What does increased liquidity mean for South America and the Caribbean?
Esteli, Nicaragua — Maria Gonzales lives with her husband and young daughters in a breezy one-bedroom home. They keep a small garden which provides fresh vegetables, and raise a goat to give them milk. Maria makes empanadas on Sundays to sell at the plaza but her day-job is the envy of her neighbors.
Maria is a roller at Tabacalera A.J. Fernandez Cigars, a state-of-the-art facility where A.J. crafts his globally recognized cigar brands. Maria has steady hours and a reliable wage. Her work requires attention to detail and the ability to sit for long hours doing repetitive motions. Maria’s husband Jorge is there at the crack of dawn in the drying facility climbing up and down four stories of drying racks moving tobacco leaves from low racks to high racks and back again until they reach the proper texture for fermenting.
Together, the two earn enough for rent and electricity, food and clothes. When the girls reach grade school age, private tuition will be tough to meet. Maria and Jorge are “unbanked”, they get paid in cash and live in a safe community so they don’t worry about not having access a bank account.
If they can’t pay for it in cash, they figure it’s out of reach, whatever it is.
“We keep our savings in a tin can inside a cabinet on the top shelf. Everyone around here does,” she shared.
They are in a similar situation to over half of Latin America and the Caribbean. Access to cash storage isn’t in their infrastructure. Access to credit cards or online banking simply isn’t in place. But what is emerging and taking hold rapidly is digital value storage, or cryptocurrency.
“The girls want to go to a good school. We want that too. Because of problems before, big institutions aren’t wanting big amounts of cash for tuition. But they’re happy with bitcoin. So, we can pre-pay now and we couldn’t before,” she explained. “That helps us.”
But, this isn’t the only economy wrapping its arms around alternative currencies. Throughout South America and the Caribbean, innovators have suffered stagnation at an escalated level. Access to business loans, start-up capital, seed-funding, has all been tightly held in highly-focused pockets of virtually-inaccessible circles.
For example, Xavier Ramos is a 23-year-old prodigy from Buenos Aires with a compression engine that will save average cloud services providers over 10x per year when they convert. He’s got a proof-of-concept, a pile of proprietary code, and a degree from a community college. His passion and willingness to work 22 hours-a-day have gotten him in front of some legitimate investors.
But, he hadn’t made it into the inner financial circle on his own and he didn’t come from that world. He’s a risk. Great idea; no track record. No battle scars. No failures leveraged into wins. He’s not from a ‘good family’ with deep pockets. No one to vouch for him. He’s just a smart kid with a lot of passion and a good idea.
Unstoppable, he turned to an emerging financial marketplace, and embarked on an ICO (Initial Coin Offering). Suddenly, he’s a hot-ticket with his own terms for funding the project. Innovation forces have embraced the ease that cryptocurrency enables because increased liquidity provides the momentum needed to be a proactive and responsive business entity in today’s marketplace.
“I was shocked how simple it was to go from all doors closed, to people banging mine down,” said Xavier.
His ICO raised just over 120% of it’s goal. And now he’s full-speed ahead.
Who else is finding freedom in crypto?
Sandra Escalante manages a University endowment, one of largest in the region. (For the sake of her job we’ve changed her name and withheld the institution.) Established mid-1950’s, the fund was heavily invested in petro-chemical industries and energy-companies that have also become international-arms-manufacturer/dealers since the investments were placed. Her Board gave her a mandate:
“Divest from morally grey verticals that incorporate predatory practices on any level, and, go green.”
Until recently, it was a tough and arduous task selecting the proper portfolio.
Last year Sandra attended her first cryptocurrency conference, “just to get an idea of what all the buzz is about,” she shared. She was immediately struck by the innovation. “It’s not just finance, there are companies applying blockchain to mortgage lending, logistics and supply chain, medicine. What remains to be seen is if the idealistic nature of blockchain and altcoins persists.”
Sandra moved over half of the endowment assets into cryptocurrencies and blockchain companies on Board approval.
“Some days they tell me it was a mistake, others they tell me I’m a genius. The volatility has benefitted us overall but not everyone is built for the ups and downs.”
The advent of cryptocurrencies in Latin America and the Caribbean has been embraced by at least three communities or economies in the region: everyday unbanked people for simple to complex transactions; innovators making an impact in business and society; and old-money looking to stay relevant.
If you can think of other population segments, or concurrent economies, definitely point them out. I think any of us who are passionate about economic alternatives want to understand all the ways this new freedom is impacting our world.
