Bitcoin Usage in South America is driven by Politics
The news of El Salvador making Bitcoin legal tender rocked the Bitcoin world. And although there’s an uphill battle, it has a good chance…
The news of El Salvador making Bitcoin legal tender rocked the Bitcoin world. And although there’s an uphill battle, it has a good chance to succeed. It isn’t just El Salvador though. Venezuela and Cuba are especially seeing an uptick in Bitcoin usage, but it is truly spreading throughout Central and South America. To explore this phenomenon, we reached out to our customers asking them to fill out a survey. For those from Central and South America, we asked for some insights on their Bitcoin usage, what we found was that Bitcoin usage is being driven by political motives, and distrust of the system.
The first thing that jumped out to us was that every respondent from South America saw an increase in Bitcoin usage in the past year.
This was big to us, over 2 thirds said their Bitcoin usage increase by 50% or more. That shows a growing number of South Americans are turning to Bitcoin.
When we asked them why we got a pretty clear answer: politics.
Political instability and a bad economy were cited by over 60% of the respondents, with another 18% citing Banking Malpractice. The interesting thing though was 9% also saw Government Support of Bitcoin promoting their use of Bitcoin. It seems El Salvador is making a mark on some of its citizens.
LATAM is no stranger to political instability and bad economies. Although always well position, South America has often been plagued with corruption and some brutal civil wars. By the turn of the 20th Century, many South American countries had strong economies, and the wars of the 19th Century had largely ended. However, the Great Depression, WW2, and the Cold War served to throw kinks into South America’s success.
Especially in the second half of the 21st Century, much of the region came under military dictatorships, often backed by US coups to prevent leftists in the region. This combined with the US’s Washington Consensus, did not do many favors for the economics in South America.
This instability continues in LATAM into the present day. Argentina suffers from inflation, Venezuela from hyper-inflation, Cuba and Venezuela from US backed sanctions. Even countries that are starting to heal from civil war, like Columbia, El Salvador, and Guatemala, still have an uphill climb and are plagued by corruption.
This is reflected in the data we see from our South American clients. Their Bitcoin usage has increased dramatically over recent months and they see their peers using Bitcoin as well. 75% say at least 25% of their daily transactions use cryptocurrency. That means others in their region are using crypto as well.
Another interesting facet is how much Bitcoin clients are holding, with over two thirds holding over 25% of their total assets in Cryptocurrency.
This all shows a distrust towards their local fiat currency, and growing appreciation for Bitcoin as a currency that allows for easier transactions, and freedom from governments and banks.
Knowing South America’s turbulent history, all this makes sense. Politics and the economy have always been points of contention in South America, and something that the people often worry about. That is not changing, and is helping to make South America a test bed for future Bitcoin usage. As people turn to Bitcoin because of the lack of faith in their economy and government, they will serve as an example for the rest of the world how to use Bitcoin in everyday lives and make it work for you. It really is quite exciting.
This is a companion discussion topic for the original entry at https://insights.blockonomics.co/bitcoin-usage-in-south-america-is-driven-by-politics-d0fc8d8da455/