In recent months, many developments regarding cryptocurrencies have taken place in Latin America. In this article we will be looking at recent events that have taken place in the continent and how different countries there have reacted to the use of crypto and blockchain technology.

cryptocurrency latin america

Let’s see how is the situation regarding Cryptocurrency in Latin America.

The evolution of Cryptocurrency in Latin America

The adoption of blockchain technology has been accepted at different rates by certain geographical areas. For instance Asia and North America have always been leaders in early adoption of cryptocurrency and users there continue to power the growth as the technology changes.

However Latin America has always been a bit slower in pace in terms of using cryptocurrency, but to understand better some reasons why this is, it’s always good to look at some data.

Let’s start though with some statistics of Latin America gathered by the World Bank in 2014. The findings show that:

  • 50% of Latin America is ‘unbanked’ meaning that people don’t have access to a bank or traditional bank account, as well as access to a credit card.
  • 60% or more do have access to a smartphone or computer.

The fact that more people have access to a smartphone than a bank account means that Latin America is a continent that has great potential for cryptocurrency adaptation. Mainly because the aim of digital money is that people don’t need to have a traditional bricks and mortar bank to visit or a bank account, they just need internet and smartphone access. It is allowing for revolutionary change in the way people can access funds and send money in places where people may not have had the chance before.

As well as personal use, governments in Latin America are also looking at introducing cryptocurrency and blockchain technology into financial and governmental sectors.

Different approaches by Latin America Countries

Yet of course when it comes to cryptocurrencies, different approaches are generally shown by the Latin American countries.

Chile, Argentina and Uruguay have all started to recognise the potential of cryptocurrency in Latin America and are gradually recognising its status as legal tender, so they have shown a more lenient approach towards cryptocurrencies in general.

For example a big development was undertaken by Argentina when many Bitcoin ATMs were installed across the country with the permission of the Central Bank of the Argentina Republic. Therefore allowing people access to Bitcoin funds like any other ordinary ATM machine.

Another step forward was made by Banco Masventas, an Argentinian bank. In 2018 it made a change to the way it handled international payments by introducing Bitcoin technology for its customers when they make international payments.

The first move was that the bank stopped using SWIFT and replaced it with a Bitex, a Latin American based cryptocurrency payment service, to settle international payments. This was done to reduce costs to customers of making payments transfers through SWIFT, which currently charges higher fees because other international banks are present as interceders.

Whereas with the Bitex route, international money transfers are cheaper as no other international banks are needed, instead Bitex will send Bitcoins directly to the recipient. With the only costs to the customer being the transaction fee that is sent to the Bitcoin miners who via the blockchain have to verify transactions, plus the Bitex fee.

There were concerns that customers who were not knowledgable of cryptocurrency might be put off from using the new system due to lack of understanding of how the technology works.

However according to one of the main shareholders of the bank, Jose Dakak, the bank will handle everything.

He declared that: “The customers will ask the bank to do an international payment, and the bank uses Bitex as a provider. For the customer, it’s transparent, they don’t touch, they don’t see the bitcoin. We are a provider for them, and they are not touching bitcoin.”

This separation of the process will hopefully further encourage users to use the new process without having to worry about lack of understanding of the general methodology.

Other positive, yet surprising developments regarding cryptocurrency have been made in Venezuela. Although the socialist regime government has not been open to external cryptocurrency use, the political situation in the country has led to ordinary Venezuelans turning to digital currency in order to access funds with value.

In Venezuela cryptocurrency technology could bring hope to many of its impoverished citizens. The national currency has suffered greatly from hyperinflation because of the nationa crysis, leaving the paper bancnote worthless. However the use of Bitcoin and other cryptocurrency based companies have highlighted Venezuela has the ideal place for the citizens to have access to another form of currency, so they can have an alternative valued currency that is free from government interruption.

One main cryptocurrency platform- AirTM launched a campaign this year called Airdrop Venezuela. The aim is to help send crypto-connected digital funds of US Dollars to 100,000 ID identified Venezuelan citizens in order for them to purchase food and medicine.

This ability to send virtual money across international borders without government interference can really help people in need when governments have stopped helping their citizens. As well as providing aid, the access to digital money can introduce struggling communities to alternative income producing opportunities such as freelance work and online commerce.

To read more about the campaign please visit AirdropVenezuela.org

However the use of cryptocurrency in some Latin America countries remains controversial and illegal. For example Ecuador and Bolivia have completely banned Bitcoin and other cryptocurrencies.

In July 2014, Ecuador banned all forms of cryptocurrencies. However during the same period it founded its own digital currency, the Dinero Electronico, as part of a transformation to the Ecuadorian monetary system. This government digital currency is also backed by the Central Bank of Ecuador.

Yet although a ban remains in place the government has not cracked down or punished crypto use, so many Ecuadorians have continued to use crypto illegally. Unfortunately the ban will continue to affect Ecuador when it comes to blockchain adoption and future developments in the technology.

In Bolivia, the majority of the population remains without access to traditional banking facilities, so the country could really benefit from the advantages of digital crypto funds and blockchain that could be accessed via smartphones. Yet Bolivia was one of the first Latin American countries to ban cryptocurrencies back in 2014.

The ban has lead to crackdowns and arrests for users. In 2017 Bolivian police arrested members of a Bitcoin mining operation in a crypto crackdown. Plus the head of the Bolivian Financial Supervision Authority (ASFI), stands firm behind the ban policy by claiming that any form of virtual currency remains “prohibited.”

Conclusion

Cryptocurrency is clearly growing and becoming more popular for businesses as well as citizens in Latin America, and it’s clear that crypto technology is bringing relief and economic independence to a lot of people who may not normally have access to a traditional bank account or credit card.

It will be interesting to see which cryptocurrencies remain the most popular for investment and growth. In Latin America the most popular ones remain Bitcoin and Ethereal.

However the following options also remain popular and could see further investment:

  • DASH or Dash
  • NEO or Neo
  • ADA or Cardano
  • BNB or Binance coin

So with this amount of cryptocurrency types on the market, 2019 looks set to be the year when cryptocurrency users and businesses come together to create a system that works for the people across Latin America.

No matter what cryptocurrency type in Latin America people invest in, it’s clear that the citizens are ready to explore new ways to approach their personal finances and to claim their own economic futures.