Latin America turns to Bitcoin

Bitcoin is nothing new in the financial world. Unlike other conventional payment methods that include intermediary institutions between the seller and the buyer, bitcoin simplifies the whole process, it’s much more direct, easier to use, and much more convenient in general. These advantages make more and more people turn into the bitcoin world and forget about banks and other financial institutions. Today, users of bitcoins can freely pay in a restaurant with bitcoins, get reimbursed about a flight delay in bitcoins, paying for online services in bitcoins. It’s safe to say that the world is ready for the storm called bitcoin.

Bitcoins in the World

Europe, American, even Asia, all continents are already part of the bitcoins world. People have recognized a new possibility and bitcoins and freely enjoy the advantages of it, no matter whether they are located. The situation is the same in Latin America, and bitcoins are very popular there nowadays. According to statistics, the fiat currencies in Latin America are decreasing in use and Latin Americans have started embraced bitcoins. Thanks to the easy bank access and remittance needs, the popularity of bitcoins has grown considerably when compared to a few years ago when bitcoin was still an idea on paper and didn’t find its way in the financial world.

Latest Analyses on Bitcoins in Latin America

Last week, a new study on the topic of the use of bitcoins in the Latin American world has been released by Chainalysis, a number of blockchain data analysts. The study has been released this month as part of the Geography of Cryptocurrency Report. According to the study, there are a few reasons why the popularity of bitcoins has grown in the Latin American region. First of all, the lack of backing access is the reason number one to turn to bitcoins. Also, the remittance needs, as well as the devaluation of local fiat currencies, are only a reason plus to start using bitcoins instead of conventional payment methods.

The major drive for bitcoin adoption in Latin America, according to Sebastian Villanueva, the Chile operations manager, is the lack of banking access to individuals and businesses. Lots of people here have an uneven income because they do gig work for Uber or places like that, which makes it hard for them to get a bank account,” is what he had to say on the matter, further explaining the popularity of bitcoins in Latin America “Without easy banking access, many young people in Latin America turn to cryptocurrency as a means of storing value”. This explains the popularity of online systems like bitcoinup.io where bitcoin users can get a greater value than using other exchange platforms.

Chinalyses Explains

According to Chinanalyses, the majority of bitcoin transactions are changing fiat currencies to bitcoins. People use the local currency to trade it for bitcoins on some of the larger exchanges like Binance. This is only happening in Latin American but in all other developing countries as well. Another factor forcing people to turn to bitcoins is the currency instability on the market. Chinanalyses further explains the phenomenon “The correlations, each of which is statistically significant, suggest that cryptocurrency users in Argentina, Uruguay, Colombia, and Chile, in particular, are turning to cryptocurrency as a means to store value when their native fiat currencies are losing value”.

“Venezuela and Argentina especially are printing money like crazy, so their fiat currencies are losing value. That drives a lot of cryptocurrency adoption,” Villanueva continued. “Some countries, like Argentina, limit the amount of U.S. dollars citizens can buy per month, which further limits their options for secure savings and increases the need for cryptocurrency.”

The Current Bitcoin Trading Scene in Latin America

Many Latin American countries have a robust crypto trading scene. Brazil, for example, is leader in the number of bitcoins users in the region. Venezuela is a close second, however, it’s the country with the third-highest number of Localbitcoins and Paxful transactions, which are the two most popular exchanges. In general, the region has the highest number of retail crypto activities. It means transfers of less than $10.000 in bitcoins. However, professional traders estimate for about 80% of all bitcoin transfers monthly. Unlike regular bitcoin users, professional bitcoin traders prefer international platforms like Binance more than the local exchange platforms because of higher liquidity and access to more trading platforms.

Latin American countries take about 5% and 9% of all cryptocurrency conversions monthly worldwide. In other words, Latin American countries send about $25 billion in cryptocurrencies and receive about $24 billion. According to representatives from the headquarters in Brazil, there is “a desire for potential high yield assets with uncorrelated returns is driving cryptocurrency adoption amongst professional investors, such as those representing pension funds and family offices.” 

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