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TON: the developing world is fertile ground for blockchain-based payment solutions

Tether’s recent memorandum of understanding with Georgia reflects the growing awareness in developing economies of the huge potential of blockchain technology.

Georgia’s Deputy Minister of Economy and Sustainable Development, Irakli Nadareishvili, highlighted the benefits of how the agreement will contribute to the development of local blockchain technologies in the country. 

Georgia is not alone as an emerging market embracing blockchain technology. The capacity of blockchain-based technologies to deliver (P2P) payment solutions is becoming increasingly recognised across the globe.

Countries in Latin America and Africa are developing a host of blockchain-based payment solutions that are increasing levels of financial inclusion and making payments cheaper and more efficient. Furthermore, the benefits blockchain-based payments provide over legacy systems, in terms of speed and reliability, have the potential to supercharge the growth of the economies of many developing countries.

In many instances, the legacy payment systems that currently exist within developing economies are unable to meet their citizens’ needs. For example, remittance services, such as MoneyGram and Western Union, charge high fees and therefore create huge barriers to financial inclusion. Using Western Union, a transfer of €1000 from the UK to the Democratic Republic of the Congo (DRC) would incur a fee of €19.50, or just under 2%. 

It’s easy to see how this would compound, and these fees are particularly problematic in developing regions such as Sub-Saharan Africa where the total value of remittances received were estimated by the World Bank in 2022 to be over $40 billion.

Ton Foundation’s engagement in the development of the blockchain ecosystem 

The DRC opened discussions with TON Foundation in 2022 about the development of blockchain-based payment solutions on The Open Network (TON). As of 2019,  12.4 million people in the DRC had an account tied to a financial institution. By comparison, there are, as of early 2023, about 23 million internet users and 48 million cellular mobile connections in the country.

As both mobile and broadband internet can provide access to blockchain-based payment solutions, which do not require a bank account, the DRC has the potential to reach tens of millions of unbanked citizens by delivering blockchain-based payments over mobile devices. 

The DRC has recognised the potential that blockchain-based mobile payments could have, and it is in discussions with TON Foundation about the possibility of building payment solutions, including a local stablecoin, on TON blockchain.

Cameroon and the Republic of the Congo are also exploring possibilities for the introduction of blockchain-based payments with TON Foundation. Notably, in a press release, the Ministry of Posts and Telecommunications stated that the partnership with TON Foundation “could play a key role in the digital ecosystem of Cameroon”, with the country looking beyond just payment solutions to blockchain based land registration, with the transparency of blockchain technology noted as particularly important. With such interest, it’s no wonder that blockchain funding rose by over 400% in Africa in 2022 according to a report by CV VC and Standard Bank.

Strike, a global payments app that makes use of the Lightning Network, has also identified how infrastructural weakness within the legacy banking networks of developing economies can be improved using existing digital connections to reach underserved markets. 

Strike offers payment solutions via the Lightning Network, a Layer 2 protocol built on the Bitcoin blockchain that looks to solve the cost and scalability challenges inherent to the network’s design. 

The protocol uses off-chain micropayment channels to enable P2P transactions on the Bitcoin network to take place more efficiently. In El Salvador, there was a 400% increase in the Lightning Network transactions in 2022 as a result of Salvadorians using the government-backed Chivo wallet.

Strike is expanding into Guatemala, a country where only 40% of people have access to a bank account. On the other hand, the number of mobile connections in Guatemala was equivalent to 119% percent of the population. Therefore the majority should be able to access all the technology necessary to perform blockchain-based financial activities through platforms such as Strike. This, coupled with what Jack Mallers, CEO of Strike, described as the “frictionless onboarding” that mobile banking can deliver has the potential to transform the way that people in developing countries obtain access to finance. 

As is the case with Bitcoin’s Lightning Network, TON represents a step forward in enhancing the scalability and cost of blockchain-based payments.The chain’s unique sharding capabilities – designed to scale up to 2 to the power of 32 workchains, each of which can be subdivided into up to 2 to the power of 60 shard chains –  enables it to support millions of near-instant transactions per second. 

For blockchain-based payment solutions to truly transform the lives of consumers within developing nations, payments need to be fast and this speed also needs to be sustained as the blockchain scales. 

Blockchain technology has the potential to bring massive benefits to many in developing economies. 

The MoU between Tether and the Georgian government is just one example of countries beginning to recognise this. Legacy payment systems in these regions are inherently limited because of the restricted access to traditional financial tools, as well as underdeveloped and untrusted centralized institutions. Blockchain-based payment solutions, however, such as Strike on Bitcoin’s Lightning Network and @wallet on TON, offer low-cost, high-speed and borderless transactions. 

Blockchain technology, when leveraged in a way that is accessible and understandable, can empower the unbanked population and revolutionise access to financial services that have to this day been woefully inaccessible across much of the developing world.

About the author

Anthony Tsivarev, Director of Developer Relations at TON Foundation, previously served as a Senior Partner at First Stage Labs, a TON ecosystem venture builder. He is spearheading the development of the TON ecosystem across decentralized applications, wallets, gaming and social.

Anthony Tsivarev
Anthony Tsivarev
Director of Developer Relations at TON Foundation