It’s no secret that Latin American countries are struggling economically.
Unstable governments and massive debt in places like Venezuela and Argentina have created a lack of confidence in local currencies, with the peso in particular devaluing 40% in just three months and more than 100% since 2017. With Latin American citizens hungry for alternatives, decentralized solutions including cryptocurrencies like Bitcoin are an accessible option that benefits civilians and businesses in meaningful ways. This grassroots demand has given rise to one of the world’s most vibrant crypto communities. One that will remain an influential force in the growing crypto economy on a global scale.
The growth of Latin America’s crypto market can credited, at least in part, to the worldwide crypto community’s increased momentum. Cryptocurrency is thriving worldwide, with the market cap expected to reach up to two trillion dollars in 2018. Currently, the majority of blockchain mining takes place in China, but the market is steadily growing in Latin America. With its citizens looking for more stable investment opportunities, the crypto market in this region is expected to grow over 30% in the next five years.
On top of the economic difficulties and declining value of regional currencies, sending money abroad is incredibly restrictive. It’s heavily regulated and often prohibitively expensive. The use of crypto helps solve this problem, not just for individuals but for ecommerce and business-to-business transactions as well. Digital asset exchanges like OKCoin work with international companies to promote regulated cross-border relations, making it easier for Latin Americans to derive value from digital currencies.
With more exchanges expanding into the region, there are even more accessible options for locals hoping to switch to crypto. In an area where not everyone has a bank account but just about everyone has a smartphone, it’s easier than ever to manage crypto funds via app, rather than having to use a centralized system that shifts in value depending on the country.
Of course, with cryptocurrency being only loosely regulated at the moment, many countries are still in the process of adapting their own policies. Some, like Bolivia, have banned it entirely, while Brazil, Argentina, and Colombia are still investigating and evaluating. Argentina’s central bank and regulating body are in the process of creating laws that are fair to everyone, and Mexico approved a bill to “promote financial stability and prevent money laundering” earlier in 2018.
We’ve already seen evidence that gubernatorial bodies that fail to embrace crypto’s decentralized ethic shouldn’t expect to gain traction, locally or on the global stage. The Venezuelan governments 2018 attempt at creating its own cryptocurrency, the Petro, is a prime example. Despite being issued by the Venezuelan government and backed by wealthy oil companies, the Petro’s lack of decentralized functionality was enough to hamstring its growth. It wasn’t well received by the country’s citizens or the industry at large, and the United States has gone so far as to issue sanctions against it.
Despite Venezuela’s missteps, regulations are, largely, a good thing for the crypto industry in Latin America. With regional governments working on laws to make the digital exchange safer, consumers will have more confidence to invest, allowing more room for growth. As cryptocurrency expands in Latin America, expect to see more firm laws surrounding it, which will ideally keep the user in mind.
Even without firm regulations, the crypto community in Latin America is active and knowledgeable, making it the perfect market to open up to the global world of digital ecommerce. It’s still in the early stages, but there’s a lot of potential for growth, and companies managing crypto are constantly learning and improving. For those stuck in bad economies with plummeting currencies, crypto just might be the lifeline they need to stay afloat.
About Pablo Magro
Pablo Magro is OKCoin’s Business Development Manager and head of Latin America. He is considered a multi-lingual executive with 10+ years of international experience. Specialised in the areas of global payments solutions, ecommerce and Marketing. Solid track record of Business Development, Sales and Marketing, and Strategy.
About OKCoin
Founded in 2013, OKCoin is a world leading digital asset trading platform. OKCoin currently provides fiat trading with major digital assets, including Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, and Litecoin. OKCoin has recently expanded to the United States and is looking to serve more users around the world in the future.
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