Cryptocurrencies have had different uses since their inception, and the technology behind it (the blockchain) is here to stay. Against this background, the Latin Americans recognized the importance of the cryptocurrency early on. Many people are currently using DAI, which has many uses thanks to its versatility but highlights its ability to protect savings and fight inflation.
For Latin Americans, the US dollar is the true safe haven currency. However, buying is not always easy. This is where MakerDAO’s Stablecoin Dai comes into play. Dai is based on the Ethereum network and is supported by a decentralized price and intelligent contract system. It is designed to maintain a flexible peg to the US dollar. In recent years, Dai and other “crypto-dollars” that lack the volatility of Bitcoin have gained ground in Latin America, particularly Brazil, Colombia, Venezuela and Argentina.
And the fact is, many people in Central and South America turned to Bitcoin in the face of economic hardship, hyperinflation, and capital controls when economic conditions deteriorated in 2015. The limited supply and resistance to censorship made Bitcoin very attractive. However, its volatility prevented it from becoming a reliable store of value on a daily basis.
Latin America’s crypto dollar
The case for adopting crypto in Latin America has long been powerful. The region was hit hard by inflation after the debt crisis of the 1980s, and while some countries have managed to control their currencies, others are facing new problems.
This is the case in Argentina and Venezuela, to name just one example with their inflation problems. Which leads residents to continue to distrust their coins. In this context, Dai has become an attractive store of value as there is clearly the need for a stable currency to protect the value of citizens’ savings.
Dai is largely commercialized in Argentina thanks to community adoption
Dai’s momentum rose steadily in Argentina ahead of the coronavirus pandemic that freed the economy and currency into free fall. At the beginning of 2020, only one exchange offered in the Dai region. today there are six. Dai has achieved incredible traction, which is a remarkable feat given that it was little known in the country two years ago.
Especially in Argentina, where in mid-August the inflation rate after 12 months in the country was over 40%. Dai has become a popular store of value, at least for people. Dai is still not widely used for everyday purchases like groceries as it still requires more acceptance. But people store their savings in Dai and then convert their Dai to their local currency when they need it.
Some national currencies, while very stable and desirable, are not always easily accessible. However, Dai can be bought on various exchanges or generated by anyone from various forms of crypto collateral and then easily stored or transferred anywhere in the world.
As a user-created decentralized stablecoin, Dai does not have a central issuer or administrator. As long as users keep their Dai in a software wallet like Metamask, they retain complete and independent control over their funds.
Due to its decentralization, it is resistant to censorship, as no company has full control over the network. This quality is highly valued by those who send money transfers to other countries or have to structure payment deferrals.
Essentially, Dai are supported in ETH, giving them a stability that the rest of other crypto assets don’t have. This way Dai does not lose value and is better able to withstand strong market fluctuations.