Achi news desk-
New research reveals that blockchain ecosystems in Latin America are growing as a response to adverse financial situations.
In the dynamic landscape of blockchain technology, Latin America is emerging as a central player, capturing the attention of global Web3 observers. The increasing importance of monitoring the blockchain ecosystems of this region is underscored by its rapid evolution, presenting both unprecedented opportunities and challenges.
The region is poised to harness the potential of the crypto wave, demonstrating a growing crypto adoption that reflects growing interest among Latin Americans. But, what is behind this growing blockchain adoption in the region? What motivates Latin Americans to invest in cryptocurrency?
A recent survey conducted by Sherlock Communications has risen to shed some light on this scenario. The 2024 Blockchain Report provides a deep insight into Latin America’s blockchain ecosystems, stepping out from behind the curtain and showing what exactly is driving Latin America’s sentiment towards the adoption of this technology.
So, what is brewing in the Latin American blockchain? Adopt by necessity. Latin Americans seem to be turning to crypto to protect their assets from adverse financial situations, such as inflation or high payment fees.
In this article, we will look deeper into different Latin American countries to better understand how Latin Americans perceive digital currency and how financial disadvantages are pushing crypto adoption in the region.
Blockchain Latin America: a key ally in navigating financial turbulence
The unique insights provided by the 2024 Blockchain Report bring to the table an outstanding fact that reveals one of the main factors behind growing crypto adoption across this vast region: Latin Americans are turning to cryptocurrencies as a means of financial survival.
Although the specific scenario per country varies, especially considering the diverse nature of the region, there is still an outstanding common pattern: unfavorable financial situations are pushing Latin Americans towards embracing crypto, with or without governmental or regulatory support.
This scenario, in turn, has an impact on local regulatory frameworks and the government’s stance towards blockchain technology, thereby reshaping Latin America’s dynamic and evolving blockchain ecosystems as a result of the Latin American push for crypto demand.
To better understand why Latin Americans are increasingly choosing crypto and how this affects the local blockchain landscape, we will explore the scenario across 4 different Latin American countries.
Argentina: rising crypto adoption against inflation
Argentina has surged to become the second largest crypto market in Latin America, reflecting a growing trend of adoption. In fact, the 2024 Blockchain Report reveals that an estimated 5 million Argentines hold digital currency.
Now, why are Argentinians increasingly turning to cryptocurrencies? Well, it seems like this the population’s response to high inflation and financial instability.
This increase in crypto adoption is a response to the overall economic challenges the country is facing. With annual inflation soaring to 211% in 2023, the highest since the early 1990s, Argentinians are increasingly turning to cryptocurrencies, especially stablecoins, as a hedge against the devaluation of the Argentine Peso.
The recent election of President Javier Milei has further fueled optimism within the crypto community, as his administration has a friendly stance towards crypto. Although no specific regulations are currently being discussed, Milei has openly stated that he welcomes with open arms the legal recognition of Bitcoin and other crypto as a means of contract payments in response to increasing demands from users.
Colombia: crypto as a relief from the burdens of payment fees
Colombia positions itself as the fourth largest crypto adopter in Latin America. According to the Blockchain Report, over 5.6 million Colombians are actively involved in the crypto market. What’s more, the country shows a remarkable adoption trend on the ground, which is superior to its regional counterparts.
The driving forces behind this surge in crypto adoption are indeed multifaceted, but, again, economic factors play a prominent role. Except in this case, it’s not just inflation that’s fueling crypto adoption. Payment fees take center stage.
The burden of payment fees has motivated crypto adoption as a cost-effective solution for cross-border transactions. Colombia received a significant amount of $9.4 billion in payments in 2022 and, in this context, the possibility of making faster and cheaper money transfers provided by crypto has become increasingly attractive among its population.
