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The importance of cryptocurrencies in developing countries
Written by Davies on / Reading time: 4 minutes.
Have you ever wondered if a cryptocurrency could help developing countries? We do.
We are going to address the importance of virtual currencies in developing countries: initiatives, possibilities and real data. About 30% of the world's population has underbanked societies with precarious infrastructure, so they don't even have a bank account or find it difficult to send money to European countries.
Therefore, it is necessary to focus on the people of these countries and to think of alternatives that can facilitate their access to financial resources and become owners of their own money. We've done it through this post. Are you ready to join Davies?
The role of cryptocurrencies in Latin America
Eleven years ago, someone decided to create a blockchain project that would revolutionize the financial system around the world. He did so under the pseudonym of Satoshi Nakamoto, the creator of Bitcoin. Although many people bet from the beginning on this technological advance, the flip side of the coin was the central banks, which spoke out against Bitcoin.
However, while these institutions were responsible for highlighting their risks, cryptocurrencies were, on the other hand, becoming a real alternative to a society without access to financial services. Latin American countries, such as Colombia or the Dominican Republic, found freedom in a decentralized economy where they could make transfers from anywhere without the control or approval of financial institutions.
The furor of cryptocurrencies sparked the interest of more and more people, creating new cryptocurrencies until having the more than 2,500 that currently exist. The rise of its use among an ever-widening public is forcing the world's governments to turn their attention to the issue. The first Latin American country to establish a legal framework for the use of virtual currencies was Mexico, something that was achieved through Fintech.
Two-way transactions with countries on the other side of the Atlantic are already a reality. In the case of Venezuela, the course of cryptocurrencies has suffered some ups and downs, although the population has come to them as a reserve of value. Other developing countries have shown their progress in regulating cryptocurrencies, as it is the case of Argentina. Buenos Aires is already known as 'the capital of Bitcoin in Latin America'.
Guatemala, Nicaragua and Paraguay, among others, have been more neutral in this regard.
Cryptocurrencies can accelerate the development of Latin America
This is one of the advances of the fourth industrial revolution. Cryptocurrencies are assets that are not linked to the economy or policy of any country and guarantee the security of all operations. Including these technological advances in banking implies a financial service free of intermediaries.
Latin America lives also this reality, although its entry process has been slower than in European or North American countries. However, its regions have the full potential to use them in instant money transfer, and even for their development.
In 2018, Colombia and Argentina were chosen to implement bitcoin ATMs and closed the year with 75 crypto-ATMs. However, in addition to Colombia, the developing countries with the largest presence of these ATMs are Mexico, Panama and the Dominican Republic.
On the one hand, Colombia tops the list, leading the statistics with the largest ATM of crypto agents installed in Medellin, Barranquilla, Cali, La Hormiga, Bogota and Pereira. On the other hand, Mexico is the second country with the most ATMs in Latin America. Brazil has only two ATMs, Peru has one and Ecuador has three. It reflects a decentralized economy that is gradually developing to contribute to the development of the population and reduce their poverty.
Conclusions of the growth of cryptocurrencies in Latin America
The growth of cryptocurrencies continues to increase for several general reasons:
- International transfers are cheaper than those made with traditional money.
- Reduce financial poverty, increasing access to services.
- They are fast, as they can be sent in seconds and at a low cost.
- You have full control of your assets.
- They are free and universal.
- They are unstoppable since no one can block a transaction through the blockchain.
- Everyone can have a wallet to send and receive cryptocurrencies.
In general, the growth of cryptocurrencies in Colombia is justified by the high banking costs imposed on international transfers and the search for profitability. In Venezuela, the justification for this growth lies in controlling the exchange of its currency, the economic crisis, the low saving capacity, the difficulties in exchanging foreign money, etc. In Mexico, however, they have aroused great enthusiasm and curiosity, a great part of the population has decided to experiment with virtual currencies. Something similar has happened with Argentina, which has turned cryptocurrencies into a payment and investment method.