Latin America is the perfect place to show that Satoshi Nakamoto’s true vision is not a speculative game between a group of geeks and gamers who replaced the exchange of baseball cards with a handful of encrypted codes, but to have a totally electronic peer-to-peer version of money that allows you to make online payments directly from one site to another without having to go through a financial institution or government.
Latin America is a region that has been hit for decades by political and economic crises that do not seem to disappear in most of their countries. This has forced many Latin Americans to abandon their families and seek better opportunities in other latitudes, since there is no improvement in the essential aspects of having a decent quality of life in their own country.
GDP growth in Latin America returned to negative in 2016 for the second consecutive year, between -0.5% and -1.0%. The region had not experienced a two years economic contraction since the 80’s. This poses challenges for the protection and implementation of socio-economic progress, in particular to reduce poverty, increase freedom and expand the middle class. Thus, about 7 million Latin Americans fell into poverty in 2015, bringing the total number of poor to 175 million people, 29% of the population; More than 250 million unbanked adults and between 25 million and 30 million vulnerable Latin Americans – one in three of those who emerged from poverty in the last decade – could fall back into it if the deceleration continues and they lose their employment, or if they become ill or if they decide to retire.
Economic projections confirm the heterogeneity that characterizes the region, with very different rates of growth expected between countries. Mexico, Central America and the Caribbean have a more hopeful outlook, due to the close bonds they have with the US economy. The challenge will be bigger for those countries with a less stable macroeconomic picture, like South American countries, just because the 2017 economic scenario for them was very low.
With political instability in some of the largest economies in the region, as well as a general fall in oil and other commodity prices, businesses and consumers face a depression and, in the case of Venezuela, an economic collapse.
Satoshi is doing for Venezuela´s economy what their President Maduro does not do. In a country where the government strives to avoid economic and social stability to stay in power through repression, Cryptocurrency as Bitcoin is already providing protection against hyperinflation and access to consumption of financial services that allow their citizens to continue with their daily life in the middle of the worse economic circumstances of its history.
While the Venezuelan currency continues to crumble, the country’s population is finding an unprecedented opportunity to use the Cryptocurrency to restructure its economy without having to wait for the government to “fulfill its job”. While the regulation of cryptocurrencies as a currency or free and decentralized payment method may continue to be far away, the banking crisis and economic mismanagement have eroded citizens’ confidence in their governments and banks, accelerating the adoption of Bitcoin as the the best alternative to escape from so many injustices, abuses and corruption on the part of its rulers.
This sociopolitical situation has forced many Latin Americans to migrate to countries where they get better living conditions and job opportunities that allow them to generate higher incomes. This migratory movement that has been increasing in the last years, has also generated an increase in the shipment of remittances; Large numbers of migrants sending money to their families to survive the economic crisis; For the second year in a row, remittances flows to the Latin American and Caribbean region (alc) surpassed their historical values, reaching US $ 65,657 million in 2016, with a growth rate with respect to the previous year of 5.9 %, The highest recorded in the last four years. While companies such as Western Union and MoneyGram celebrates this growth by charging up to 25% to move all that money, users are starting to discover alternatives like Bitcoin, which allow them to save up to 80% of time and money…
We all know how difficult it is for to send money outside of our borders through these remittance services or the delay of an international bank transfer and, in the case of Ecuador, an extra 5% tax to send capital abroad.
Can you imagine what will happen when all the people of Latin America find out that all that money they spend on taxes and bank charges can remain in their pockets?
When an effective solution meets a general need, it is inevitable that a massively positive reaction explodes becomes obvious. In the case of Latin America, the migrants are the first to catch the cryptocurrency fever, because they promote the use of Bitcoin and other cryptocurrencies with their families to bring more money home. This has generated a replacement of Western Union´s services… A very similar process like the telecommunication companies went through when WhatsApp came along: People prefer free services.
THE CURE IS GROWING
There are impressive growths for the massive adoption of Cryptocurrencies in Latin America. While the rest of the world speculates and plays to make money with the growth of the coin market capitalization and ICO fever, in Venezuela, Argentina, Colombia, Brazil, Mexico and the rest of Latin America, real economic problems are being solved with The antidote that Satoshi Nakamoto donated to all of us.
Data released last year by the BitPay payment processor suggest that Bitcoin’s faster adoption is taking place in Latin America. Revealing a 510% increase in Bitcoin transactions between 2014-2015, compared to an increase of only 70% in Europe.
In July 2017, BTC’s trade in Venezuela for the first time exceeded USD 1.5 million in operations recorded during a single week, on the LocalBitcoin.com platform. The 50% jump reported in less than six weeks, from the previous record, seems driven by the need of many Venezuelans to access, through different mechanisms, foreign currency or exchangeable securities with which they can protect their patrimony in the face of the devastating local currency devaluation. The dollar price in Venezuela reflected a rapid contraction of more than 50%. This rise in the dollar value that came to unprecedented levels at the end of July could generate a psychological effect that has driven the purchase of bitcoins as a mechanism of protection value, reaching a total sale of 425 BTC. However, it has not been the month that has had the most demand for the pioneer coin Bitcoin, by April 2017 Venezuela registered a volume of 736 bitcoins through LocalBitcoin.
Venezuela continues to be a relevant market within the region, which increases the volume of BTC transactions every day. Currently, demand in Brazil is experiencing a significant contraction since the highs records registered in May, while operations registered in Argentina are better in line with its level.
Chile, on the other hand, shows an increasing adoption curve with slight setbacks in recent weeks. Likewise, countries like Colombia, Dominican Republic, Mexico and Peru also tend to a sustainable scenario and with growth potential in the Cryptocurrencies demand.
Everything indicates that the popularity and growth of the Cryptocurrencies use in Latin America is a reflection of the population´s needs which relates on the fact that they have to be able to regain control of their own money. It is in these latitudes that the great global solution to the bank fraud can be Crypto-currency. It is here that you can see that this financial revolution is real, not a trend caused by “many geeks playing Monopoly with video game money”, Blockchain is changing the world and Latin America seems to be the perfect breeding ground for them to take out all the experiments and entrepreneurship initiatives that shows that the main cause of social ills do not come from an economic crisis – because there is more than enough money – but from the lack of financial education that teaches us to know how to redistribute it, eliminating the restricted access to the financial system to people who need it the most.
Cryptocurrencies came to break these obstacles, but it is important to incorporate instruction, information and education on how the banking system works and why we need to ride the wave of money E-volution urgently. Just as it did with the communications and information industry, the Digital Era is transforming the financial sector, reinventing it into a more fair, democratic and transparent way.
The Internet is breaking all the paradigms and, without asking permission to the Status Quo, it is leading us towards a freer, efficient and more decentralized world.
by Janko Ranghi | @Cripto_Jankoin | Ecuador