Blockchain analytics firm Chainalysis has published a report highlighting, among other things, the importance of cryptocurrencies in Latin America for escaping inflation.
The analysis entitled “Latin America mitigates economic turmoil with cryptocurrencies” analyzes the trends in cryptocurrencies in Latin America between July 2019 and June 2020and shows, for example, that problems with access to the traditional banking system and the need for remittances influence the usage patterns of cryptocurrencies.
But the context in Latin America and especially in countries like Venezuela or Argentina, You think of cryptocurrencies as a safe store of value in the midst of turbulent markets.
“”Not only companies in Latin America have problems with banks. Many people are also unable to get bank accounts, which is another factor behind the adoption of cryptocurrencies.”They explained in the report.
Unequal income, difficulties getting a bank account, the need to store value, the emergence of stable coins such as DAI and USDC – all of these come together in a scenario where Latin Americans try to secure their savings and escape inflation.
“”Currency instability is another factor behind the adoption of crypto in Latin America. Unfortunately, this has been a problem in the region for decades, ”they emphasized from the chain analysis. They also quoted the Argentine Wences Casares, CEO of Xapo, who cited the problem as the main motivation for starting his business and recalling how his family’s savings had impacted several times due to the unfortunate history of the Argentine peso.
“”Analysis of the volume of peer-to-peer trading (P2P) shows the extent to which currency devaluation is driving the adoption of cryptocurrencies in many Latin American countries. The following bar chart shows the correlations between the dollar value of the volume of P2P transactions and currency devaluation in various Latin American countries, measured by the number of units of local currency required to make one US dollar.”You detailed.
(Currency included: BTC. Source: LocalBitcoins, Paxful via CoinDance)
“The correlations, each of which are statistically significant, suggest that cryptocurrency users in Argentina, Uruguay, Colombia, and Chile, in particular, turn to cryptocurrencies to store value when their native fiat currencies depreciate.”
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