Case study of countries using crypto and its economic impact

Cryptocurrency has become an important part of the global financial system, and some countries have made progress by accepting or experimenting with crypto in various forms, both legally and economically. The following case studies will illustrate the countries that have adopted crypto and the economic impacts that have occurred.

El Salvador

The acceptance of Bitcoin as legal tender

In 2021, El Salvador became the first country in the world to recognize Bitcoin (BTC) as legal tender, with the aim of: 

• Reduce the fees for international money transfers. (Remittance)
• Increase access to financial services for the unbanked population. (Unbanked Population)
• Attract investors and tourists interested in Blockchain technology.

Economic impact

Positive impact: 

• The increase in tourists and investors interested in Bitcoin
• Some citizens have benefited from accessing financial services through the Chivo Wallet app.
• The infrastructure supporting Blockchain and Bitcoin has been established.

Negative impact: 

• Price volatility causes economic instability.
• The acceptance of Bitcoin is not yet widespread across the country because most people lack knowledge about this technology.

Switzerland

The creation of "Crypto Valley" in the city of Zug

The city of Zug in Switzerland has been dubbed Crypto Valley due to its status as a hub for blockchain companies and cryptocurrency startups. The government encourages the use of crypto for various transactions, such as paying taxes with Bitcoin or Ethereum.

Economic impact

Positive impact: 

• Attract investors and technology startups
• Enhance the country's competitiveness in the FinTech sector.
• Create jobs and promote innovation development

Negative impact: 

• There are security risks in the financial system, such as the cryptocurrency bubble.
• The challenge in regulation needs to keep pace with technology.

Nigeria

Using cryptocurrency to bypass traditional financial systems

Nigeria is one of the countries with the highest cryptocurrency usage in the world, with many citizens using crypto for international transactions or value storage. This is due to the high limitations of the local financial system and the high fees in the traditional banking system.

Economic impact

Positive impact: 

• The public can access the financial system more easily.
• Reduce international transaction fees.
• Stimulate domestic financial development

Negative impact: 

• The risk of using crypto in illegal activities
• The volatile prices of cryptocurrency have caused some people to lose the value of their money.

Republic of China (China)

The development of Digital Yuan

China does not use decentralized cryptocurrencies like Bitcoin, but the Chinese government has developed the Digital Yuan or Central Bank Digital Currency (CBDC) to control and promote the use of digital currency in the economy.

Economic impact

Positive impact: 

• Improving efficiency in the financial system
• Promote transparency in transactions
• Reduce dependence on the US dollar at the international level.

Negative impact: 

• There are limitations regarding user privacy.
• Strict controls may reduce flexibility in the system.

Cryptocurrency has the potential to transform the global economy, with both positive and negative impacts depending on how each country adopts it. For developing countries or those with unstable financial systems, the use of cryptocurrency can help solve the problem of access to financial services. Meanwhile, developed countries can use this technology to promote investment and innovation.