Colombians’ stance towards crypto adoption is reshaping the blockchain scenario in the country, with the government responding with positive signals such as the possibility of introducing a central bank digital currency (called CBDG) or the collaboration with Ripple Labs that explores the potential of blockchain beyond traditional financial areas as part of a plan to remedy land distribution efforts.
Venezuela: the biggest figures of stable currency trades in the middle of financial crisis
Despite facing a number of obstacles, including political instability, Venezuela has emerged as a significant player in the regional crypto arena. In 2023, the country ranked 40th in the Global Crypto Adoption Index, and its grassroots adoption increased not only despite but rather because of challenging financial scenarios.
Despite initial efforts to adopt a centralized cryptocurrency, highlighted by the ill-fated Petro (PTR), Venezuela’s crypto journey took a different path. Government initiatives in this area were not really adopted and even became involved in controversial corruption scandals.
Yet, contrary to all expectations, Venezuelans, driven by the urgent need to fight against currency devaluation and hyperinflation, managed to grow the adoption of crypto users out of necessity in search of financial security. According to the Blockchain Report, the total number of crypto transactions in the country showed a 32% increase between 2021 and 2023.
Similar to the case of Argentina, Venezuelans became strong consumers of stables due to hyperinflation. This is such a thing fixed currency trades accounted for 34% of small retail transaction volume in the country, the largest figure in Latin America – is a testament to the populace’s innovative approach to financial stability amidst economic instability.
Furthermore, the country’s migration patterns have led to a Venezuelan diaspora spread across Latin America that is becoming a participant in the crypto sector, contributing to the country’s growing influence in the regional blockchain landscape.
Cuba: persistence and education boost crypto adoption
Amidst Cuba’s challenging political and economic challenges, the growing crypto adoption trend is gradually gaining traction in the country. And, once again, crypto is considered a means to protect Cubans from adverse economic situations.
Cuba faces a number of challenges. This country showed an annual inflation rate of 45%, and, according to the Cuban Human Rights Observatory, most of the population lives in situations of extreme poverty, 88% to be more precise.
In addition, the country faces restrictions imposed by the US trade embargo, which leads to central exchange companies being absent in Cuba. High inflation rates in the country depend on remittances and tourism to access the US Dollar. And to this complex scenario, we must add some structural challenges, clearly exemplified by the collapse of crypto mining operations due to frequent blackouts in the country.
And yet, despite all these obstacles and challenges, the Cuban population continues to mobilize crypto as a defense. The crypto revolution has found its way in Cuba through the push and demand of users who are vociferously calling for crypto adoption. In fact, the country was included in 2023 in the Global Crypto Adoption Index, ranking 136 out of 155.
To overcome currency restrictions resulting from the US embargo, Cubans engage in peer-to-peer transactions to access crypto. In addition, the acceptance of crypto payments by an increasing number of businesses reflects a nascent but growing adoption trend.
The crypto revolution in Cuba is primarily driven by its highly educated population. Grassroots educational movements are emerging to spread knowledge about Bitcoin and blockchain technology, empowering citizens to navigate financial uncertainty through digital assets.
Blockchain Latin America: where need drives opportunity
Blockchain landscapes in Latin America are not just a reflection of trends, but a response to pressing economic challenges.
The recent insights provided by the 2024 Blockchain Report highlight a critical reality: crypto adoption in the region is more than just a trend; it’s a lifeline. As countries across Latin America face common challenges such as inflation or economic uncertainty, crypto is emerging as a beacon of resilience and innovation, offering a path towards financial stability in turbulent times.
From Argentina to Cuba, the common thread necessarily driving crypto adoption underscores the profound impact of economic challenges on shaping the region’s blockchain ecosystems.
As individuals and businesses navigate inflation, currency devaluation and high payment fees, demand for crypto as a means of financial survival continues to surge. Moreover, this demand, as we have seen in this article, further affects grassroots movements and government initiatives that are reshaping blockchain ecosystems across the region.
Latin America is emerging as a key player in the global crypto arena, where need not only drives adoption but also unlocks new opportunities for growth and development.
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