For people living in societies operating with global reserve currencies, it is almost impossible to picture the scale of financial exclusion that happens in the world. If you live in a country with any of the following currencies:

• United States dollar
• Great British pound
• Euro
• RMB
• Canadian dollar
• Swiss franc

Then you are part of the fortunate minority or “golden billion” in which your money is valuable enough that other governments around the world want to invest in it. For everyone else, the harsh reality is that they are living in one of two systems: either they are in an authoritarian regime in which their money can be confiscated and not traded freely, or they operate under a weak fiat money that is subject to rapid devaluations, making it impossible to store or accumulate wealth. For most people in the world money is a problem, and until recently there has been no real solution.

Lyn Alden’s comparison of “bad money” to “arcade tokens” effectively illustrates the challenges of navigating poorly regulated financial systems. Just as arcade tokens serve as a medium of exchange only within the arcade itself, inflationary money becomes undesirable for anyone outside the economy in which it operates. When individuals are compelled to store their wealth in ineffective forms of money, they find it difficult to trade with those beyond their closed system. On top of this, in many of these regimes, the tokens are issued by corruptible institutions, and people are unable to leave as they would in an arcade.

This article will highlight some fundamental flaws in commerce across the globe and offer the solution that Bitcoin provides. Bitcoin is often incorrectly labelled as having no real world utility but this is a complete falsehood. In helping all people gain equal access to a decentralised monetary network, it has become the biggest opponent of financial injustice and a key tool in humanitarian aid in the darkest corners of the world.

Currency Debasement

Currency debasement is the sudden loss of value in any given currency through an increase to the money supply, usually a result of excessive printing of money. While all fiat currencies experience inflation over time, nations with more instability can experience overnight debasements that devastate the purchasing power of the individual. Historically, there are some well documented occasions of this occurring, with recent examples including Venezuela (2010s) and Zimbabwe (2000s), which were ravished by hyperinflation and had to restructure their entire monetary system. However, what is more unknown is that these are not isolated incidents and the excessive printing of money has caused drastic debasement of fiat currencies within the last year. Below are some examples of overnight devaluations of currencies in recent years:

Malawi - Population: 21.3million

Malawi devalued their Kwacha by 44% against the US dollar in May 2022 to combat the persistent imbalances in foreign trade markets as the Malawi government had artificially inflated the money supply to an unsustainable level. In a country where only 11% of the population have access to electricity, a debasement of this magnitude undoubtedly results in the significant loss of human life. Even some of the most affluent businesses in the nation could not escape the major repercussions of the currency debasement. Telecom companies, a major source of economic activity in Malawi, went from grossing profit of 37 billion dollars to less than 0 after they endured a $50bn loss on foreign exchange. When the people took to the streets to protest against the tax laws, the IMF gave instructions to police to ignore the complaints.

Nigeria - population 21.3 million

In June 2023 the Nigerian central bank allowed the Naira to drop 36% against the dollar market. This became necessary due to the huge discrepancy between the official exchange rate and the black market exchange rate in the country. Nigeria is one of the largest economies in Africa and this big hindrance on international trade has a staggering effect on the local purchasing power. Once again, this currency debasement was without warning and with no discussion with the people most affected by the consequences.

Egypt - population 114 million

Since March 2022 the Egyptian pound has undergone a 70% depreciation. This has mainly been catalysed by the attempts of the government to completely monopolise the gold supply of the country. The enforcement of this policy has involved widespread confiscation of individuals’ gold holdings, forcing them to sell to the government at a fixed and significantly undervalued price. After stealing the country’s hard assets, the government proceeded to print excessive money to finance their spending, using their gold reserves to protect them from the money devaluation. With no hard assets left, the workers of the country were not afforded the same protection.

Bitcoin solution - Currency debasement

A common misconception is that people in these countries can hold their money in USD to protect themselves from debasement. In reality, while governments will hold reserves of the US dollar to protect themselves from their own wealth depreciation, everyday people do not have access to the dollar. The majority of people in the world are trapped inside their own economies, unable to bank transfer abroad or access apps like paypal to exchange with people from outside their country. The primary consequence of being forced to hold “bad” money is the value of your work (which is really the value of your time) is massively devalued against the world labour market. Consequently, foreign markets are able to get cheaper goods from economies that have been monetarily mismanaged. This has culminated in a huge portion of the globe’s workers earning next to nothing, as their labour is squeezed and exploited by richer countries with more stable currency.

Bitcoin ensures the time and energy of its holders remains intact. Being an entirely fixed form of money, it is immune to government debasement. By holding Bitcoin instead of fiat money, when money printing occurs, the purchasing power of bitcoin increases proportionally to the increase in the fiat money supply. Thus, the more irresponsible the monetary policy of any given government, the greater protection Bitcoin provides against the subsequent inflation. As demonstrated in the previous examples, those most heavily affected by financial exclusion and monetary mismanagement are often from economically isolated and disaffected portions of the world. As such, Bitcoin acts as an equaliser for economic participation, with every user on the network subject to the same rules, and the rules immune from the decisions of any third party ruler.

