money transfer could potentially unlock billions of dollars for the people who need it the most. This is achieved thanks to Bitcoin’s extremely low cost of money transfer.
Banking the Unbanked
There are 2.5 billion people around the world today that are either unbanked or under-banked. That’s almost 50% of the planet’s adult population that is left out by our current financial system, and forced to live in a cash-based society. These individuals cannot benefit from all the financial products that contribute to their prosperity, and in return cannot contribute to growing their economy.
The Middle East, unfortunately, ranks among the lowest in terms of financial inclusion (access to basic financial services). The regional average barely stands at around 20% of the adult population (with accounts at a formal financial institution).
Mobile penetration, in contrast, is quite high across the world (90%) and especially so in the Middle East (110%; including people with multiple mobile subscriptions). The inclusiveness of the Bitcoin protocol has the potential to bring all of these individuals, regardless of their financial situation, into the digital economy!
Bitcoin is a global and open network, that only requires access to a phone or an Internet connection. This means that, as more mobile-based Bitcoin services are built and made available, millions of unbanked individuals may soon have access to easy and affordable financial services.
Getting Rid Of The Ads
Bitcoin also introduces a new category of payments that was previously impossible: micro-payments; payments of less than 1 Dollar, Dinar, Dirham, Lira, etc.. Because of the high transaction costs, these micro-payments were only possible in cash (but still remained impractical). Bitcoin makes this possible and even attractive, since the transaction cost is negligible. This has the potential to reshape many industries and even create new ones.
Let’s look at the world of online content monetization (e.g., articles, news, videos). It has been dominated by advertising. Any time you access content on the Internet you are forced to watch an ad placement (or pay a subscription fee). Imagine if, instead, you could pay pennies for each nugget of information you consumed, or even tip the person that has produced it. Bitcoin allows you to pay cents or even less for each article, video, news source, etc. and only when you want it. This is the pay-per-x model (pay-per-article, pay-per-video, etc.).
But, We Still Have Work To Do
Bitcoin is still in its early stages of development. There is no doubt that all of the above is great. But for it to become a reality soon, we (Bitcoin entrepreneurs and advocates) still have work to do before Bitcoin’s full potential is reached.
For example, there aren’t nearly enough products and services built to make Bitcoin as useful as described above (e.g., remittance product); it still isn’t easily accessible in most regions because of limited infrastructure (e.g., local exchanges); it remains a complex technology that needs UX (user experience) improvements before it can reach mass adoption, etc.
However, none of these are insurmountable problems. And many ambitious entrepreneurs are already working on these issues in different corners of the world. I believe it’s a matter of when–not if–all of this happens.
What’s Next For Bitcoin In The Middle East?
This is only a small selection of the innovative ways in which Bitcoin can reshape industries. And for these reasons and many more, the Middle East is gearing up to join the Bitcoin economy. There have been many events popping up across the region, in Lebanon, Jordan, Dubai, and more.
The most exciting event so far–one you won’t want to miss–is #CoinTalksDubai on April 21st! This event will be bringing regional and international Bitcoin experts to introduce Bitcoin and talk about the latest developments. So if you’re curious, want to learn more, or want to engage with digital currency enthusiasts, entrepreneurs, and investors, I’ll see you there. (Full disclosure: I am helping organize this event.)
And to stay up to date on all things Bitcoin in the Middle East, be sure to check out ShuBitcoin.com.