Latin Americans are increasingly turning to cryptocurrencies which many perceive these as a more stable store of value and means of transaction.
In hyperinflation-crippled Venezuela, privacy-focused cryptocurrency Dash is rising in popularity among locals with some 200 merchants and thousands of wallet downloads per month.
“We are seeing tens of thousands of wallet downloads from the country each month,” Ryan Taylor, CEO of the Dash Core Group, the US-incorporated company leading the development of the peer-to-peer payment platform and cryptocurrency Dash, told Business Insider in an interview last week. “Earlier this year, Venezuela became our number two market even ahead of China and Russia, which are of course huge into cryptocurrency right now.”
Merchants in Venezuela including brands like Subway and Calvin Klein have signed up to accept Dash in Venezuela, Taylor said.
“Effectively, even if I accept a credit card, three days later when the funds hit my account, it’s worth significantly less in Venezuela than when the authorization went through.
“This is a problem that cryptocurrency can solve. [Dash’s] instant transactions can solve it and the relative stability of our cryptocurrency is better than their fiat currency.”
A recent survey conducted by blockchain and cryptocurrency startup Ripio found that Latin Americans are confident that blockchain technology “will build a more reliable and participatory system” and “change the rules.”
Ripio, formerly Bitpagos, polled 890 Argentina-based customers and found that nearly a quarter of respondents believe blockchain will take over the financial system in five years. Among the key potentials, respondents cited the ability to “make the financial system more accessible to all” and improve financial inclusion in emerging markets, but also “change the way we use money.”
To tap into the opportunity, Dash unveiled last week a partnership with Kripto Mobile Corporation (KRIP) to provide new capabilities for users in Latin America to acquire, store, and spend the cryptocurrency for everyday transactions.
KRIP mobile phones, which are now available across Latin America and retailing for under US$100, come pre-loaded with “a complete Dash ecosystem” including the Dash wallet, an exchange service, and third-party apps such as Bitrefill, a service that allows users to purchase mobile top-ups, vouchers and gift cards using cryptocurrency.
Venezuela isn’t the only country that’s witnessed strong adoption of Dash, Taylor said. Others with similar dynamics have too.
“Venezuela is unique, it’s the only country in the world with what can be called hyperinflation,” he said.
“But there are other high inflation countries. We’re seeing this with Turkey right now. Ukraine, Argentina, these are countries with very high inflation rates with of 20-30% or something. 20-30%, we think is enough to get people to try something new. We’re going to try and be successful first in Venezuela before branching out to try this in other countries.”
Venezuela has been afflicted by an ever-worsening economic crisis which has led many citizens to flee overseas as shortages and riots plague the South American country. UN officials estimate that some 2.3 million Venezuelans had fled the crisis-wracked country as of June, mainly to Ecuador, Colombia, Peru and Brazil. 1.3 million of them were “suffering from malnourishment.”
Inflation in Venezuela is predicted to reach as high as 1,000,000% this year. Earlier this month, president Nicolas Maduro announced several measures aimed at stabilizing the economy including devaluing the bolivar by 95% and pegging it to the state-backed cryptocurrency, the Petro.
But the cryptocurrency is nothing more than a “smoke and mirrors” scheme by the debt-ridden government and its introduction has already failed in its main aims, Lianna Brinded, the head of finance at Yahoo Finance told Express.co.uk.
In fact, the introduction of the Petro is actually making Venezuela’s problems worse. Brinded said:
“The Petro cryptocurrency isn’t working. It’s made thing worse.
“It’s a smoke and mirrors operation. They are trying to cure their economic ills but this is not the way to go.
“All the Petro is doing is making a bad situation absolutely horrific.”