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Despite inflation and monetary policy changes in the US that have negatively impacted investments, Latin America continues to lean towards the use of cryptocurrencies as a way to achieve greater financial inclusion and is emerging as an attractive region to promote blockchain technology.
Among other things, this seems to be ratified by the more than 1200 people who attended the Blockchain Summit Latam 2022 in Panama, which sought to highlight the region as one of the most friendly with blockchain technology in the world, where countries such as El Salvador or Panama may emerge in the future as a crypto hub.
Although there are eloquent data, such as studies that say that 51% of Latin consumers have made a transaction with cryptocurrencies in the last year, it is more impressive to see hundreds of participants from all over the continent gathered at the Blockchain Summit Latam, which in its sixth edition—which took place between July 6 and 8—served as a platform to promote learning, analysis and the identification of opportunities for the use of blockchain technology.
The event was hosted in Panama City, which became the blockchain capital for a few days (July 6-8), with more than 130 exhibitors at the new state-of-the-art Panama Convention Center.
“Part of what we do with this event is that everyone can meet and connect,” Cristobal Pereira, CEO of consultancy firm LatAmTech Finance and overall organizer of the summit, said. “To live the experiences and, in a certain way, to visualize the opportunities that this technology provides for Latin Americans.” For Pereira, the volumes of cryptocurrency transactions in the region are increasingly exciting and merit more events like this one, where, he said, some 250 business meetings were registered.
Considering that analysis firms such as Triple A and Grandview Research forecast that the blockchain sector will grow worldwide at 86% between 2022 and 2030, it can be said that we are seeing the first steps of an industry with infinite possibilities. And if we also estimate that LatAm concentrates the largest number of cryptocurrency users worldwide, the future looks promising for the region and platforms such as this one.
CJ Rinaldi, CCO of Blockchain.com, stated during the event that the last two years have seen a massive expansion in the crypto sector worldwide and that he considers Latin America to be a market of significant growth due to the impact that factors such as inflation, political instability and distrust in banking institutions have on its population.
“Latin America has 200 million unbanked citizens who turn to crypto as a store of value, safe and stable, and an entry point to financial freedom,” said Rinaldi after recalling the cases of Argentina and Venezuela, where the use of cryptocurrencies has grown significantly in the face of the fragility of their local currencies. “Latin Americans are progressive and innovative in their adoption of new technologies, and we only expect the numbers to grow.”
For his part, Maximiliano Hinz, Latam Director at Binance (one of the largest crypto platforms in the world), stressed that the use of this technology is not limited to digital currencies: it is also having an impact on traceability processes, logistics tracking, digital art and control of processes and stocks, throughout the continent.
Panama, a possible hub for the region
The fact that the meeting was held in Panama was no coincidence. It intended to give prominence to the isthmian nation for the critical boost they are giving to the blockchain ecosystem and the use of cryptocurrencies in recent years, shaping up as a possible crypto hub in the region.
“The possibility of exporting services, and as the currency used by Panama is the dollar, it allows to create a company with fewer restrictions than in the US,” explained Cristóbal Pereira when highlighting that the benefits for international investment are remarkable in Panama, which potentially places them above other crypto-friendly countries.
Thanks to these benefits, Panamanian companies and organizations are becoming more organized daily, seeking a regulatory framework that gives confidence and credibility to operations with digital currencies that can be carried out from Panama.
For this reason, organizations such as the Chamber of Digital Commerce and Blockchain —which since 2018 groups six companies on its board of directors and has collaborated with multiple companies, banks, associations, chambers, and government entities—have emerged in the Panamanian technological map to connect the government, the private sector, and civil society to achieve the establishment of a blockchain industry solid enough to turn the country into a model to follow.
Rodrigo Icaza, executive director of the Chamber, says that to achieve that goal, “there is a great effort of training and education, negotiations, analysis and filters of the actors that really add value to the development of the industry.” He also believes that blockchain could positively impact Panama’s GDP.
Although Panama maintains partially vetoed the so-called Crypto Law by the National Executive, efforts to have a regulation do not stop. The different groups that support the use of this technology believe that the next step is to become a hub of cryptocurrencies in the region by strengthening the internal ecosystem.
“You don’t need a law to achieve objectives either,” says Icaza. “As long as they stay within ethics and the right actions of people. But, if a law embraces and protects development and innovation, welcome.”
Education is the cornerstone
While it is true that being a financial and logistical center makes Panama a strong candidate to be a pole of attraction for fintechs, crypto-asset exchanges, and other related companies, another country has accumulated significant experience in the use of digital currencies: El Salvador.
The experience of the smallest country in Central America, which passed the Bitcoin Law in June 2021, perhaps cannot yet be fully dimensioned, as Monica Taher, director of Technological and International Economic Affairs of the Secretariat of Trade and Investment of the Presidency of El Salvador, explained during her intervention in this event. However, what is very clear is that one of the critical factors for this country to adopt Bitcoin on a daily basis and at all times is “education.”
“The educational process is gradual at the moment and should not fall solely on the government. It must fall on the triple helix: government, academia, and the private sector,” Taher said. The expert invited these sectors to be part of this meaningful change in all countries that want to adopt the use of cryptocurrencies. “Education has to be the pillar so that any nation can adopt bitcoin or any other option massively,” she insisted.
On the other hand, she emphasized the importance of private enterprise in El Salvador’s experience. For Taher, the ecosystem can only emerge with the support of this sector, as it will allow giving more options to different projects and “turn El Salvador into a crypto hub for Latin America.”
Taher assured that El Salvador’s objective is to comply with a planning that allows them to continue strengthening a legal framework conducive to achieving financial inclusion and a decentralized finance ecosystem.
Although El Salvador is the first country in the world to approve bitcoin as legal tender and has more than 200 virtual currency ATMs installed throughout its territory, 82% of its population still shows little or no confidence in bitcoin. For this reason, Salvadoran authorities continue to promote education to encourage the more than 6.5 million Salvadorans within the territory (especially 70% of the unbanked population) to use this currency in their daily lives.
Experts and specialists who participated in the Blockchain Summit Latam made it clear that the use of blockchain technology is not limited to cryptocurrencies. The opportunities for the region also include the digitization of banking, logistics, real estate tokenization, identity protection, smart contracts, the use of wallets (digital wallets), which are becoming increasingly easier to find in the different countries of the continent and, of course, the purchase of NFTs, among many other possibilities.
They also concluded that more and more Latin American companies and users are taking advantage of this technology in their daily lives as a natural way to achieve financial inclusion and protect their economy. Therefore, they believe the region must continue working on education and building a true ecosystem that integrates regulators, companies, financial institutions, chambers, and all sectors that can pave this vital path in the region.