Cardano brings technology to developing countries

Published 3.7.2023

People are looking at cryptocurrencies from two angles: economic and technological. Let us think about whether people in developing countries need a new form of money or rather a financial infrastructure. At first glance, it may seem like one and the same, but it is not.

Cryptocurrency vs. blockchain

Cryptocurrencies are associated with an economic aspect. For some, it is a new (better) form of money. For others, it is an investment or speculation. In the context of the article, we don't need to make that distinction. The important point is that cryptocurrencies are highly volatile.

Blockchain is a technology. From the perspective of users, it is the infrastructure that allows cryptocurrencies to be transferred. The second generation of blockchain has added additional features such as token minting and the deployment of decentralized applications.

Each blockchain project has native coins that are directly linked to the network consensus. Owning coins requires installing a wallet and using the network to transfer them. People perceive coins either as a ticket into the ecosystem or as an investment in a project. In the case of investment, coins can be held on a centralized exchange.

Over 95% of people hold coins on exchanges. So we can say that for most people cryptocurrencies are mainly investments. We can also say that most people are not yet interested in using the infrastructure. This is especially true for first-generation blockchains like Bitcoin. The financial aspect prevails. Smart contract platforms, such as Cardano or Ethereum, are being built as financial platforms. Although people hold the coins of these projects largely on exchanges, similar to all other cryptocurrencies, the number of infrastructure users is growing.

Blockchain was first adopted by Westerners. It is only in recent years that efforts have been made to get people from developing countries to use these modern technologies. The IOG team is working with governments in several developing countries to use Cardano to build infrastructure. Other projects are trying to do something similar. For example, Bitcoin fans are trying to get people from Africa to buy BTC and start using Bitcoin infrastructure.

There is an unhealthy (even toxic) rivalry between cryptocurrency communities when trying to help developing countries understand and deploy blockchain technologies.

Will the poor improve their situation by buying a volatile cryptocurrency or by having a modern financial infrastructure that they still don't have? Can a single blockchain project provide everything these people need? Let's explore this more.

Volatility can't solve high inflation

In some developing countries, there is very high inflation of local fiat currencies. If people do not have access to another more stable (western) currency, they lose their wealth.

One of the main narratives circulating in the cryptocurrency communities is that monetary inflation is a problem and that in the future we will be using cryptocurrencies with a capped number of coins.

The same argument is used as a reason why people from poor countries, such as in Africa, should start buying cryptocurrencies. One of the other arguments is that they have no financial infrastructure and that blockchain is available wherever there is the internet.

The problem with this argument is that Westerners consider cryptocurrencies mostly as an investment. They continue to use fiat currencies because inflation is not as high and the infrastructure works reliably. Few cryptocurrency fans are able to deal with their high volatility and stop using fiat currencies.

It can help people in poor countries like Africa to buy volatile cryptocurrency if fiat money inflation is so high that it can lose half its value in a relatively short period. It's just that even cryptocurrencies can lose half their value in a year, and market value growth is more of an assumption or aspiration than a certainty.

I dare say that people in developing countries benefit more from access to stablecoins (tokenized USD) than to volatile currencies like ADA or BTC. A cryptocurrency may retain more value even in the short term than a highly inflationary fiat currency, but USD is almost guaranteed to retain it.

Poor people need to solve a problem in the short term. The long-term perspective is important, but saving is an afterthought for them. Saving in stablecoin is a sufficient and more reliable solution for these people than cryptocurrencies.

This may be an unpopular opinion, but I personally wouldn't recommend people from poor countries to buy cryptocurrencies if they have access to USD either physically or via blockchain. If they understand that most Westerners see cryptocurrencies as an investment (not money they use every day) and want to participate in buying them, they can. But they have to account for the risk of losing value just as much as Westerners do. It is usually much easier for rich Westerners to ride out a long bear market.

Access to blockchain in developing countries is mainly about access to the Internet. Wherever there is the internet, stablecoins are available.

Cardano is no competition for Bitcoin

Bitcoin maximalists sometimes condemn other projects, including Cardano, arguing that ADA is trying to be better money than BTC. Because maximalists consider BTC to be the best money, Cardano is not good for them even as a technology. They take this stance even when trying to adopt blockchain technology in poor countries, saying that everything except Bitcoin is a scam. But they are doing more harm than good to developing countries with this approach.

Bitcoiners are blinded by the economic aspect and completely overlook the technical one. They are trying to give the impression that blockchain adoption is only about the ability to preserve value (investment) which is the predominant view of Westerners. I dare say that Cardano is not presented in such a way that ADA is better money than BTC. No one is arguing that people from poor countries should buy ADA and that it will solve their problems. It's certainly not the mainstream view.

You will never have a guarantee that the project with the highest market capitalization is the best technology available for your problem (e.g. value transfer).

From the beginning, Cardano is being built and presented as a blockchain that will be decentralized and accessible to all people on the planet, especially those who need it most. The focus has always been on the potential of the technology, not on the potential growth of the market value of ADA coins.

