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Crypto Remittances: Empowering Developing Economies

Crypto Remittances: Empowering Developing Economies

CAIZ
Crypto
February 27, 2024
CAIZ- Pioneering Islamic Finance in The World of Cryptocurrency

In a world where connections are everything, the movement of money across borders is a crucial force driving families and economies forward. Remittances, the transfer of funds by migrants to their home countries, are a beacon of hope for many developing nations.

Though traditional systems may have limitations such as high fees, slow processing times, and limited accessibility, the potential game-changing power of cryptocurrency presents an inspiring vision of a more inclusive and accessible financial future. 


The Impact of Cryptocurrency in Developing Countries 

 

Cryptocurrencies like Bitcoin are often considered an investment option or viewed with suspicion in developed countries. In the financial world, where conventional centralised finance concepts still dominate, Bitcoin is often regarded as a risky undertaking and a highly volatile trend. 

 It’s amazing how people and organisations can change their perspectives over time. Take JP Morgan CEO Jamie Dimon for example. Despite his initial criticisms of Bitcoin, his firm has now embraced the technology as it continues to gain value. This just goes to show that being open-minded and willing to adapt can lead to great success and growth. 

 Cryptocurrency enthusiasts have the freedom to participate in the crypto economy as they like. In developed nations like the United States, United Kingdom, and Canada, Bitcoin adoption is visible across investors, miners, and traders. Regulations vary, and people involved in cryptocurrency are still resisting regulators. 

 In Nigeria, however, many people have started to depend on cryptocurrency to overcome financial difficulties. However, the Nigerian government banned cryptocurrency use in 2021, which hindered their ability to transact freely.  However on Friday Dec 22nd, 2023 the Nigerian Central Bank issued a circular to all banks announcing a lift of the ban. 

This has created a major obstacle in their journey towards achieving financial freedom through cryptocurrency. Instead of providing regulations or warnings, the government has taken a strict step, which has affected the people who rely on cryptocurrency for their financial needs. 

 Cryptocurrency is gaining ground in developing nations, particularly in regions with a financial history of instability. The impact of Bitcoin is evident in Africa, where there has been a high adoption rate of the cryptocurrency.  

 The United Nations has even stated that Africa could be the next cryptocurrency frontier. Many individuals and business owners have found practical uses for Bitcoin, such as paying for overseas suppliers in BTC instead of dollars. 

 A small business owner in Africa shared with Reuters how using Bitcoin to pay his suppliers boosted his profits and protected his business from currency devaluation.  

 He found that using BTC eliminated the need to pay extra charges that came with buying dollars with Nigerian naira or using money-transfer firms with high fees. In addition, he found that transacting in Bitcoin was faster, safer, and cheaper than other payment methods. 

Bitcoin offers a path for individuals in developing nations to break free from the chains of poverty and navigate the challenges of living in a developing country.  

Inadequacies in traditional financial systems in third-world countries create opportunities for Bitcoin use. Access to cryptocurrency and blockchain technology empowers people to overcome financial inequality and currency instability issues. 

 

Financial Inclusion Through Cryptocurrency 


Cryptocurrency’s potential extends beyond just remittance. It can empower individuals in developing countries by providing access to: 

  • Financial Services: Cryptocurrency platforms can offer basic financial services like savings, micro-loans, and even insurance, especially for the unbanked population. 
  • Investment Opportunities: Cryptocurrencies offer an alternative investment option, potentially leading to financial gains and opportunities for wealth creation. 
  • Entrepreneurship: Blockchain technology, the foundation of cryptocurrencies, can facilitate secure and transparent financial transactions for businesses, fostering entrepreneurship and economic development. 

 

Case Studies: Cryptocurrency Transformations in Developing Regions 


Cryptocurrencies are revolutionising the way we think about money and its impact on the global economy. Developing countries are embracing this change and are making bold decisions to recognise cryptocurrencies as official currencies. For instance, El Salvador has set a new precedent by recognising Bitcoin as legal tender, giving it equal status as the US Dollar.  

 This move is particularly significant for countries that heavily rely on the remittance market, as cryptocurrencies are fast becoming a popular medium of exchange. As we witness this transformational change, we are reminded that innovation and progress can open doors to new opportunities and possibilities. 

Then there’s Venezuela. Venezuela has faced significant challenges in the past four decades, with inflation rates ranging from modest to staggering levels. However, the recent widespread adoption of cryptocurrency in response to socioeconomic and political issues has offered a glimmer of hope for the country’s struggling economy.  

With cryptocurrency, people can engage in peer-to-peer trading and use it as a form of payment, which has the potential to transform the way business is conducted. This is a testament to the resilience and resourcefulness of the Venezuelan people, who continue to find new and innovative ways to adapt in the face of adversity. 


Collaborative Efforts for Enhancing Crypto Adoption 


In order to unlock the complete potential of crypto remittances and promote financial inclusion in developing nations, it is imperative that nations work together and collaborate their efforts: 

  • Regulation: Establishing clear and well-defined regulations can create a safe and secure environment for both users and businesses involved in the crypto ecosystem. 
  • Education and Awareness: Raising awareness and providing education about cryptocurrencies can empower individuals in making informed decisions about their finances. 
  • Technological Development: Continued development of user-friendly and secure crypto-based solutions is essential for broader adoption, especially in regions with limited access to technology. 

