Economic stability, a given in much of the world, has long been a goal of the countries in Central America. Latin America and the Caribbean have been plagued with economic instability for decades.
Rampant inflation and devaluation of currencies and assets have left these nations unstable and often havens for criminal activities. Corruption of the banks and governments is often cited as the leading cause of these economic woes, specifically relating to the centralized control over currencies. Luis Cuende, co-founder and project lead at the ICO record-breaking Aragon, believes that the time is right for cryptocurrencies to play a role in revitalizing the economies of these regions, issuing in a new era of stability. And he’s not the only one.
Before Bitcoin was even a twinkling in Nakamoto’s eye, the people of Latin America suffered at the hands of extreme inflation and wild swings in the value of their assets and currencies. Regional fiat currencies, like Venezuela’s bolivar, experience drastic inflation at an unpredictable rate, resulting in widespread poverty throughout the nation. Of the economic problems in Latin America, Cuende explains that they, “have been so sustained over decades, that it’s easy for people to relate to what’s going on in cryptocurrency, that governments shouldn’t determine how much your money’s worth.”
Cryptocurrencies, by design, are able to withstand economic turmoil. This results in a more stable store of value, unaffected by the whims of a central authority like a government or bank, and protects the integrity of savings and transactions. The governments throughout Latin America have turned their backs on their citizens for decades; cryptocurrencies give the people an opportunity to fight back. “We don’t really need permission from the banks or the governments to move this forward,” Luis says of cryptocurrency adoption, “and so what’s going to happen is that people are going to start using cryptocurrencies more and more and they are going to self-organize and maybe self-govern. I think it’s pretty organic.”
If you think about fiat currencies, you see crazy changes in value because governments can print whenever they want to, but it happens the opposite with crypto and it’s so funny because it can only grow in value – there is no other outcome at all.
Recently, the United Nations released a report detailing the possibility for using cryptocurrencies as a means for de-risking financial systems in the Caribbean. This is just the latest in a series of research reports, investigations, and calls for information surrounding blockchain, all focused on delivering international aid and improving global economies. The Caribbean report boils down to three primary options:
Though utilizing a permissioned blockchain or central bank issued digital currency are viable courses of action, Luis discussed how these options miss the point of cryptocurrency and therefore would be ineffective as solutions in Latin America. “What matters most, especially in Latin America, is the accountability part… I would love if they use the actual blockchain. That kind of accountability is what Latin America needs for fighting corruption.”
With the United Nations and the European Union being added to the ever-growing list of governments and corporations actively pursuing blockchain technology, the likelihood of cryptocurrency-based global solutions is increasing each day. As the total market capitalization for digital currencies surpasses $90 billion, it comes as no surprise that eyes are turning to this emerging technology. Dubai, Zimbabwe, Norway, Delaware; as more governments turn to blockchain, it’s only a matter of time before the nations of Latin America do as well. However, as Luis said, if the governments and banks don’t implement these changes, the people are in a position to do it themselves.
“You have governments and banks who have a lot of power and they’re noticing what’s happening… we’re seeing that now, banks getting into the cryptocurrency space, and I think that trend is only going to accelerate.”
Featured image from Shutterstock.
Last modified: May 21, 2020 9:46 AM UTC