A Quick Guide to Brazil’s Blooming Cryptocurrency Scene

🇧🇷 Travelling through the decentralised market landscape of Latin America’s biggest economy.

🚨 This is not financial advice. Do your own research. Every thing that’s not linked to a source down here is purely personal opinion.

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This is a non-exhaustive map. Please send suggestions to improve it, over twitter. Tokenised services are separated as their own category: this will change in future iterations, as such services mature and find clear market fit.

Brazil was there when bitcoin was born. Insiders often tell the story of one or two compatriots that subscribed to the Cryptographer’s Mailing List and read that famed email. Despite having promising initiatives in the beginning of the decade, the country suffered with heavy hands of legislation, media-fuelled misinformation, and a wave of public discredit after the nation’s largest exchange (guess what) was subject to an incident that remains largely unspoken of.

Although we host a ton of open-source world-quality talent, our economy wasn’t under hyperinflation like that of our neighbouring Argentinians at the “right point in time” to make cryptocurrencies tip. Los hermanos took an important role in the technical and entrepreneurial developments upon Satoshi’s legacy, spearheaded by the likes of Wences Casares (Xapo), Sergio Demian Lerner (unstoppable novel research on bitcoin, RSK Labs) and Manuel Araoz (Proof-of-Existence, Streamium, Zeppelin, Decentraland). We have a historically complicated affair with Argentina when it comes down to sports. In cryptoland, the brawl has been translated into admiration.

The domestic exchange and OTC markets never halted expanding, but it was in 2015 that Brazil took a more prominent role in the space, more broadly speaking. A local was among the early Ethereum members, and eventually stablished an arm of the Mist team in Rio De Janeiro. The “smart contract” revolution was better heralded than the advent of bitcoin here, and spread out more smoothly on newspapers, business sectors and the collective unconscious.

Don Tapscott had a book translated into Brazilian Portuguese by an army of “volunteers” around a DAO-like organisation. An app for subscribing to public law petitions through Ethereum has been launched with the support of a reputed anti-corruption parliamentary. A division of the country’s largest stock exchange has reportedly launched its ERC20 token, and even Brasilia is flirting with Ethereum.

The regulatory landscape remains messy, and the CVM (our SEC) has both “ruled against” and in favour of local ICO proponents. Funds are not allowed to directly hold cryptocurrencies. Banks frequently pursue and arbitrarily shut down accounts essential to the well functioning of major crypto exchanges.

Despite all the quirks that make Brasil what it is, the ecosystem has matured quite a lot in the last couple years. The +200 million people market (almost half still are not online, ~40%!), unchallenged leadership in Latin America’s economy, and the fact that crypto still has <1% local adoption all make the scene worth a deeper look.

Below, we’ll explore (1) national token projects, as well as the country’s (2) top exchanges, before (3) geographically visualising the initiatives mapped.

💎 1. Tokens

“Moeda offers simple peer-to-peer payments and a […] remittance network to help drive entrepreneurs toward their goals, [… f]rom micro business loans to large crowdfunded initiatives”, through a fiat-pegged ERC20 token. It was the first national ICO I heard of that eventually hit foreign exchanges. With ties to some state governments and television celebrities, the project has risen to the top 100 on the CoinMarketCap market capitalisation rank, bur now places below 300. The code is not open source, but the team releases periodic updates (along private repo screenshots o.0) on Medium.
Status: token trading on Binance and other exchanges.
Latest product shipped:
app not yet available (on AppStore).

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OriginalMy at work.

A notarisation and document authentication platform originally built on bitcoin, later migrated to Ethereum, led by one of the most well versed blockchain developers in the country. Headed towards an ICO for its Anti Bureaucracy Coin, halted plans under regulatory uncertainty, and has accelerated international expansion efforts in order to maintain the funding strategy viable.
Status: undergoing international expansion in order to safely conduce fundraising.
Latest product shipped:
4 products are operational: the Blockchain ID (universal login); the Contract Registry; the Authenticity Registry; and the Notary Service.

Best known for being the first coin to sponsor a soccer club during a match broadcast on national television, MartexCoin is a fast currency with optionally anonymous transactions and hybrid PoW/PoS mining. I do not know the team, or any deep differentiation to other means of payment currencies.
Status: being traded on CoinExchange and Braziliex exchanges (low volume).
Latest product shipped:
their 2.7.1 wallet.

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A glimpse of Auctus’ interface.

