Why Cryptocurrencies Matter In Latin America
If you're anybody from planet Earth, then you have heard the term Bitcoin. And while you might not be too familiar with the technology, we're pretty sure you know it's a kind of cryptocurrency.
Ever since Bitcoin demolished the financial barrier and brought money to cyberspace, cryptocurrencies have been soaring the world over.
Despite rampant volatility in valuations, digital cash such as Ethereum, Bitcoin, Litecoin, and Dash (to name a few) have captured the imagination of users and investors the world over.
Surprisingly, one of the continents that has shown a rising interest in cryptocurrencies is Latin America. Though considered financially less stable than their first-world cousins, Latinos have shown a massive interest in digital currency.
But what is the reason behind this interest in digital cash? Why has Latin America embraced this mode of value interchange when many advanced nations still view the concept with skepticism?
That's exactly what we're going to discuss in this article. The following are some of the major reasons we think are behind the rise of digital currencies in the land of extremes.
A Volatile Economy
One of the first reasons why Latin Americans prefer to use cryptocurrencies despite the inherent volatility is that their national currencies are even more unpredictable. Countries such as Venezuela have recently seen inflation rates of about 72000%...now that's something to worry about.
Other Latino nations such as Brazil and Argentina haven't seen much improvement either. As a result, residents of the continent naturally feel the need for an alternative vehicle for parking their wealth. Cryptocurrencies provide just that platform.
By storing their wealth in the form of digital currencies, Latin American Nationals can safeguard it from the vagaries of the market economy. With unpredictable governments and tottering financial stability being the norm, cryptocurrencies provide a safer haven for wealth.
Lack of Faith in Governments
Widespread instability, rampant corruption, and rapidly changing regimes have created an atmosphere of institutional distrust among the people. This has naturally spilled over into the financial system, and people are wary of trusting their national currencies.
This is why cryptocurrencies such as Bitcoin and Dash have become such a rage in the region. As cryptocurrencies are inherently decentralized, this means they are not regulated by any financial or government institution.
The very fact that they aren't under the control of the government, something which is actually a matter of worry for advanced nations, has become a favorable factor for the growth of cryptocurrencies in Latin America.
Consider the following figures: Latin America currently has over 450 million active internet users. Compared to that, the number of bank account holders is a paltry 240 million or thereabouts.
The above clearly shows that over sixty percent of the Latin American population is still unbanked. With such a large number of adults without a proper financial structure, it's no wonder that the regional economy is in shambles.
Enter cryptocurrencies, a safe and secure way of storing cash. Given the fact that Latin America already has greater internet access than banking facilities, it's no wonder that people here are leaning more and more towards digital money.
One of the biggest problems with not having a bank account is the fact that you can't perform digital transactions easily. However, cryptocurrencies take the hassle out of the game.
By utilizing Blockchain Technology, digital currencies such as Bitcoin and Ethereum allow safe, secure, and simple monetary transfer to anyone on the planet.
What's more, the entire process is protected by the Blockchain distributed ledger system, which means there's no chance of the money getting lost in transition.
If the latest census results are anything to go by, Latin America has a predominantly younger population. This means that a major part of the populace is not only comfortable with the latest technology, but they also have growing enthusiasm for the same.
Hence it's only natural that when this young and vibrant population looks to investment, it's the technology they're going to lean on first. The anonymity and security of cryptocurrencies, coupled with the allure of storing wealth in a safe digital vault, is surely enticing for the younger parts of the region.
It's this widespread affinity for technology that plays another major role behind the rise of cryptocurrencies in Latin America.
A Startup Culture
Perhaps a direct outcome of the above-stated reason, Latin America has also developed a steadily thriving startup culture. This has led to the creation of a number of ventures that have already taken the Latin American cryptocurrency market by storm.
Some examples of such ventures are Bitso from Mexico, Ripio from Argentina, and Cryptofacil from Uruguay. These are only a few of the companies that have come up to leverage the Blockchain ecosystem and create a new financial roadmap for the people of Latin America.
And Then There's Venezuela
We've already mentioned the massive inflation that Venezuela has seen. With no relief, and the government refusing to take reformative steps, Venezuelan Nationals have taken to cryptocurrencies over the Bolivar.
Its cryptocurrencies such as Dash that have allowed the citizens of this economically ravaged nation to buy essentials, help relatives in need, and even access international aid. Plus, cryptocurrencies have also acted as a shield against corrupt government officials.
Cryptocurrencies may still be viewed with suspicion in many parts of the world, but Latin America cannot be counted among them. A younger population, disproportionate economic development, and political instability have pushed this region to the brink.
Thankfully, the saving arms of cryptocurrency have been a boon for the citizens of Latin American nations. By setting up and relying on this ever-evolving mode of transaction, they have certainly displayed a progressive attitude towards the future of money.
Perhaps a time when crypto will be the major currency is not far away. And Latin America may just be the harbinger of this major financial change.
Written by Ruchi Gupta