Erik Weijers, a month ago
Because we in Europe all have bank accounts and still a somewhat stable currency, we almost forget that there are entire continents where this is not the case. Latin America, for example. Chainalysis research shows that crypto transaction volume increased by 40% between mid-2021 and 2022.
This summer, Mastercard already came up with the pretty impressive finding that as many as a third of people in Latin America sometimes use stablecoins for everyday purchases. Chainalysis's recent report delves deeper into the crypto market in Latin America.
Among South American countries, Argentina has traditionally suffered and continues to suffer the most from inflation (only Venezuela is much worse). In 2001, the Argentine middle class lost almost all their savings as the government devalued the Argentine peso overnight. The situation now is not as bad as then, but still deplorable: in September 2022, inflation was over 80% year-on-year.
Traditionally, Argentines have been used to - literally - hoarding US dollars under their mattress. The government has always tried to prohibit this. This is more difficult now that there are dollar stablecoins. According to the report, more than 31% of smaller crypto transactions in Argentina come from stablecoins, compared to only 26% in Brazil and 18% in Mexico. By the way, Buenos Aires is a real crypto hub: developers of Chainlink and MakerDAO, for example, reside there.
Apart from El Salvador, where 50 million in Bitcoin was sent to, Mexico is an important market for remittances. Through the Mexican crypto exchange Bitso alone, more than $1 billion in US-Mexico transactions were processed in a year. That is an annual growth rate of 400% and accounts for 4% of Mexico's international remittances. So crypto is still only a small part of the pie - but one that is growing explosively.
Of course, crypto is not just there to pay for groceries with in USDC. There are also traders in Latin America who want to make a profit, and a lot preferably. The figure from Chile is remarkable: a whopping 45% of all crypto transactions there happened on DeFi applications. For most other Latin American countries, the figure is around 20%. It suggests there is a lot of speculation going on in Chile.
According to a spokesman for Nubank, the Brazilian bank offering crypto services, it had one million customers trading crypto within a month. That number was reached faster than when the bank offered stock trading. Yet another sign of explosive growth.
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