5 Reasons Why Cryptocurrency Is Becoming a Preferred Payment Method in Emerging Markets

The digital transition has resulted in increased mobility and additional opportunities for the workforce in emerging markets. 

As technology keeps evolving, there is a growing number of options to get paid, one of them cryptocurrency, which has swiftly skyrocketed in popularity. Recent statistics show that over one million transactions per day are processed in Ethereum. 

According to our study, over 35 percent of contractors in the marketing, management, and engineering fields stated they would like to receive their earnings in crypto, and many of them already do. 

That said, I expect that the adoption of cryptocurrency as a preferred payment method will continue rising, and here are five reasons why. 

#1: Decentralization provides a hedge against inflation

The uncertain macroeconomic environment has a strong impact on emerging markets. For example, currencies like the Turkish lira and the Argentinian peso have, recently, lost a considerable amount of their value. 

Additionally, the International Monetary Fund is still expecting us to grapple with the effects of inflation, against which cryptocurrency can be a protective mechanism.  Because cryptocurrency is decentralized — meaning that it does not belong to any central bank and it is not automatically affected by its decisions —- people can keep eliminating their exposure to the devaluation of their local currency.   

#2: Lower fees in comparison to traditional financial institutions

Especially with cross-border payments, the legacy banking system is expensive, and so are the majority of institutions that control the flow of remittances, like Western Union.

For example, banks can charge a fee of up to 3-4% of the total transfer, affecting outgoing and incoming transfers. Similarly, digital wallets like PayPal obliterate approximately 3.5 percent of the transaction in fees and commissions. This is a stark contrast with crypto, which, in many cases, only takes less than 1 percent of the total value of the payment. 

#3: Increased security

Another advantage of cryptocurrency’s decentralization is that it gives users full control over their wallets at all times, as long as they maintain the security of their private keys, and advanced encryption techniques considerably reduce the risk of fraud. 

Even if it is deemed safe, having money in a bank has risks. The bank can randomly freeze accounts, or if the bank fails due to overexposure or poor internal controls, customers can be left without immediate access to their assets and potentially lose their money. 

#4: Accessibility

According to the World Bank, there are over 1.7 billion people without access to conventional financial services, many of them in emerging markets. 

Unlike banks and other financial institutions, cryptocurrency does not discriminate. Anyone can open a wallet, regardless of location or status, and sometimes even use it to pay their ongoing bills. 

Even large companies like Microsoft are already accepting crypto as a form of payment, and the same goes for major payment processors Visa and Mastercard, which will provide a considerable boost to its popularity and widespread adoption. 

#5: Speed

In addition to being expensive, cross-border payment services offered by conventional financial institutions are slow. Depending on your location, an international transfer processed through SWIFT could take up to two weeks to be completed. And if a transaction is flagged for an erroneous reason, it can take longer or even be rebutted. 

On the other hand, a cryptocurrency transaction usually completes within minutes, depending on the specific network’s load. 

Final Thoughts

Although cryptocurrency can be subject to unfounded hype — which needs to be taken into account — when used correctly, it can provide numerous advantages, especially for emerging markets. Because of this, I anticipate that the volume of cryptocurrency payments will only keep growing, particularly as more merchants enable it as a payment method.

This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.