Latin America is fast becoming the world’s model for how cryptocurrency will permeate the daily lives of citizens in years to come. All heads have turned towards El Salvador –– as they will toward any country that adopts a cryptocurrency as legal tender –– to see how its economy and the quality of life of its citizens will be affected by it. Latin America is the ideal region for Bitcoin adoption for a multitude of reasons, many of which revolve around increasing financial inclusion for citizens and promoting financial stability. Remittances are very common in Latin American countries, and they provide a perfect use case for cryptocurrency. In the beginning of 2021, these international transfers accounted for 20% of El Salvador’s and Honduras’s GDPs and 11% of Mexico’s. But while they contribute a significant portion to Latin American nations’ GDP, remittances also involve high and long wait times. Individuals who have left their home countries with the goal of sending money to their families back home are forced to pay debilitatingly high transfer fees only to have their families wait days or weeks to receive the funds. Bitcoin and other cryptocurrencies offer the ideal solution: Individuals can send money back to their families much more quickly and with minimal transaction fees.
Many Latin American countries also have volatile currencies, due to high inflation rates and political factors. This is the case for Venezuela and Argentina, which have seen rates as high as 1,575% and 69.5%, respectively. Even though cryptocurrencies are considered volatile, they remain more stable alternatives to some Latin American currencies. Indeed, while the latter have experienced hyperinflation, Bitcoin and Ether have dramatically increased in value despite their volatility. This appreciation adds to the case for implementing these currencies in countries experiencing inflation about their own native currency. Another reason Latin Americans feel crypto is safer than their fiat currencies are that it is decentralized and does not depend upon government-controlled institutions, banks or other third parties. With cryptocurrencies, Latin American citizens do not need to place trust in their governments, in which they often place very little trust, or third-party entities that may act in their own self-interest. Instead, they can take advantage of the trustless nature of the blockchain. Bitcoin and decentralized finance (DeFi) will open a new array of services to Latin American citizens, not only in their respective countries, but also in the entire world. Many of the people who are going to transition to using Bitcoin to send and receive payments previously relied on cash and did not have bank accounts, meaning they were unable to take advantage of the global connectivity we have come to enjoy. Individuals who were once unable to purchase goods and services existing in other countries will soon be able to thanks to cryptocurrency adoption in the region. In an increasingly global world, it is crucial to have systems that work across borders, which Bitcoin does. The world will soon realize the positive economic impact Bitcoin and other cryptocurrencies have and implement them into their existing financial systems.