In 2021, the cooperation between the Ethiopian government and representatives of the Cardano project was officially announced. The announcement was preceded by a long collaboration regarding a project to establish digital identities (DID) for students and teachers.

ADA has not become a legal tender in Ethiopia. What people are actually adopting is not ADA coins but Cardano technology. If you do not have an identity, it is logical that you cannot access banking services such as loans or insurance. If you don't have a trustworthy identity, you can't even prove that the diploma you hold in your hand is really yours and that it is authentic.

If people were to voluntarily decide which blockchain to use, Cardano and other SC platforms offer them more options than just transferring volatile cryptocurrencies.

As we explained above, stablecoins are more useful to poor people than volatile cryptocurrencies. The stability of the financial system is important for the healthy economic development of any country in the world. It will be impossible to build a stable economy on volatile cryptocurrencies in the next few decades. This is simply a reality that must be acknowledged. Developing countries basically have two options. Either dollarize themselves through the blockchain (or use another reserve currency such as the Euro or Yen) or mint their own currency on the blockchain. This may seem unrealistic for now but in 2020 the Marshall Islands used a private version of Algorand to introduce a national currency.

Cardano will allow people from poor countries to use stablecoins. In cooperation with governments, it is possible to build a national system for citizen identity. People will have access to all financial services that arise on Cardano. They will essentially connect financially and socially with the whole world. Governments can build their own DeFi services (banks) for their citizens. They even have the ability to create their own digital national currencies, including rules they set themselves (such as fixed inflation). For example, the Marshall Islands algorithmically set a fixed annual inflation rate of 4%.

If citizens have an identity, it is conceivable that people could participate in voting through the blockchain (probably through a second layer designed for this purpose).

If you think about it, developing countries could theoretically have a modern and even freer infrastructure than Western countries. Politicians can decide what systems will be on the public blockchain infrastructure and where permissioned systems are better suited.

Cardano is not a rival to Bitcoin on a technological level, as it brings a completely different opportunity to developing countries. The IOG team is building an inclusive system. There are many details the team must think about. For example, ensuring that the on-chain fees remain low and do not increase significantly even if people just decide to buy NFT in bulk.

It is expected that the normal on-chain fee will have to be in the order of tens of dollars over the next few Bitcoin halving due to the well-known issue of the security budget. Hard to predict the future. However, if standard fees were such high, Bitcoin would essentially become unaffordable for developing countries. Using the Lightning Network requires on-chain transactions (closing and opening channels regularly), so it's not a solution despite many people thinking it is.

This will be another unpopular opinion, but Bitcoin is not a suitable technology for developing countries. Unless low on-chain fees can be secured in the long term, Bitcoin may only be a temporary solution during bear markets.

Don't get us wrong. We're happy that the adoption of any blockchain is underway. You always have to ask yourself if the particular problem being addressed is the best solution available and if will it deliver what people expect it to. It seems to us, that many Westerners try to present blockchain to people in developing countries as the solution to all their problems and promising the impossible. In doing so, they overlook the technological capabilities of the project and its long-term vision and sustainability.

I don't think Bitcoin is designed to be a suitable technology for mass adoption from a technology perspective. The team and the community have no plans to change that. The second layer will always be limited by what the first layer allows. On the other hand, Bitcoin is strong as a cryptocurrency, from an economic perspective. I imagine that people from poor countries will be able to speculate on the market value of BTC or save it for retirement.

Cardano will allow BTC to be tokenized, so it may become the best i.e. economically available layer for it. Technology is evolving and it is possible that solutions will emerge in the Bitcoin ecosystem that allows the use of BTC without having to pay for on-chain transactions. If not, it will be more economically viable to buy a portion of BTC in a tokenized form on Cardano than to pay an on-chain fee just to transfer BTC value. In the Cardano ecosystem, it will be possible to transfer tokenized BTC to Hydra and send it there very cheaply or use it in DeFi.


If there is ever to be mass adoption of cryptocurrencies, they need to be cheap to use (including onboarding) and enable the same things we can do with current fiat currencies. They need to be a good medium of exchange in the short term. They must be a good store of value in the long run. People must be able to send them quickly and cheaply at any time. In addition, we need to have the same financial services available that banks offer today. If the blockchain industry cannot deliver this, it will not be able to fully compete with the current financial world and will be seen as speculation with uncertain potential. It is almost certain that a single blockchain project cannot provide all this.

El Salvador has adopted BTC as a legal tender, but for the majority of the people of this country, this has not yet brought any improvement in living standards. People living in the Marshall Islands have a currency on the blockchain and the state has decided to treat the DAO as a legal entity. Students from Ethiopia are getting used to having a decentralized identity on the blockchain. Different countries have approached the adoption of blockchain technology in different ways and that is good. Only time will tell which approach will be most useful. Let's not conflate utility with market capitalization, as they can be two very different things.


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