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Worldcoin Uptake in LATAM is Just Desperation for $30: Venezuelan Crypto Founder

Last Updated September 8, 2023 12:11 PM
Teuta Franjkovic
Last Updated September 8, 2023 12:11 PM
Key Takeaways
  • In Argentina, Worldcoin registrations are driven by economic incentives.
  • Argentina’s crypto adoption is expected to grow due to economic instability and low trust in the government.
  • LATAM countries tend to turn to crypto due to hyperinflation and distrust in the government.
  • Worldcoin users willingly share biometric and financial data for tokens in order to survive.

LATAM, and especially Argentina’s, cryptocurrency and technology industries have recently experienced growth with World ID, a project of Worldcoin, hitting a record number of user verifications.

Argentina broke its previous record on August 30 when 9,500 of its people used World ID to confirm their identities. Given Worldcoin’s  privacy concerns with other local governments, this is seen as rather contentious.

Even if the majority of people in Latin America are well aware of the whims of the digital currency market, they have a deeper understanding of cryptocurrency since, despite its volatility, it “maintains its value in the long term and goes up.”

Most LATAM nations, particularly Argentina and Venezuela, are severely affected by rising inflation, making crypto, including Worldcoin, seem less like a speculative play and more like a necessity, according to one Venezuelan crypto founder.

“Strong Embrace of Technology” in LATAM – A Cry for Survival

Despite the economic volatility, cryptocurrency is still in great demand in Argentina because so many people lack confidence in their government’s ability to manage the country’s finances.

CCN spoke with Mauricio Di Bartolomeo, Co-Founder, and CIO at Ledn, a Canadian-based crypto lender, about rising Worldcoin embracement and how LATAM countries are embracing crypto faster than others.

CCN: The surge in World ID registrations in Argentina seems to signal a strong embrace of Worldcoin by the crypto community. In your view, does this enthusiasm genuinely reflect a demand for global economic inclusion, or could it potentially share similarities with the questionable fervor observed in Kenya’s recent crypto wave?

Di Bartolomeo: “The key to understanding why so many people in LATAM, more precisely, Argentina, are registering for this service is to understand the Worldcoin incentives and their economic conditions. For context, the minimum wage in Argentina is ~120,000 Pesos/month. At the current free market rate of 725 pesos per USD, that’s equivalent to ~$165/month.”

“Worldcoin is giving anyone that scans their iris 25 WLD tokens, which is roughly equivalent to USD $30 at the current exchange rate. In other words, a person can receive the equivalent of 1 week’s pay just by scanning their iris, in a country where 40% of the population lives in poverty. They don’t want their irises scanned, they are desperate for anything they can earn in USD. Worldcoin is a convenient way to get USD $30.”

“We saw similar ‘strong embraces’ of technology that gave away money during the play-to-earn phenomenon with Axie Infinity and others, as well as projects like “steppen.” The strong embrace typically dies down when the strong incentives end.”

CCN: Looking ahead, what are your expectations for Argentina’s crypto adoption landscape?

Di Bartolomeo: “I believe economic and political conditions in Argentina are ripe for higher adoption of digital assets. Typically, countries with high rates of inflation and low trust in government are the ones with the strongest incentives to adopt Bitcoin, stablecoins and other digital assets.”

“As it allows them to protect the value of their savings, and shelter the assets from a regime they do not trust.  The rate of adoption could accelerate depending on the outcome of the upcoming election.”

“A victory by Javier Milei would certainly cause stablecoin adoption to soar, as he plans to dollarize the country’s economy. It would also lead to more adoption of Bitcoin and more digital assets, as Milei intends to deregulate the industry locally, so that service providers can compete openly to offer the best services to Argentinians.”

Parallel Paths: Hyperinflation and Dollarization Drive Digital Assets

CCN: When comparing Argentina and Venezuela, both countries have shown varying degrees of engagement with cryptocurrencies. Could you provide a comparison of their respective positions in the crypto space, highlighting any noteworthy differences or similarities?

Di Bartolomeo: “Both countries have similar reasons to drive people to digital assets – namely hyperinflation and low trust in government institutions.”

“In terms of noteworthy similarities, I’d highlight that as the local currency has collapsed (Bolívares and Pesos), the economy has become effectively dollarized. Meaning that, despite the government’s best efforts, local people are using USD for their everyday transactions, making it de facto “legal tender” without the government’s official blessing. This means that you need fewer and fewer bolivares or pesos.”

“You will also notice from the Google search trend charts below, that because of their dollarized economies, stablecoins are becoming increasingly popular in both countries. In fact, interest for stablecoins is getting very close to that of bitcoin. The reason is that once your economy is effectively dollarized, your inflation problems become greatly reduced.”

Argentina:

Argentine interest over time

Venezuela:

CCN: Given the vocal criticism of Worldcoin’s privacy implications from certain quarters, do you foresee potential moral and legal implications arising from its adoption? Your perspective on this matter would be invaluable.

Di Bartolomeo: “I don’t believe legal implications around privacy concerns are likely – as people are willingly agreeing to share their information in exchange for tokens.”

“I believe there could be repercussions around the user base once they understand what they are giving up in exchange for the ~$30 of free tokens (their biometric and financial information). From a moral standpoint, I think there is a substantial risk to having a “honey pot” of biometric and financial information for a large number of people around the world.”

“If this information were ever compromised, it could have significant consequences for those who had their information and balances shared.”

 

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