Bitcoin is a phenomenon that has introduced a better way to transact for citizens all around the world. Due to a tumultuous recession affecting Latin American economies, the region’s residents are embracing the digital currency as local citizens and businesses try to curb economic woes. According to a recent editorial from the Latin American Post Bitcoin is surging in popularity throughout many countries across the region.
Bitcoin Surging in Latin America
The deep recession and exponential inflation affecting Latin American economies continue to destroy the wealth of its citizens on a daily basis. According to a recent report by the International Monetary Fund (IMF), Venezuela’s inflation rate will reach 720% by the end of the year. Similar conditions are also taking root in Brazil, Argentina, and surrounding countries within the region. Due to the growing recession, the heads of monetary policy in these countries are increasing taxes, imposing capital controls and tightening austerity measures.
A turbulent economy typically involves politicians manipulating and controlling the citizens means of exchange. People often look for alternatives to local fiat whenever authorities make things tougher for citizens to trade wealth. In Argentina and Brazil, for example, e-commerce and online transactions are growing more popular every day.
A very attractive alternative for both of these countries has been Bitcoin and locals are figuring out that the digital currency is far superior to the issued paper money in the region. You can see the prominence of the cryptocurrency’s popularity when reading about local meetups and visiting social media groups online such as Facebook (FB). The Bitcoin Brasil group on Facebook has over 17,000 members discussing the virtual money daily amid rising trading volume. Argentina’s FB group has over 10,000 members as well, and its numbers exceed many of cryptocurrency communities online.
During 2015, Bitcoin has also performed better than every local currency in the region. According to the LatAm Post, Bitcoin has managed to beat the Argentine Peso by 41%, 92% better than the Brazilian Real, and a staggering 400% better than the Venezuelan Bolivar.
Because of this performance the cryptocurrency has shown Latin Americans that there is a better alternative. Many are realizing this as Bitpay’s volume shows a 510% rise in Bitcoin merchant transactions across Latin American countries while wallet adoption and trades are growing exponentially as well. The volatility of Latin American fiat has created fear when it comes to using local banks as national defaults across the region are increasing the devaluation of the Peso, Bolivar, and other sovereign currencies.
This trend in Latin American Bitcoin adoption is very hard not to notice given the stagnation of fiat currencies. Bitcoin can save citizens millions of dollars in remittance costs, increase overall saving, and provide a better form of money for the people. The digital currency cannot be manipulated by interest rates, its supply cannot be inflated at a whim, and it can bypass capital controls plaguing the region. These advantages are clearly being realized by people throughout Latin American region and abroad, increasing sovereignty for the average citizen.
Adoption May Take Time But Bitcoin is Here to Stay
However, it still may be a few years until the digital currency takes hold across the entire region. Bitcoin is allowing employers the means to pay workers with the digital currency and exchanges are alive and well in Brazil and Mexico. In some developing regions within Latin America, citizens need to rely on transnational brokerage services to attain the cryptocurrency as regulatory policy varies from one country to the next. For instance in May of 2014, the Central Bank of Bolivia issued a resolution which banned Bitcoin from use. The legislated policy 044/2014 prohibits using any currency that’s not legal tender or issued by the Bolivian state. Bolivia is not the only Latin American state to forbid the utilization of the permissionless cryptocurrency as Ecuador has done the same. In fact, Ecuador has planned to create its own digital currency with attempts to reform Ecuador’s banking system.
Despite these hurdles and the lack of exchanges in some areas, many see the Latin American community as ripe to take advantage. According to the World Bank, sixteen Latin American countries are considered to be emerging economies rising above most under-banked economies worldwide.
Bitcoin offers a low barrier solution for anyone with internet access and continues to allow locals from the region to trade freely. Government officials have yet to decide how to approach Bitcoin as entrepreneurs and startups starting taking advantage. Bitcoin could very well surge in the Latin American region, and signs of this growth are already becoming apparent.
What do you think about Latin America embracing Bitcoin? Let us know in the comments below.
Images courtesy of Bloomberg, Techcrunch, Bitpay, NearShoreAmericas.com, and Pixbay