Here's why cryptocurrencies are popular in South American countries
The recent release of the bitcoin-only MegaMoolah.com casino has opened up the opportunity for a huge number of people to play the famous Mega Moolah progressive jackpot slot from Microgaming.
The MegaMoolah.com game is the current World Record holder of the largest progressive jackpot ever paid out by an online slot after it paid out a staggering €18.9 million prize to one lucky winner (worth around $19.2 million). It's availability, for the first time, to players that only want to play by bitcoin is a huge deal as it means not only can you play via a new payment method, but it also opens up the game to millions of other players from around the world.
Of course, MegaMoolah.com's bitcoin casino also carries a high number of other enjoyable games, many of which can be played for the first time using bitcoin, and it is developments such as the release of this casino and the games it contains, that has been welcomed by the cryptocurrency community. Particularly those in parts of the world where this form of digitized currency, is still in a state of flux in legal terms.
Perhaps no part of the world is this more evident than in South America, where a combination of factors have combined for cryptocurrency, despite its status in some countries, being a hugely popular form of investment opportunity for millions of people.
What is the situation in South America?
As far as we can gather from most recent research, the situation regarding cryptocurrency in South America can be broadly described as follows.
- Cryptocurrency is legal in Argentina, Brazil, Chile.
- Cryptocurrency is illegal in Bolivia, Colombia, Ecuador.
The situation for the other countries in South America remains unclear.
However, this is over-simplifying the situation, particularly in terms of what 'legal' means in each of those countries and certainly as to what 'illegal' means (and how it is enforced, or not) in the countries where cryptocurrency is banned.
In Argentina for example, bitcoins can be used as money but is not legal currency. Under the Argentine Civil Code, bitcoins are considered goods or an asset and transactions using bitcoin are covered by the Sales of Goods section of that Civil Code. In Brazil, while it is permitted for citizens to own bitcoin, however bitcoin remains unregulated but there are moves afoot to introduce some positive legislation for bitcoin in the country.
In Venezuela the situation is also different in that for several years, bitcoin mining was viewed as illegal and people had their equipment seized and they were arrested, however now the government's stance has changed to allow cryptocurrency with a statement issued in January 2018 stating that "It is an activity that is now perfectly legal".
Things get even more confusing when you look at the situation in countries where there is some form of ban on bitcoin. In Bolivia there is an absolute ban in place, but in Colombia, the ban is implicit, meaning that while financial institutions cannot invest, broker or manage virtual money, there is nothing stopping citizens using other services online, based in other countries from doing so.
In Ecuador though, this government has taken a completely different approach, banning all forms of unregulated cryptocurrency, but instead making moves to create its own online digitized currency, which will be regulated and tied to the Ecuadorian Dollar.
What is certainly true is that regardless of whether the legality of bitcoin is clear or not in South American states, millions of people have been investing in the currencies available and the reason for this, especially in states where it is deemed illegal, is that it is simply far too difficult for the authorities to police what every individual does online.
With cryptocurrencies being international and many international sites available across the globe that facilitate bitcoin transactions and trading, it is relatively simple to use these services from any country if you so wish. That is indeed what lots of South Americans are doing, but perhaps the real question here is why they are choosing to invest in bitcoin, especially when you consider how volatile it is as a currency.
Why South Americans are investing in bitcoin?
In some countries in South America, notably Venezuela, but also Argentina, the fact that cryptocurrency has proven volatile in the past is actually a comfort to many citizens as these are the countries struggling with the effect of hyperinflation.
Hyperinflation is where the real-terms value of your local currency is reduced to such a small amount that you need huge amounts of cash in order to buy even the simplest items. When this runs rampant in a country, it can mean the global value of your financial assets just crash.
Cryptocurrency however, despite being volatile, offers a chance to escape this. If you can purchase bitcoin, its value, compared to hyperinflation, is relatively steady. This means your money holds its value and as the value of your local currency drops, your bitcoin value will remain more steady and thus your relative wealth will remain steady.
It is crazy to think, having witnessed the bitcoin boom in late 2017 and then the subsequent crash in 2018, that bitcoin could be a more stable option that some local currencies, but for many in South America that is the case and that is why digitized currency is hugely popular in these countries (and indeed, why these governments are welcoming it with open arms).
- Accessible Technology
Another key reason for the swift uptake of bitcoin and cryptocurrency in South America, which is a continent which contains vast swathes of poorer regions, is that the technology needed to access bitcoin and the blockchain is now commonplace and becoming more affordable for many.
No longer is it the case that you need an expensive PC computer set up to access the internet. Mobile technology has brought down the cost of accessing the internet and allowed a greater number of people using 3G/4G and WiFi services, to access the digital realm. As more people do, then more are going to seek to try and earn some money by investing in cryptocurrency, especially if you are poor and trying to earn a better living for you or your family.
There is also the fact that many South America, especially those living in relative poverty, may see investing in bitcoin as a way to offer them some hope for the future. It is a calculated gamble, where if the value of bitcoin starts to rise again, as it did in 2017, then they may make some money on their investment.
In countries where poverty and inequality is rife, investing even just a tiny amount of cash in bitcoin is being seen as a potential jackpot for many people.
Although South America may have some of the most contradictory, confusing and unusual laws and rules in place across the different countries that form this beautiful continent, there is no doubt that as a single population, bitcoin is being embraced by an increasing number of people. Whether the cryptocurrency can the antidote to the problems of hyperinflation and poverty is not certain, but for many, it does offer them at least a glimpse of hope for a better future.