Cryptocurrencies can play a significant role in empowering developing economies and promoting financial inclusion for all by fostering a collaborative approach involving governments, financial institutions, and technology innovators

 

 

 

 

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      IFBA Blockchain

      The Islamic Federated Byzantine Agreement (IFBA) has three main innovations over FBA, which provides optimal resilience in decision-making, improves transparency, increases the costs for malfunctioning and ill-behaving nodes, and ensures the blockchain is Fiqh compliant. These innovations ensure the nodes in the network of the CAIZchain can always reach consensus, meaning the blockchain will never stop running.

      The three innovations are:

      I. Introduction of Islamic Supervisory Nodes
      Special type of node which is run by Islamic scholars who are respected leaders in the community

      II. Verified, Public Nodes
      Individuals and organizations must pass identity and compliance verification in order to join the CAIZchain network.

      III. Caiz Consensus Protocol
      It is used by nodes in the network to ensure the validity and Fiqh compliance of statements or ledger updates.

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      DeCe by Caiz

      We developed and introduced a new financial architecture that combines the advantages of decentralized (De) and centralized (Ce) systems, giving rise to the distinctive DeCe acronym. Our mission is to secure a safe and inclusive environment that allows our community to capitalize on the opportunities provided by new digital systems. We can offer lower fees and a faster and more transparent framework based on high moral principles by balancing operations and instruments. Importantly, our users always maintain complete ownership and control over their data, deciding what to disclose and when.

      The benefits of our integrated system are self-evident: a more streamlined and efficient financial system that empowers both individuals and enterprises. But that's not all. CAIZ is at the forefront of this exciting transformation as the digital shift toward decentralized systems creates new resources and opportunities. We want to be equipped for the next stage of the global economy.

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      Our moral compass

      Our name, CAIZ (jāʾiz), represents our commitment to preserving the values of lawfulness, trustworthiness, and legitimacy in all that we do. We prioritize inclusion, justice, safety, and philanthropy by adhering to Fiqh-compliant financial principles. A Fiqh-compliant financial model is centered on principles such as the prohibition of Riba (interest), asset-backed transactions, and limits on funding Haram (banned) ventures. This approach is decisively different from traditional financial systems and provides countless benefits to investors.

      First and foremost, a Fiqh-compliant financial model protects investors and their assets. Unlike traditional interest rates, a Fiqh-compliant structure allows for equity participation, with investors sharing risks and gains. Likewise, a Fiqh-compliant system emphasizes equity and places itself on parity with investors. Activity screenings are built on clear principles that prioritize social utility rather than solely focusing on profit potential. A Fiqh-compliant financial model has a long-term and positive impact on society and appeals to investors who are increasingly looking for evidence of good intentions. This is possible through a drive for transparent cooperation and the avoidance of industries that can contribute to harm.

      Our ambition at CAIZ is to bring financial instruments to users who do not have access to traditional financial systems, while simultaneously providing a more simplified and congenial model to those who are already in the finance sector.

      CAIZchain

      CAIZchain with the governance API - The CAIZchain is a distributed database solution that functions as the host for CAIZcoin and all related APIs to facilitate decentralized, peer-to-peer transactions. The blockchain operates on a network of federated nodes that approve transactions, governed by a Fiqh-compliant governance layer. To ensure Fiqh compliance, the CAIZchain incorporates innovative methods, such as full KYC requirements for new users to access the ecosystem, and an IFBA protocol, which stands for this protocol offers a more robust consensus mechanism than existing protocols, in that it ensures compliance with Islamic transaction principles.

      CAIZapi

      CAIZapi is a SaaS solution that offers access to our blockchain ecosystem, enabling you to develop apps and leverage on existing denomination to transfer value and assets. Our blockchain ecosystem enables developers to build applications that interact with other users in the network. You can use our APIs to communicate with smart contracts, send transactions and access data from other users’ wallets. We will build a variety of tools that make it easy for developers to start building their own applications using CAIZapi. These include for example a library of code samples and tutorials that show how you can use our APIs in your next projects.

      CAIZwallet

      CAIZwallet - The CAIZwallet is a digital wallet that enables users to store CAIZcoin and various financial products in the CAIZ Ecosystem. It serves as the core element for a user's interaction with the CAIZchain and the financial products offered within the Caiz Ecosystem. Integrated into the CAIZapp, the CAIZwallet can be downloaded by users on their mobile devices. Prior to utilizing the CAIZwallet and CAIZapp, users must complete a Know-Your-Customer (KYC) process, which includes identity verification and several checks to ensure compliance with anti-money laundering regulations. Furthermore, the CAIZwallet offers additional features, such as confirming transactions that are compliant with Islamic law as well as allocating a percentage of funds to Zakat.

      CAIZapp

      The CAIZapp serves as the centerpiece of the extensive CAIZ Ecosystem. With the App, you can maintain complete control over your digital assets and access all the features of the ecosystem. Check your transaction history and stay up-to-date with the latest market value of Caiz. It can be downloaded onto a mobile phone or accessed via a webpage. The CAIZapp will be consistently enhanced with new features as they become available.
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