The average citizen in many Latin American countries has turned to Bitcoin in order to survive, and now many wealthy families are becoming a believer in the cryptocurrency and are buying as much as they can.
The economic situation in many Latin American countries is extremely dire. Hyperinflation has hit Peru, Bolivia, Argentina, Venezuela, and Brazil, with some countries in worse shape than others (Venezuela). Many normal residents began to turn to Bitcoin when the economic situation began to hit rock bottom. Now it seems that the upper echelons of Latin American society have taken note as many wealthy families are now diving enthusiastically into Bitcoin.
A Land of Upheaval
Venezuela has served as ground zero for the economic crisis in Latin America. The situation is so desperate that many turned to crypto mining in order to buy the basic necessities, such as food and medicine. A shocking stat is that a full 3/4th of the country lost weight last year due to food shortages. Despite government crackdowns, the local population continues to actively trade in cryptocurrency, with Localbitcoins serving as the main hub.
The elites of Latin America have not proven immune to the economic situation. Wealthy families are now buying big into Bitcoin as a means to protect their assets from currency controls and rising consumer prices. Several cryptocurrency funds have opened up in 2017 to provide service to this elite clientele.
One of these funds is Solidus Capital, founded by Carlos Mosquera Benatuil, who fled to Rome from Venezuela to open the business. He says that family offices make up most of the funds, who are looking to turn around their fortunes. He says:
Latin America is very volatile. Cryptos are turning into a new haven for these families.
Bitcoin Offers Hope
Whether rich or poor, the skyrocketing inflation has eaten into everybody’s savings and spending power. Compounding the issue is strict government controls, especially the Venezuelan government cutting off access to US dollars. Bitcoin offers a refuge from these problems.
To show how much Bitcoin and other digital currencies have exploded in Latin America due to the ongoing economic crisis, the number of cryptocurrency transactions in Venezuela alone have tripled since the start of 2017. Demand in Argentina spiked in June when former President Cristina Fernández de Kirchner, whose policies put the country into a recession, announced that she was running again for political office.
Interesting post on /r/Bitcoin from a Redditor who compares the different options for storing value in Venezuela.
“I know a lot of people who sold everything they could to leave the country and took their money to bitcoins through @LocalBitcoins.”
— Kyle Torpey (@kyletorpey) December 1, 2017
People in Latin America are turning to Bitcoin as it offers immediate payment without the need for a bank. Even professionals are now demanding to be paid in digital currencies. For family members who live abroad, Bitcoin is a lifesaver as they can send money in an instant back home without the onerous fees charged by groups like Western Union.
The fact that anybody with a smart phone can now begin trading Bitcoin has led the way. The chief executive of the Panama-based Cryptobuyer digital currency exchange, Jorge Farias, says:
There are countries today without potable water where everyone has a cellphone. Anyone who has a smartphone can have a bitcoin account, which is something that couldn’t happen before. So its niche really is the whole world.
While many governments in Latin America continue to hamstring their economies, their citizens are increasingly turning to Bitcoin in order to survive or protect what they have left. It’s amazing that the situation is so bad that even the rich are now turning to the cryptocurrency to stave off the current economic effects.
Are you surprised that wealthy families in Latin America are having to turn to Bitcoin due to the economic circumstances? Let us know in the comments below.
Images courtesy of Twitter/@kyletorpey and Pixabay.