The case for crypto is growing in Latin America, and not just because of hyperinflation in Argentina and Venezuela. From bringing financial services to the bankless to funding for startups which has been notoriously difficult to obtain in the past, there’s a quiet transformation under way and its being fueled by crypto.
Crypto startups in Latin America
The old Silicon Valley venture capital model of securing funds simply doesn’t work down here. While there are hubs in places like Guadalajara, Buenos Aires or Mexico City where tech startups may experience a significant advantage over their peers, generally speaking, Latin America is a tough place to get capital.
Not only is income in the region much lower than the U.S. or Europe, it’s significantly more spread out. And the region’s governments aren’t exactly rushing to lend a helping hand either. This has created a pool of talented and ambitious individuals with big ideas and no way to get them off the ground.
To make matters more difficult for would-be entrepreneurs, stock exchanges in the region are difficult to enter and extremely illiquid. To put it into perspective, the total market cap to GDP ratio of the region’s largest stock exchange, the Ibovespa Brasil Sao Paulo Stock Exchange, currently sits at 46 percent while the amount traded vs. GDP in the U.S. weighs in at 146 percent.
With a lack of VC funding, little stock market action and no government support, companies are beginning to turn to crypto to carve out their piece of the pie.
Rootstock may be one of the most promising and exciting crypto projects not just in Latin America but in the entire world. Though it has received backing from some of the biggest names in the crypto space, it’s rarely mentioned when discussing the future of bitcoin. But it should be.
As the first smart contract platform with a 2-way peg to Bitcoin, Rootstock aims to build upon the Bitcoin ecosystem, not only adding greater functionality to the network, but adding value by extension.
Another major player in Latin America’s crypto startup scene, Ripio, formally Bitpagos, Argentina’s biggest exchange, has leveraged its success to launch an ICO in order to build a peer-to-peer credit network, and it’s already secured a partnership with one of the biggest credit card issuers in the region, Naranja. The project will allow users to lend or borrow funds utilizing smart contracts and will even insure lenders if the case of a default.
Like Ripio, Bitso, Latin America’s largest exchange, is also looking to shake up the world of finance. Through the Bitso network, users are already able to send and receive fiat transactions instantly to anyone using the platform, but that’s just the beginning. Bitso is also looking transform the way Mexicans pay their bills, buy their groceries, and even purchase a cup of coffee, though the details of this merchant friendly platform have not yet been revealed.
Adoption gains speed
With the new wave of startups leading the way, crypto adoption is on the rise. While a spike in bitcoin trading volumes in Argentina and Venezuela are almost expected, Chile, Mexico and even Peru are also witnessing similar activity.
Peru, one of the region’s fastest growing bitcoin markets, has seen exceptional growth in recent months despite the bear market. This is largely thanks to bold moves by companies actively pursing the facilitation of crypto transactions for their customers.
Peru’s BitInka for its part has a network of 29 banks which process Bitcoin, Ethereum, Dash and other crypto transactions. This allows customers across the region to easily buy and sell crypto in their native currencies.
And while BitInka takes on the regions financial institutions, Dash has partnered with a new crypto-friendly brand of mobile phones, Kripto Mobile Corporation(KRIP), in a campaign to increase merchant acceptance of the digital currency.
Dash Core Group Head of Global Business Development Bradley Zastrow explains, “We all know that fiat payments take too long and cost too much, and that cryptocurrencies have the potential to affect real change, especially for people experiencing hyperinflation where cryptocurrency is less volatile.”
The new KRIP phones include instant access to the Dash ecosystem, a pre-loaded wallet and full access to Sweden-based Bitrefill’s services which allow customers to pay bills, top up pre-paid cell phone plans and purchase gift cards for e-commerce.
Zastrow continued, “Right out of the box, even users who have never interacted with cryptocurrencies have everything they need, and by working closely with the Dash community and Dash Help Me, new users have the necessary support structure in place should they need assistance. The critical element to moving to mainstream is the need for removing the friction that exists today with the cryptocurrency experience. We’re doing that with the KRIP phones.”
Though Bitcoin still takes center stage, with its activity and advocacy in the region, especially in Caracas, Dash is quickly gaining traction.
Roadblocks still exist
While there is certainly a notable uptick in crypto acceptance in the region, it has not been an easy task.
Chile’s Buda.com, for instance, has had to fight for its survival. After a string of account freezes and banking hiccups, the exchange has taken legal measures to challenge the financial head-on. And though operations are currently moving ahead, the Chilean government hasn’t exactly welcomed the crypto-movement with open arms.
Colombia is also taking aim at the crypto space, with the age-old “blockchain, not bitcoin” stance. Citing volatility, criminal activity and the rest of the typical rhetoric against cryptos, Colombia is currently looking to define specific regulatory measures in the space. Though the country has yet to announce what these regulations might be, one might imagine they would be less than supportive.
The benefits of cryptos for Latin Americans are vast. From hyperinflation and lack of banking solutions to crowd funding and micro-financing, cryptos offer the region a new way to interact with money.
Though Argentina and Venezuela have been forced to take the lead in crypto adoption in Latin America, bitcoin trading volumes are up, new exchanges are building their roots and a wave of fresh financial services are bringing unique opportunities to a region that has often lagged behind in adoption of new technologies.
The path will likely include an even greater number of challenges moving forward, but Latin America is looking to cryptos with a generally positive tone.