Auctus does smart contract powered retirement plans. Based in the city of Belo Horizonte, the young team spun off a digital consulting company has been picking up traction, and began an ICO in March 2018, after a pre-sale last year. The AUC follows the discount token model.
Status: undergoing ICO as of April 2018.
Latest product shipped:
the alpha savings platform.

A marketplace for hashrate, where token holders have discount access to mine between different chains, proportionally to the tokens they choose to lock-up.
Status: ICO’d, experiencing delay in delivery of mining platform due to suppliers’ move from China to Canada and tech issues.
Latest product shipped:

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The Paratii player, v0.0.2.

A p2p video streaming engine. . The motto is to allow for publishers to choose or create any monetisation model. Exploring the use of a token; none deployed, nor concrete plans yet.
Status: privately funded, testing early version of a content management portal that will go public.
Latest product shipped:
their embeddable player v0.0.2 αlpha.

An open, “non-juridical” organisation where subjects can create objects and define business models for commercialising or collaborating on them, gathering in communities around interests like crypto trading, artesanal beer production, book publishing, clean energy commerce and web services freelancing.
Status: more than 1000 registered subjects and more than 50 communities on the platform.
Last product shipped:
the web platform on which a bunch of objects (like translated books) have been created.

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Gimmer’s trading bot types.

Gimmer is a marketplace for bots where anyone can buy into automated strategies ranked according to their backtested or real-world-tested profitability, and also put proprietary strategies for rent. Aimed at more experienced traders, it has a Brazilian-led international team. The growing community was recently surprised that the ICO was halted in order to pivot towards a more efficient and less dilutive fundraising mechanism.
Status: polishing token design and the beta app.
Last product shipped:
the “semi-functional” MVP.

A token creation and registry of authenticity platform that aims to provide a wallet, a crypto exchange, a pre-paid card, and a private label point-of-sale service, Lunes Platform is led by an all-Brazilian team, and has code derived from Waves.
Status: undergoing ICO as of April 2018.
Last product shipped:
their hybrid web wallet.

Taylor is a “smart trading assistant”. It works as a mobile app bot that sends out trading signals and asks for “opt-ins”, allowing for easy and semiautomated trading. Led by seasoned Brazilian entrepreneurs and advised by some influential traders on Twitter.
Status: has ICO’d, beta undergoing internal testing phase, release scheduled for Q2 2018.
Last product shipped: none.

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Taylor’s designed as an intuitive, easy to use mobile app.

A platform for investing and following up on ICOs, Iconic has just done an ICO for its own token, and plans to offer assurance services + a marketplace for projects.
Status: has just ICO’d.
Last product shipped: none.

A fund issuing a proprietary securitised cryptoasset backed by real estate with anti-fraud procedures and dividends payment via an ERC20 token.
Status: undergoing business structuring and investor roadshow.
Last product shipped: none.

The native currency of the newly created BOMESP - Exchange for Digital Corporate Coins of São Paulo. The team behind the initiative managed to get a no-action letter from the CVM - the Brazilian SEC - in record time (hmm…), and wants companies to issue green coins (for NGOs), blue coins (ICOs) and gold coins (securitised assets) on their platform. Technical development is outsourced to a company in Iran, +60% of the token supply is reserved for the team and controlling organisation.
Status: completed an ICO in February 2018, not many news since.
Last product shipped: none.

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Peaking into Swapy’s interface.

A peer-to-peer credit network based on blockchain-based financial IDs and distributed scoring. The team has won some pitch competitions in big events abroad, and now counts on the advice of some heavy-weight names.
Status: undergoing a pre-ICO as of April 2018.
Last product shipped: the Swapy Exchange public alpha.

A p2p services marketplace that aims to “tokenise self-employment”. Crafty is originally a maid-freelancing app (Diaríssima) that seems to be pivoting, after 2 years of operation and some dozen thousand users.
Status: just ICO’d, as of April 2018.
Last product shipped: nothing that involves crypto yet.

📈 2. Brazilian exchanges

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Data from CoinHills, in April 15th 2018.

The market in Brazil is still insignificant globally. The country’s two biggest exchanges, in volume, amount to only ~0.015% of the bitcoin traded daily around the world (numbers #66 and #68, on left).

The internal rate of growth is staggering, though. Along 2017 (from January to December), Brazil witnessed a 3x increase in monthly traded BTC volume, and an increase of over 500 times in monthly traded R$ volume.

