Are cryptocurrencies the best alternative for remittances in Latin America?

Cryptocurrencies in areas like Latin America have seen a lot of upswing and consideration compared to traditional options in the remittance market, which is why we spoke to them to have a slightly more objective view of the situation in this region Franco Martinez, DeFi researcher at Defiant, who told us this first Cryptocurrencies are very useful for sending money transfers due to their ease of use and low cost.

“Clearly, cryptocurrencies in general, more specifically stablecoins like USDT, DAI, USDC etc. They are very useful for sending remittances, payments or any type of transaction that is needed. It’s easy to use, the transactions have very low costs and in addition the operation is pretty fast and done every day, business or not.”he commented.

Matinez explains that a traditional system like Western Union takes between 1 and 4 business days to send transfers and with extremely small transaction limits of up to 3,000 euros where they even ask for documentation to back the funds and receive the funds . Instead of this, With cryptocurrencies – Martinez points out – an unlimited amount can be sent via a non-custodial wallet, with anonymity that also does not require the recipient to identify themselves, and the operation is usually confirmed within minutes.

Are cryptocurrencies the best alternative for remittances in Latin America?
Are cryptocurrencies the best alternative for remittances in Latin America?

“Another important difference is that when using a traditional system, Western Union, the sending currency is converted to the receiving country’s currency at an equivalent exchange rate, in addition to an additional commission per transaction .â€highlighted.

“When euros are sent from Spain to Argentina, they convert them into an exchange rate of pesos, which would be the local currency. Unlike sending “cryptocurrency,” you send stablecoin and receive the same asset, paying only the commission for using the network it operates on. Yes, of course, everyone must take precautions when operating and not mistake where the broadcast is made, nor confuse the network they are going to use. It’s non-technical things, but it’s just the learning and that’s it.”he mentioned.

Likewise, Martinez recommended that the most important thing is not to share the private access key to the wallet, as the assets contained in the wallet could be stolen.

On the other hand, highlighted as a clear example of using cryptocurrencies for remittances in Latin America to Venezuelans living in Argentina sending their relatives to Venezuela through the use of cryptocurrencies. “They use these mechanisms mentioned above because when they send currencies in a traditional way, the government usually withholds them and gives them another very uncompetitive exchange rate.”called.

“We Argentinians use it a lot too, many of us have relatives abroad studying or working and need help initially. For example, sending wire transfers using traditional banking starts at 150 base dollars plus a variable commission, it’s completely impractical for small wire amounts.”he added.

Last, Matinez commented and pointed out that another important point and problem to solve is the bureaucratic part. He himself explains – in the Argentine case – that if you buy dollars in the bank, about $200 a month with a quota, you can no longer buy through your pocket for 90 days. “Therefore, if you are selling a car, house, etc. and need to convert more than that amount into dollars, because of the 90-day restriction, you have no choice but to buy a stablecoin in order not to lose purchasing power, my There is nothing in LATAM where we have pretty high inflation and every day counts.” called.

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