Jason Simon explains why cryptocurrency acceptance is growing in Latin America

The use of cryptocurrencies in Latin America has boomed during the pandemic in recent years. Jason Simon, an expert in the cryptographic space, revealed that different Latin American countries appear in the top-ten list, where they use this type of currency, such as Bitcoin (BTC). The specialist explains why this growth has become a reality in the region.

Traditional finance is increasingly being displaced by digital currencies, and those living in Latin America know this better than anyone. According to Simon’s analysis, the countries with the highest adoption of cryptocurrencies are Argentina, Mexico, Peru, Colombia, Brazil, Chile, and Venezuela.

The reason for this increase in cryptocurrency transactions from Latin America is simple: it was imperative to get an alternative for sending money from the US. According to the data provided by the expert, remittances sent through exchange platforms from abroad to Latin American countries went from $100 million per month, from October to April 2020, to $400 million per month between April and May 2021. By 2020, these financial remittances represented 2.4% of the GDP in Latin America as a whole, and particularly for countries such as Honduras or El Salvador, this figure is more than 23%.

Although BTC is a volatile currency that constantly increases its supply and demand, stablecoins are the currencies that have come to the forefront for all remote employees, freelancers, and others who need to receive secure payments in such an uncertain market. The most famous stablecoins on the market and exchange platforms such as Binance are Tether (USDT), DAI (DAI), and TrueUSD (TUSD).

Another point in favor of stablecoins is that since they can be acquired so easily on the different web platforms, they are more convenient than buying physical dollars. When doing this in the traditional way, you have to pay commissions. Also, these same platforms where money can be exchanged allow the possibility of sending money to other countries. Another important point to mention is that they protect users from suffering the ravages caused by the inflation that most Latin American countries are going through.

“Latin America is, after Central and Southeast Asia, the region that has been able to grow the most in terms of cryptocurrency adoption,” explains Simon. “While the remittance business and the possibility of saving in stablecoins continues to grow and drive the integration of new users to the crypto world, other players arrive guided by speculation and profit.”

Given this, Simon recommends that they evaluate their investment term needs and risk profiles well by starting with small amounts. The market will have ups and downs, but the issue of technological adoption, adoption at the enterprise level, government, and so on.

“Client interest in building cryptocurrency solutions is consistent with some survey findings, where we see that perceptions of cryptocurrencies are largely positive in emerging markets,” states Simon. The majority of active and passive owners, as well as curious consumers, interviewed in the region said they consider cryptocurrencies to be a positive innovation in finance. Most also agree that within ten years, cryptocurrencies will be in general use and in about five years, they will become a useful tool for sending money to friends and family.

Simon also notes that “active and passive owners interviewed in the region cite volatility, not having enough money, and fear of losing their money as the main barriers to becoming even more active and trading more cryptocurrencies. Non-cryptocurrency owners, on the other hand, cite lack of knowledge and funds as the main barriers to acquiring or trading cryptocurrencies.”

An example of this crypto evolution, the specialist highlights, is the legalization of cryptocurrency operations in El Salvador and the bill being processed in the Chilean parliament, which aims to recognize and regulate cryptocurrencies in that country. The adoption of cryptocurrencies in Latin America is still incipient. Their development in the coming years will depend on how the regulatory framework evolves in the region and the level of acceptance and interest that cryptocurrencies have among users.