Crypto adoption is spreading in Latin America (LATAM). The region, which runs from the Caribbean islands all the way to the Argentinian peninsula, comprises some 650 million people and makes up 13% of the Earth’s land surface. And throughout its thronged cities, vibrant towns, and mountainous rural areas, cryptocurrency is taking root as digital assets are starting to be used to solve everyday problems.
From saving to remittance, payments and lending: you name it, LATAM countries are using crypto for it as citizens look for a way to counter sometimes shaky national currencies struggling to hold their own against the US dollar. Given this fertile soil, it’s no wonder blockchain companies are making a beeline for Latin America and the untapped potential it holds for genuine crypto adoption.
Latin America Warms to Cryptocurrency
The LATAM region has been making significant strides in its efforts to bolster crypto adoption and blockchain innovation, with many countries working towards attracting cryptocurrency entrepreneurs and investors alike. Argentinian fintech Ping has seen continent-wide demand for its payments and remittance app. In addition to US dollars, the mobile application enables users to send BTC, ETH, and LTC.
It’s not just companies that are normalizing the use of digital currencies across Latin America: governments are looking to get in on the act. Colombia is considering introducing a Central Bank Digital Currency (CBDC) accordingly to its tax agency boss. While CBDCs are about as far removed from the ethos of Bitcoin as imaginable, the fact that they are being pondered says a lot about Colombia’s readiness to countenance digital currency.
Countries in the LATAM region are amending their laws in order to attract blockchain companies and digital nomads. Argentina recently passed legislation that will allow citizens who earn money through cryptocurrencies to pay their taxes in bitcoin or other digital currencies through an official government portal. The service is currently available to citizens in Argentina’s Mendoza province. Paraguay also passed a similar law earlier this year, allowing residents there to pay taxes using cryptocurrencies like bitcoin.
The Earn Economy
In a part of the world where making ends meet can mean juggling multiple jobs, it’s no wonder that many people are trying to make their money work for them. And cryptocurrency, with its potential to be staked and farmed for additional rewards, is an ideal vehicle for generating a passive income. While some citizens simply want to buy or sell cryptocurrency with their local currency, others are intent on earning money by mining bitcoin instead of working at traditional jobs.
Mining is an energy intensive process—the proof-of-work algorithm that underpins Bitcoin requires substantial computational power. As such, miners have flocked to locations with cheap electricity and access to renewable energy sources (like wind farms) in order to reduce costs associated with running their operations. Colombia’s climate makes it an attractive place for mining companies looking for cheap resources; they operate most efficiently during cooler months when air conditioning isn’t necessary.
Colombia Chases Crypto
In Medellín, Colombia’s low-cost living and high quality of life is in sharp focus. It is no surprise then that Medellín has become one of the top cities for crypto companies to establish their headquarters. The city’s tech talent is growing, with a relatively high unemployment rate making it an attractive place for new ventures as well as established businesses looking to expand.
Given these factors, it’s clear why Medellín has become LATAM’s de facto crypto city. It combines some of the best qualities associated with traditional business hubs like Silicon Valley (accessibility) with those associated with newer emerging markets (affordability). In September, the Colombian government published draft rules for crypto companies that wish to operate in the country.
Loop Financea DeFi marketplace for NFTs and crypto assets, is one crypto project that’s zeroed in on Medellin. As it prepares to launch its own, LATAM focused blockchain, the company is moving its HQ to the Columbian city, where it plans to set up an exclusive membership lounge for its community members. Once its blockchain is live, Loop plans to open a staking product that’s targeted at LATAM residents who are seeking a return on their crypto assets.
Loop says it aims to be the premier blockchain hub for Medellin and has already built strong alliances with top crypto projects in the region and is collaborating with local artists to create a series of highly collectible NFTs. Commenting on the opportunity in Medellin, Loop’s CEO Tom Norwood said the team is “opening up new partnerships and opportunities literally every day [there]”, adding that he believes LATAM to be “the strongest” growth market for crypto in the world.
In the meantime, Loop is working on rolling out NFT ticketing in the city and beyond. The firm is planning to utilize NFTs for ticketing and payments at events and festivals, facilitating a seamless digital experience for attendees. This model has already been proven successful at Loop’s Cosmoverse event in Colombia, where over 700 people used the Loop mobile wallet for quick and easy NFT tickets and crypto payments.
400 km inland from Medellín lies another crypto hotspot: Bogotá. Colombia’s capital recently hosted Ethereum’s annual Devcon, an event which saw crypto figureheads flock to Bogotá for a series of workshops, keynotes, and parties, including a delightfully in a converted warehouse hosted by DeFi heavyweight Aave.
Stability in a World of Chaos
In addition to bringing crypto communities together, far more practical progress is being made on the ground in LATAM. Stablecoins, in particular, have resonated with a citizenry tired of seeing their national currency – and with it their savings – devalued. With LATAM countries facing their highest inflation in 25 years, there’s little incentive to stack pesos.
Into this void, stablecoins have begun to meet demand for a reliable store of value. The fact that these assets can be locked into DeFi protocols to earn an attractive APY only adds to their appeal. They’re also ideal as a stable unit of account for sending funds to friends and family; Mexico is the world’s third largest remittance recipient.
The trouble with stablecoins though, from the perspective of South American leaders at least, is that they’re still too closely tied to the US dollar, whose hegemony they have long been trying to displace. The appeal of genuine decentralized assets that are beyond the control of the US and IMF is understandable, but as El Salvador’s President Nayib Bukele has discovered, bitcoin has its own drawbacks.
Regardless of what the rest of the world may think about Bukele’s decision to legalize bitcoin in El Salvador, he remains popular at home. A recent survey of Latin American citizens gave El Salvador’s leader an 86% approval rating. With great popularity comes the power to make unpopular decisions, which is why El Salvador is doggedly sticking to its guns and ramping up its efforts to foster bitcoin adoption.
While neighboring countries have yet to follow suit, across Latin America, a similar story is unfolding. From the highest level of government to grassroots, crypto adoption is permeating at an unstoppable pace across the South American continent.
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