In recent years, Latin America has become more interested in using cryptocurrency. However, the biggest obstacle for many nations is that they are only used as a speculative investment strategy rather than as a form of payment or an asset to replace the local currency.
However, their importance in Latin America and the Caribbean has also been slowly increasing. Some currencies, like Bitcoin, have primarily concentrated on nations like the United States, Russia, or Nigeria.
Brazil (ranked seventh), Argentina (ranked thirteenth), Colombia (ranked fifteenth), Ecuador (ranked eighteenth), and Mexico (ranked thirty-first) are all located in Latin America.
Making cryptocurrency usage more accessible in nations where it is not yet prevalent is the main problem facing firms advocating its use.
Three companies—Bitso in Mexico, Mercado Bitcoin in Brazil, and Ripio in Argentina—have successfully built up significant regional positions in the exchange of digital currencies. In the case of Ripio, they have even developed their own cryptocurrency.
THE REALITY OF LATIN AMERICAN FINANCE AND CRYPTOCURRENCIES
Argentina serves as a useful example. In 2020, Manuel Beaudroit established Belo, a cryptocurrency exchange that helps its consumers incorporate cryptocurrencies into their daily life.
According to the CEO of Belo, Beaudroit had the vision to « build a product that allows people to live in crypto every day » for many years.
Contxto is reassured by Beaudroit that there are several use cases for each market. In Mexico, it is widely used for everything linked to remittances, while in the case of Brazil, it is frequently used for trading, that is, to arbitrate other currencies. As an illustration, Argentina is a practical use case where it is utilized specifically for living.
According to Daniel Vogel, the co-founder and worldwide CEO of Bitso, in a discussion with the media last year, 5% of the remittances that Mexico gets are already conducted in cryptocurrency.
This amount is made possible by a mix of individuals who transfer money from overseas and remittance businesses that automate the procedure and cut expenses by utilizing Bitso, the cryptocurrency exchange platform with a USD$2.2 million market cap.
Africhange, an Afro-Canadian remittance provider with more than 5,000 users, and Bitso partnered in September 2022 to make it easier for people to send money between Canada and Mexico. As it does away with middlemen and enables individuals to get their money practically in real time, the use case of sending remittances is growing in popularity.
Due to their speed, cryptocurrencies are now also utilized to pay wages to remote workers, who are more in demand than ever. Belo and Payoneer, a platform for digital financial solutions that enables businesses and professionals to transact abroad, struck a partnership at the beginning of June this year.
By enabling people to send and receive money abroad using multi-currency accounts in an easy, transparent, and secure manner, Payoneer acts as a bridge for Latin American professionals and enterprises to engage in the new global economy.
Increasing financial freedom and improving user experience are the goals of this integration with Belo, which will let users to purchase ether and bitcoin.
Beyond international transfers, Belo has been making it possible to pay for services with cryptocurrency for more than three months. This is a more practical use case. Argentina users of the Belo platform « can pay for electricity service, water bill, or their children’s school; it was something we were missing and that more and more users are using, » claims the businessman.
There are 130,000 users of Belo throughout various nations. There were merely 100,000 a year ago. Beaudroit claims that its growth was extremely erratic.
The Argentine entrepreneur intends for Belo to be a market leader. “We would love to open operations in the rest of Latin American countries; we are very excited about Mexico, Colombia, Brazil, Peru, and Chile”.
“The secret is to understand a bit how to adjust the product in each of the markets, to be really relevant and, ultimately, bring a real solution to people,” he admits.
“The brake that existed in global crypto adoption was that we were not creating platforms for people to really take advantage of this technology and use it every day, there was no concrete perceived value”.
Beaudroit
ADOPTION OF CRYPTOCURRENCIES HAS SEEN BOTH PROGRESS AND DIFFICULTIES
According to the annual Chainalysis analysis, Latin America will be the sixth largest cryptocurrency market in the world by 2022. Adoption, however, is not yet ubiquitous or popular enough.
“We are still in an early stage in terms of the number of users, the latest estimate was about 200 million users, globally. In the next year and a half, that number will possibly double, hitting half a million users by 2025,”adds Belo’s CEO.
Adoption stalled last year due to a significant decline in the value of the major cryptocurrencies. This was partly responsible for the demise of FTX, one of the world’s major crypto platforms.
The professor of accounting and finance at the Monterrey Institute of Technology, Campus Estado de México, feels that, as a result of the above, cryptocurrencies have lost much of their allure to many individuals who had not yet dared to test them. “It will be complicated for cryptocurrency companies to attract new customers”.
Magaa advises consumers to invest in solid cryptocurrencies, which are supported by the behavior of the dollar or the Nasdaq Index. In the midst of the crypto bull market, some organizations include every asset supplied to their consumers, according to Beaudroit, but the key is to remain cautious as a platform and as users.
According to its CEO, Belo has supplied a restricted range of market-tested assets. In a study called New Payments Index 2022, conducted by MasterCard, the payment company that has backed several cryptocurrency credit cards such as those from Bitso and Belo, more than a third of Latin Americans said they used stablecoins for regular purchases, compared to just 11% of those who responded globally.
The fact that huge corporations like as Mastercard and Mercado Libre are entering the crypto sector offers people more trust. Mercado Pago, the Argentine marketplace’s fintech division, teamed with TruBit, a Mexican cryptocurrency platform formed in 2020, in March to provide a safe and user-friendly alternative for purchasing cryptocurrencies.
Users of Mercado Pago can deposit traditional currency into their accounts and then purchase cryptocurrency. Mercado Libre’s venture into cryptocurrency began a little earlier, in 2022, when it let consumers in Brazil and Mexico to purchase bitcoin (BTC) and ethereum (ETH) cryptocurrencies using their platform.
Despite the optimistic predictions of crypto-asset supporters, it has long been difficult to persuade authorities, investors, and regular users that using a cryptocurrency is safe.
