Latin America has become somewhat of a trial ground for crypto-as-a-currency. With hyperinflation wreaking havoc in Argentina and Venezuela, and Ecuador and El Salvador without their own currency, cryptocurrencies offer a unique safe haven against government, foreign or domestic, actions which could negatively weigh on citizens’ economic sovereignty.
Though cryptocurrency adoption is nowhere near widespread in the region, despite how many media outlets may paint it, there are a growing number of users who have found their own solutions to the challenges presented in actually spending cryptos.
From Amazon gift cards to using LocalBitcoins to pay bill or purchase a service, there are a number of ways Latin Americans, especially in Venezuela and Argentina, are working around the lack of merchants ready to accept their crypto.
Forex Trader By Day
Across Latin America and even in the Caribbean, exchanging currencies is a big business.
In Cuba, young traders stand on the sidewalk near official exchange houses with wads of euros, pounds, and dollars in their pocket, waiting to help foreigners get their convertible notes (while taking a sliver for themselves, of course).
Venezuela experiences a similar phenomenon, with impromptu traders eager to give tourists the best deal for their dollar, often in cab rides or even on the street. This is largely due to the government-regulated exchange-rates — black market deals typically yield substantially more bolivars as citizens desperately try to unload the plummeting currency.
Despite the abrasiveness of some of these transactions, however, it can be a win-win for both parties involved.
The Dollar Is King
While exchanging money in Latin America can be madness, with different offers and different rates on every corner, using the dollar, even in countries which have grown to accept it, can be a difficult task as well.
Peru, for example, is the world capital of forged U.S. dollars, with millions of fake bills seized every year. Some operations even print passports and university degrees, in addition to the fake U.S. dollars that are often shipped abroad.
Though the dollar is widely accepted across the country, there’s always the chance that fake bills will slip into the pockets of unsuspecting victims, adding a layer of suspicion onto every transaction. In fact, the entire region takes special care when receiving payments in dollars, though because of past-or-present economic turbulence, many businesses are happy to accept USD when given the chance.
How Can Crypto Help?
Across Latin America, many people are tired of their government’s influence on their economic well-being. Stashing foreign currencies is becoming increasingly common, and for good reason.
Government led initiatives, geopolitical tensions and even elections can add tremendous volatility to even the most stable of the region’s economies. And while the crypto market isn’t exactly stable, for many, it’s better than the alternative.
With corruption and the inflation that comes with it on the rise, most notably in Argentina and Venezuela, crypto-as-a-currency is becoming more appealing.
Buenos Aires, one of the region’s blockchain hubs, has become home to internationally renowned crypto initiatives such as Ripio and RSK. And with local currency woes continuing to worsen, crypto is gaining traction. The city now hosts more merchants willing to accept bitcoin than New York City.
And Venezuela, for its part, has seen a surge in cryptocurrency adoption, as well, thanks in large part to boots-on-the-ground initiatives. CEO of Dash Core Group Ryan Taylor noted a wave of adoption in the country: “We are seeing tens of thousands of wallet downloads from the country each month,” he said, adding, “Earlier this year, Venezuela became our [number two] market, even ahead of China and Russia, which are, of course, huge into cryptocurrency right now.”
In addition to the perceived hedge against government meddling and inflation, crypto is also poised to help simplify some of Latin America’s currency confusion.
With crypto, people across the region can shed their dependence on volatile, counterfeit or foreign currencies, saving time and headaches moving forward.
Though cryptocurrency adoption is on the rise in Latin America, there are still challenges that remain. Not everyone trusts the volatile market, and more than that, not everyone is aware that these alternatives even exist.
It’s easy for observers within the crypto bubble to advocate for, and even fetishize a solution to an extremely complex dilemma thousands of miles away, but simply saying “hey this is great, you should do this” isn’t exactly helpful.
Crypto adoption in Latin America is growing not because of techie anarchists or new-age economists, it’s growing because of individuals actively making an effort to educate and enable their neighbors to fight for their own financial freedom. And that’s something we might be able to learn from.
Picture from Wikimedia Commons.