Dual rates of exchange

Another use case for Bitcoin is overcoming the boundaries set by unfair dual rates of exchange. This occurs when a country maintains two separate exchange rates for its currency; an official rate and a street rate. The official rate is set by the government and is often set at a fixed rate or pegged against another currency, making it unreflective of the money’s true value. In contrast, the street rate is determined by supply and demand, allowing the price mechanism to dictate an exchange rate that is agreeable to all participating actors. Here are a few examples of countries with huge disparity in the two different rates:

Venezuela

• Official rate: Approximately 4.5 bolívars per US dollar.
• Street rate: Up to 20 bolívars per US dollar.

Argentina (Recently amended by Milei)

• Official rate: About 350 pesos per US dollar.
• Street rate: Around 700 pesos per US dollar.

Nigeria

• Official rate: Approximately 470 naira per US dollar.
• Street rate: Around 800 naira per US dollar.

Iran

• Official rate: About 42,000 rials per US dollar.
• Street rate: Approximately 600,000 rials per US dollar.

Egypt

• Official rate: About 30 pounds per US dollar.
• Street rate: Approximately 36 pounds per US dollar.

(Street market rates are ever changing and thus hard to measure exactly. - Figures from Xrates)

Within local communities very few transactions will occur using the official rate, with most people engaging in commerce without the oversight of government. The difference between the official rate and the street rate becomes a problem when trying to send money within or into a country through any official channels. This encompasses all trade deals and government contracts, but also any money activists, charities and family members are trying to send money to individuals from abroad.

Lets use Venezuela as an example:

If someone, working in the US wanted to wire money to their family in Venezuela then they would likely do it through Western Union using the official rates. Sending 100 dollars through the government approved exchange rate would get you 450 bolivars; and this is before the Western Union has taken their fee. Transaction fees vary when using international transfer services, but let’s assume the family received 400 bolivars all together. However, we know the street rate is closer to 20 bolivar per dollar so the actual value of an 100 dollar transfer should be closer to 2,000 bolivar than 400 bolivar. That means that 80% of the actual value, (what those dollars could actually buy in Venezuela), is absorbed by third party institutions. For every 10 hours worth of wages sent, 2 hours worth of wages are received. Scenarios such as this are common occurrences when moving money overseas, with both charities and individuals subject to these financial barriers when trying to support people abroad.

The Bitcoin Solution: Dual rates of Exchange

Satoshi Nakamoto’s paper “Bitcoin: a peer-to-peer electronic cash system” began the process in which the “Bitcoin” money was born out of. The importance of this title can not be understated, as it clearly indicated the primary purpose of Bitcoin was not to act as money, but to be able to move value from person to person, without the need for a third party. Thus, it is the perfect tool to overcome the financial injustice posed by the dual rate of exchange problem.

Using the same example as earlier, if an individual opted to send money using bitcoin instead of the Western Union then all of the value from the transaction would be retained. Payments can easily bypass controls and do not need to be verified, processed or settled by any untrustworthy party. Not only is security less of a risk, with transactions ratified by the blockchain, but there is also no heavy service charge from the Western Union to contend with. Once at the local level, the recipient can choose to keep the bitcoin, or exchange with a money dealer into their local currency (for a fair price due to Bitcoin’s high demand.) Born out of necessity, bitcoin vendors are already widely available in most underprivileged economies, with each adoption cycle increasing the ease at which BTC can be traded locally. The network is under constant development and improvement, with updates such as Manchankura meaning internet access is not even a requirement in entering the market.

Future of commerce

The world’s current financial system is predicated on exclusivity. Grounded in years of poor centralised decision making, being able to transact fairly with our peers has become a privilege rather than a basic human right. The majority of people on the earth have a poor relationship with money, with structural barriers impeding how they can acquire, store and transfer wealth. This article has highlighted just two ways in which third party institutions control the commerce of normal people, but this is just scratching the surface in terms of the corruption in the industry. The inequality in our monetary models is so deeply ingrained the only solution is to refuse to take part entirely.

Bitcoin is the ultimate equaliser to economic participation because although it may not be for everybody, it is for anybody. Bitcoin is an unbreakable set of rules, the very first of which is it can not discriminate between its users. While a person living in a bubble in New York or London may not see its value yet, it is so important it is available to the people that need it most. The more self interested the government is, the more protection bitcoin offers. The more severe the regulation, the more freedom bitcoin offers. By moving financial power from the few and giving it to the many, bitcoin will reform the methods in which people interact with one another. The future of commerce looks to be far more inclusive and equitable on the back of Satoshi’s invention.