Last year, Latin American countries experienced the most severe hyperinflation ever. The same had happened back in 2019 when record levels of Bitcoin trading volumes were recorded as people tried to secure their savings from depreciation and invested all their money in cryptocurrencies.
The black streak continued in 2020 with the arrival of the coronavirus pandemic. According to the report on the consequences of COVID-19 compiled by the United Nations Economic Commission for Latin America and the Caribbean, known as ECLAC, by the end of 2020, more than 2.7 million companies in the region will cease to exist, of which 2.6 million are microenterprises with a staff of about 8.5 million. The figures do not take into account the reduction of employees in companies that continue working.
The people who lost their jobs turned their attention back to cryptocurrencies. First of all, this was reflected in the growth of trading volumes on such exchanges as Localbitcoin and Bitso.
Adrian from bitHolla a crypto exchange provider, says, “We have seen a bump in businesses looking to open exchanges from Latin America. We’ve also noticed on our exchange network an increase in user signups—especially countries suffering from COVID-19 and hyperinflation.”
The quarantine and crisis are contributing to the spread of cryptocurrencies in almost all Latin American countries: the volume of LocalBitcoins trading in Peru increased by more than 30%, and in Colombia—by almost 15%. Argentina was able to gain a foothold in the ranking of the leaders in transaction volumes in December 2019 on the LocalBitcoins platform. This is evidenced by the latest data from the Coin Dance service.
Mexico’s first crypto exchange—Bitso—reached 1 million users and gained popularity in Latin America, becoming the country’s largest cryptocurrency trading platform. The success of Bitso is due to the huge activity of users and the growing demand for cross-border payments, as some freelancers and technical contractors use cryptocurrencies to receive salaries from American employers.
In addition to the growth of trading volumes on exchanges, the number of users of cryptocurrency wallets continues to grow, which allows the latter to conclude successful collaborations and expand the list of supported cryptocurrencies. Since cryptocurrencies have become increasingly popular as a means of payment, developers are interested in doing everything possible to improve the usability of their services.
For instance, the number of commercial payments increased by 104% compared to the previous quarter in one of the most popular crypto wallets—Dash. Thus, for the first three months of the year, the median number of daily commercial payments using Dash was 17,127. At the same time, during the first quarter of 2020, the number of active Dash wallets on mobile devices increased to 101,747, which is 21% more than in the previous quarter. Year-on-year growth was 214%.
According to Dash CEO Ryan Taylor, this was facilitated by the conclusion of a number of partnerships in Latin America. These include cooperation with Burger King in Venezuela and the payment processing service Cryptobuyer, as well as recent integration with MegaSoft’s network of payment terminals and Caracas-based delivery service Dingo. Additionally, the rapid pace of cryptocurrency adoption in Latin America may be the result of a sharp increase in the number of smartphone owners, as well as a fairly low percentage of bank customers among the population.
With this new increase in trading volumes and demand for cryptocurrency, it is obvious that the current situation on the Latin American market opens up new opportunities for financial instruments that had previously no chance of competing with global payment systems.