Small Islands, Big Problems: Can Bitcoin Fix This?

A Tool for Progress?

Cointelegraph recently traveled to Cape Verde, West Africa, to explore whether Bitcoin (BTC) could be a tool for progress. In the latest on-the-ground video documentary, global reporter Joe Hall investigates the remittances market, cash economies, and the challenges and opportunities faced by small island nations worldwide.

Cape Verde: A Small Island Nation

Cape Verde, officially the Republic of Cabo Verde, is an island nation in the central Atlantic Ocean. With 10 main islands and several smaller islets, it sits 570 kilometers (350 miles) west of Senegal, West Africa. However, more Cape Verdeans live abroad than on the country’s islands.

The Struggles of a Small Land Mass

Due to its small land mass, Cape Verde struggles to cultivate and export goods abroad. The islanders, especially those on Sal island, rely on tourism to stimulate the economy, and relatives living abroad send money home.

The Challenges of a Tourism and Remittance-Based Economy

The combination of a tourism and remittance-based economy presents multiple issues for Cape Verde. Sal island, due to the presence of tourists year-round, uses three currencies: the local Escudo, the U.S. dollar, and the Euro. Transaction fees from Mastercard and Visa can be as high as 4%, which merchants often pass on to customers.

Furthermore, remittance costs through Western Union and MoneyGram can be as high as 15%, acting as a tax on the higher incomes of Cape Verdean workers living abroad.

The Cash Economy and Its Challenges

The Cape Verde cash economy is also hamstrung by high ATM and bank access fees, as well as strict opening and closing hours. Bank holidays often result in ATMs running out of cash for withdrawal, presenting further economic hurdles for full-time workers.

In addition, inflation runs higher in Cape Verde than across the eurozone, even though the escudo is "pegged" to the euro. The incumbent financial systems on the islands impede Cape Verdeans from simply spending, saving, and sending money in the way many Westerners take for granted.

Enter Bitcoin: A Borderless Solution?

While investigating these economic issues, Joe Hall met with Renato Evarchi, one of the first business owners in Cape Verde to accept Bitcoin. Evarchi shed light on the economic situation and explained how more and more Cape Verdeans were warming up to the idea of using a borderless, immutable, and decentralized internet currency.

Watch the Full Documentary

To learn more about Joe Hall's travels in Cape Verde and the potential role of Bitcoin in solving economic challenges on small island nations, watch the full documentary above and subscribe to Cointelegraph's YouTube channel.