MercadoBitcoin and FoxBit accounted for close to 70% of the market at the end of 2017, in volume, and maybe even more when it comes to the share of registered users. New platforms are popping up day after day, and talks regarding M&A activity were on fire until recent cool-offs by national antitrust entities. One of the most awaited events of 2018 is the arrival of XP Investimentos, the country’s biggest digital investment advice firm (recently bought by Brazil’s biggest bank), in the bitcoin market.

Below, we’ll look at some of the outstanding players in the field.

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Data from the domestic exchange market during 2017, in Portuguese, by BitValor.

Not an exchange, but rather Brazil’s “reliable index” on the bitcoin market. Independently maintained, periodic comprehensive reports, all under creative commons.

The first platform to dominate the exchange market, and still the biggest one in number of registered users (over a million). Has emerged from a shady past and restructured itself to become one of the country’s most lively fintechs.

The largest exchange by volume, product of a curious story where young co-founders met and started the company 100% online, has experienced some serious downtimes last year probably due to reliance on external tech providers. Still among the few “mindshare” leaders, when it comes to crypto, locally.

One of the longest-running exchanges down here, formerly named CoinBR, rebranded after a fusion with a fund from Hong Kong. Besides the influence earned along the years in the space, Stratum is also know for the fierce positioning against KYC-enforcing rules (hence the amount of trouble it’s had with banks), and some cool on-boarding products like the “bank to crypto” gateway.

An exchange coupled with the Quantum arbitrage platform, that basically yields revenue for BTC hodlers, accelerated by a renown program in southern Brazil. Recently co-founded the Brazilian Association of Cryptocurrencies.

As far as I remember, the first exchange to add ETH support here. New, investing a lot in promotion (also sponsored a soccer club), has listed some Brazilian tokens already, and also has its own.

Brazil’s first 0x relayer, Amadeus aims to provide liquidity for dApps that need to interoperate between tokens. Founded by a young team in Minas Gerais, also spun off the digital consulting company where the Auctus team came from.

🌎 3. Geographic distribution: a tentative thermometer

Out of the 75 initiatives mapped on the chart at the top of this piece, some have incorporated outside of Brazil in search of more amicable jurisdictions. However, most of their human talent remains in national soil. Following is a ‘heat map’ of all of them, according to their team’s main location, except for those under the “media & channels” category, totalising 63 organisations. It yields a far-from-accurate, but rather indicative visualisation of activity in the Brazilian ChainTech ecosystem.

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Check the source data here.

São Paulo, Minas Gerais, Rio de Janeiro and Rio Grande do Sul clearly distinguish as poles. It’s noteworthy that all organisations under the “legal” category are in São Paulo. 80% of the “education” organisations too. In the exchange market, activity is more disperse, with only 10 out of 19 entities in the country’s richest state.

🏁 4. Final notes

An important aspect left out of this brief study are Brazilian members of teams based elsewhere. There are national developers in the Colony and Raiden Network teams (both important projects on Ethereum), for instance, that don’t make up the numbers presented above, and still contribute a lot to the local ecosystem.

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Cryptocurrency-focused meetups in Brazil, by meetup.com.

This ecosystem currently boasts a little over 19K members subscribed to 78 recurring meet-ups scattered around the country, and is being further fuelled by formal education programs run by large institutions.

Brazil may still lack projects relevant in global scale, but the (1) sheer amount of raw talent available; (2) apparent good-will of the national government towards Ethereum; and (3) still pretty open path for regulatory innovation show some hope in the horizon as for picking up on lost time.

If we deal with all the present challenges along the traditional Brazilian way of doing things… we’ll go nowhere. We do have our chance in the global scenario, though. Distributed technologies are handy tools to help break down this vicious tradition, inherited trough the centuries, as a corollary of insurmountable, rigidly hierarchical state-sponsored bureaucracy.

While the mass education on cryptocurrencies keeps being pushed back by (understandably) feared market forces, world-class talent and innovative crypto startups will keep immigrating elsewhere.

Investing in a landscape like this may make one feel like playing a soccer scout, looking for brute potential in dirt fields before it’s snatched by the likes of Real Madrid or Barcelona.

At least the analogy makes a good part of us comfortable. When it comes to soccer, we know what we’re talking about. And, with all due respect, we’re blocks and blocks ahead of our neighbours. 🇦🇷💛🇧🇷

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Paradigma Capital

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