Here’s Why Small Island Economies Need Bitcoin

I'm here in a small Country, you've Probably never heard of Investigating a problem Most people just aren't Aware of. I think we have more Cape Verdeans outside Of Cape Verde. In fact, there are more Of them living abroad Than on the islands. We have more people Abroad than here. But this problem isn't Just specific to here. It can also be found Here, here, and in fact All over the world. And this problem could End up being one of the Defining use cases for Bitcoin. The problem That I'm getting at is Remittances. People Living abroad, sending Money back home. Now, this might not Seem like a mind Blowing revelation. That will of course Come later, but as I Talk to locals, Navigated a currency

System in shambles, and Endured middlemen Thievery, I stumbled Upon deeper economic Issues that plague Islands like Cape Verde. And as so often Happens, I realized the Solution for many of These problems was Sitting right in front Of me. And it could be Applied not only here, But in similar Environments around the World. I'm global Reporter Joe Hall, Bringing you another Cointelegraph Documentary. Welcome to the island Of Sal, Cape Verde. Let's see if Bitcoin Can fix things here. Welcome to Sal, one of The ten small islands That make up the nation Of Cape Verde. Cape Verde is roughly the Size of the state of Rhode Island or Liechtenstein for the Europeans, and is Situated in the

Atlantic Ocean off the Coast of West Africa. Now, Cape Verde suffers From a common Characteristic among Small island developing Nations. More of its Citizens live abroad Than at home. And do You have relatives that Live abroad? Yes. I have a lot of Relatives living in Europe, America. I have a brother that Lives in Portugal and Some other cousins that Live in Europe. In fact, the International Organization for Migration estimates That there are twice as Many Cape Verdeans Living overseas than Domestically. In the State of Massachusetts Alone, there are nearly 70,000 Cape Verdeans. Now that's three times The population of Sal, The island that I'm Currently on. Knowing This, it will come as

No surprise that a Whopping 15% of Cape Verde's GDP is from, You guessed it, Remittances. Let me put It this way $0.15 on Every dollar of Cape Verde's economy is from Work carried out Thousands of miles away By relatives living in Places like the United States, Europe, Africa And Brazil, where Salaries are usually Higher and jobs are Abundant. To put that In perspective, the World average Percentage of GDP for Remittances is 5%, Three times less than That of Cape Verde. But that isn't the main Issue. The real problem Lies in the process of Sending money back Home, which is Multiplied by the sheer Quantity of money being Sent home. And that Problem is mainly Caused by these guys. Let me show you just

How bad it is, because More Cape Verdeans live Outside the country Than on the islands. That means money is Being sent home every Day and money transfers Like this guy are Everywhere. Cape Verde Is one of the most Expensive places in the World to send money to. Western Union on Average, charges a fee Of roughly 10% of the Total amount you send. So if you send home $200, Western Union Takes $20. And that's not Forgetting the cost of Having to drive into Town, wait in line and Potentially be told, Sorry, madam, we've Just run out of cash. We've just closed. The Machines are buggy Today. The money hasn't Arrived yet. All common Occurrences at banks Around the world, and Particularly in Cape Verde. And still, every

Day people queue up Trying to receive money Or send their Hard-earned cash home. I was dumbfounded by This experience, so I Decided to call up a Good friend of mine to Help better understand The situation. So this Is Andre Loja, an Entrepreneur who Brought Bitcoin to the Island of Madeira, some 500 miles north of Where I am. What would happen if he Tries to convince the President of Madeira to Embrace Bitcoin? Madeira is another small Island developing Nation that shares many Of the same economic And diaspora concerns As Cape Verde. A lot more Madeirans Live outside of Madeira Than on it. It's estimated to be 1.2 to 1.4 million Madeirans in Venezuela. As you know, the Communists are the

Ruling party in Venezuela, for example. They make life very, Very hard for Remittances. So people Get creative. There's a lot of black Market activity going On. You know, they buy Dollars on the black Market. They send it To countrymen or banks That they have in Florida, or in Miami To those that belong to Venezuelan people. And from there they Send it to Portuguese Banks. But again, they Lose a lot in fees, a Lot of it in exchange Rates. The rates in the Black market are Horrific. So it's Terrible! The island's official Currency is the escudo, But even things in the Supermarket are priced In euros. Just look. The island now has Effectively three Different circulating Currencies, which means

Three different Exchange rates and a Whole bunch of other Inconveniences. This is An escudo. 2000 of These are worth roughly 20 of these in Cape Verde. You can use Either of these and Sometimes these to pay For goods and services. So of these options Which would you choose ? Probably these two, Right? And that right there is A problem. It's what Many developing nations Around the world are Currently facing. That means tills often Run out of physical Change to give Customers, or they give Back the wrong change Or "confused change" I.e. a mix of euros and Escudos and sometimes Dollars. I'm paying in Euros for 850 escudos. So that's it. I get Euros and Escudos Back. Bizarre. Wild, hey. Where in the

