How Cryptocurrency Will Disrupt the Banking Industry in Latin America As Latin American countries flock to cryptocurrency, they are creating a spot for themselves in the digital global economy where cryptocurrency is a key player.
By Tony Delgado
Opinions expressed by Entrepreneur contributors are their own.
Since its first release in 2010, cryptocurrency has been regularly covered in the news and various industries involved. But despite being in existence for a decade and rising in value, this modern form of currency is still foreign to some people.
Put simply, cryptocurrency is an internet-based medium of exchange that can be used to buy goods and services. But unlike regular arrangements, it uses an online ledger with strong cryptographic functions to secure online transactions, keeping its users safe from double-spending as well as counterfeiting.
Related: What is bitcoin? Why the digital currency became popular
Recently, cryptocurrency has become very popular in Latin American countries.
Latin America enters the digital global economy
Over the years cryptocurrency has enabled users to make money by buying and selling. This is one of the major functions of cryptocurrency as it works its way toward its end goal of becoming the primary form of currency around the world, breaking barriers and opening markets to the global economy.
As some Latin American countries establish their position as having some of the largest populations of cryptocurrency users, they're creating a spot for themselves in the digital global economy where cryptocurrency is a key player.
Being a part of the digital global economy opens new opportunities to participating countries and allows them to boost their economy through a series of digital transactions, which are slowly becoming the new normal arrangement thanks to the rise of technology.
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Having a younger population in Latin America also helps as younger generations are keener on exploring the ins and outs of technology, thus making cryptocurrency a good choice of investment.
Another reason for its success in Latin America is its lively trading scene. According to an article written on Sounds and Colours, "in the past year, Latin countries have sent $25 billion worth of cryptocurrency and received $24 billion, representing 5 percent and 9 percent of all cryptocurrencies in the world."
A safety net against hyperinflation
Cryptocurrency users, in general, have a variety of reasons for choosing to use digital currency, ranging from curiosity to investment purposes. But for Latin American users, one of the main reasons for switching to cryptocurrency is the volatile economy. For instance, Venezuela has recently seen inflation rates of about 72,000%.
Other nations in Latin American aren't as secure with their economy either. As a result, Latinos are looking for safer platforms for storing their money without having to worry about hyperinflation greatly affecting its value. Cryptocurrency offers the ideal solution to this problem. With their assets in digital currencies, Latin Americans are safeguarding their money from the unpredictability of the market economy.
But tumultuous markets aren't the only driving force that led Latin Americans to turn to cryptocurrency. For many, traditional banks are simply inaccessible.
Protection against oppressive governments
Another reason Latin Americans are welcoming cryptocurrency with open arms is their lack of trust in a government. Over the years, Latinos have developed an institutional distrust as a result of widespread instability, rampant and blatant corruption, and rapidly changing regimes. All these factors have shaped Latin American countries in one way or another. At this point, the people aren't too keen to put their money in an institution that's controlled by the government and that can access personal details.
This is where cryptocurrencies change the scene for Latin Americans. Because they're inherently decentralized, cryptocurrencies aren't controlled by any government or financial institution, offering their users safety and freedom from any government agenda. This decentralization has made cryptocurrency very popular in Latin America.
Cryptocurrencies have since established themselves in various industries. They are also gaining the interest of entrepreneurial minds who are looking for something innovative to invest in. But some remain skeptical about the platform as they have yet to fully understand its process.
Latin Americans don't share the same sentiments. Because of the issues mentioned above (banking inaccessibility, a volatile economy and an oppressive government), some countries were prompted to look for a platform where they can feel safe keeping their money.
Will cryptocurrency reach its goal of becoming the only currency and earn the trust of billions of people? I believe it will be a while. But Latin Americans have fully embraced the advantages of digital currency.