World does that happen? While finding the right Change can be a bit of A nuisance, it actually Handicaps commerce. If you attempt to pay For a small ticket item With a €20 or even a €10 note, the cashier Might reject the sale. Why? Well, there simply Isn't enough cash in The register to give You the correct change. It's a peculiar but Pointed situation where Having too large a note Prices you out of the Purchase while the Merchant misses out as Well. Like many other Smaller currencies Around the world, from The Norwegian kroner to The Vietnamese dong to The Tunisian dinar, the Value of the Escudo is Collapsing into the US Dollar. That's despite The fact that the Escudo is "pegged" to The Euro, and that's Pegged in quotations Because Cape Verde is

Experiencing higher Levels of inflation Than the eurozone. The physical money Issues are compounded By the introduction of Mastercard and Visa Services. I was Surprised to see that In lots of shops and Businesses, they simply Would not accept Plastic, or they would Charge upwards of 4% to The customer—not the Business—if you elect To pay by card. As a Result, credit cards Are mostly used by Tourists, while Cape Verdeans stick to cash. To get a better Understanding of this Issue, I talk to the First business owner to Accept Bitcoin on Cape Verde. Renato Evarchi From Ocean Club Cape Verde. Now, Renato is One of the island's Business moguls and a Respected member of the Community. He hopes to Roll out Bitcoin

Acceptance to other Parts of the island. Many merchants here Prefer to pass that Cost onto customers, Despite the fact that It's against the law. When companies want to Accept card, they signa Contract where it is Made very clear that it Is absolutely forbidden To pass on the cost to The customer . But the culture here Is a little different. Bitcoin overcomes this Problem and it Represents a real Opportunity because it Eliminates transaction Fees. Moreover, it Could bring greater Benefits and bring Cape Verde closer to European practices . ATMs are another example Of why cash reigns king In Cape Verde. Even if the bank offers An attractive interest Rate, the high cost of Withdrawing money

Outweighs the implied Savings. Now, ATMs Charge as much as 5% to Withdraw money, Regardless of the card Issuer's nationality. Plus, the ATMs Regularly run out of Cash and the Dispensaries hosted in Banks are closed on Evenings, weekends, National holidays, and They're only working During working hours. So if you work a 9 to 5 Job, you have to take Time off to use banking Services. As the Financial Inconveniences, the Fees and the Frustration mounted, I Got that funny feeling I've experienced in Other parts of the Developing world. Why should people pay a Tax to the likes of Western Union to send Their hard-earned money To families back home? Why pay a 4% fee to a Corporation like

Mastercard to process The payment for a loaf Of bread or some fish On an island some 5000 Miles away from the United States? Why be handicapped by a Currency when the till Runs out of coins? Why put up with soaring Inflation? Surely There's a better way, a Better way of saving, Spending and storing Money. And no, I'm not Talking about leveraged Loans, CDOs, trading, Or ETFs, but merely the Ability to spend, save And move money around The world without being Taxed for the Privilege. As you can Probably guess, I was Starting to think about Cape Verde and how it Could use Bitcoin. Let me break it down. Bitcoin is a uniquely Digital form of money That lives on the Internet. It has an Incredibly low barrier To entry. All you need

Is a phone, which all Cape Verdeans have, and An internet connection To start sending, Saving and spending Money. Fortunately, Mobile phone Penetration is very High at over 100% in 2020. Plus, all of Cape Verde's islands have Three and sometimes 4G Internet connectivity, More than enough to use The Bitcoin network. As a remittance tool, Bitcoin's the Lightning Network charges fees of A fraction of a cent to Send money around the World. Bitcoin never Runs out of cash and it Always gives the Correct change because There is none. You can Simply scan or tap an Invoice and if you have Enough bitcoin, you pay It. Simple as that. Moreover, given the low Fees on the Lightning Network, using Bitcoin For day-to-day Transactions can

Benefit the business Owner and the customer Alike. Merchants can Sidestep Mastercard's High fees and they can, If they choose, pass on That saving to the Customer. Yes, the Price per bitcoin is Incredibly volatile, But it does not debase The way fiat currencies Do. Over time, it has Gained in value against Legacy monies such as The dollar, the euro And certainly the Escudo. What's more, Places around the world That have adopted Bitcoin, such as El Salvador and Lugano in Switzerland, have seen An increase in Bitcoin-related visits, Investments as well as Business expansion. Cape Verde could Certainly do with a Similar boost. The Cape Verdeans I spoke to Preferred to store Their cash at home Rather than in

Financial institutions, So they are already Familiar with Controlling their own Money. And one of Bitcoin's mantras is The idea that you can Be your own bank. Nonetheless, as ever, Bitcoin's stumbling Block is education and The hurdles posed by Transitioning to a Fully digital age. In conversation with "Mr. Africa," a tour Guide on the beach in Sal, I showed him how To download a Bitcoin Lightning Network Wallet. I sent him some Sats (Bitcoin) and he Was indifferent. Sent. Yea. Or 2500 SATs. Yeah. What do you think? I've been interested in Bitcoin, but since It's not working here I've not had much Interest in it. But It's something nice. In cash economies, there Is a cognitive leap

Between physical cash And digital Sats, or Satoshis, the smallest Amount of a bitcoin. However, the proverbial Penny started to drop As he slowly came Around to the idea. I'm Joe Hall, reporting From Cape Verde. This Has been another Cointelegraph Documentary. The world is like a Small village – it's Digital. So Bitcoin is The fastest way of doing Transactions, which Everybody would like To do. I'm not an Exception. I would like To have knowledge about It and also know how I Can do transactions.