There has been much discussion about Bitcoin and how the authorities and businesses in China have responded to it. But there may be more interesting possibilities for this currency and other cryptocurrency. The Wall Street Journal published a piece last week about the apparent divide in Latin America. The Pacific-facing countries, except for Ecuador and Nicaragua, have more market-oriented economics than the countries facing the Atlantic.
Latin America is now a continent that is being viewed on a global level. It has seen slowed European growth and has welcomed an Asia-Pacific region into the global economic conversation. Latin America will be affected by alternative currencies, and each side will feel the effects in a different way. Latin American Growth and Bitcoin will be together in the end because they are both in the spotlight at the same moment. Cryptocurrencies (including Bitcoin) will allow Latin American entrepreneurs and businesses to compete on an equal playing field with the rest.
These countries have economies that are more dependent on national interests. Cuba is the most extreme example of a state-run economy. It has a Communist regime, but has made some concessions to economic liberalization. Venezuela is the most extreme state-run economy, and is currently in a socioeconomic crisis. Argentina has seen its fair share in instability and command-oriented economic events courtesy President Cristina Fernandez de Kirchner.
These include price controls, drama regarding possession of the Falkland islands, inflation of 26% and strikes by police officers, as well as nationalization of YPF. Brazil is often feared for its old ways. There is still a lot of red tape and the tax rate is higher than other countries. Mexico’s efforts to attract business are not limited to Mexico City. Guadalajara has been highlighted as a growth destination in digital and tech space, much like Bogota, Colombia’s established economic powerhouse, and Medellin, which is a young, digital force. Mexico is the 14th largest economy, and it is growing.
The drug cartels still control Mexico’s northern border, and there is still a lot of demand for drugs. Ciudad Juarez is still plagued by cartel-induced violence. The Sun Bowl strongly discouraged visitors to cross the border. The college bowl game was an opportunity for both El Paso, Texas, and Ciudad Juarez to be promoted as a tourist destination and business hub. FARC is still being fought in Colombia, but the country is clearly winning after President Uribe’s term. FARC’s presence in Colombia’s jungle areas has been limited. To a certain extent, active peace talks are being held with FARC. Colombia’s economy has a lot of potential for growth in agriculture, energy and finance. The country is actively pursuing Americans to buy real estate in the country, promoting its beautiful beaches, tax policies, English fluency, and English language proficiency.
Belize still has much to grow and must shake off its stigmas. 1. In economic freedom in Latin America. Chile has a surplus in trade and a central bank policy rate at 4.5%. This would make Chile attractive to foreign investors. If you are looking to trade the Chilean Peso, it may be worth the effort. This is because the carry trade with countries/economic zones with extremely low interest rates, such as the United States, European Union and Japan, could be worthwhile. Chile has low inflation and has policies to benefit copper exports as well as other exports to maintain surplus. These countries do not face looting epidemics or fights over toilet papers, nor do they have leaders who want to escalate actions against another country.
Currency controls are a part of all these state-oriented economies. Price controls are a hallmark of Argentina and Venezuela. Brazil’s government influence on the economy is due to their excessive influence, possible corruption issues and inflationary concerns. Investors, entrepreneurs, and the common man will all look to the market to fulfill their needs. These state-oriented economies are associated with rationing, red tape and high costs as well as possible surveillance. Many people will be able to access the internet and use Bitcoin and other cryptocurrencies. Although it can be difficult to compete globally in countries that are more isolated, the use of the internet and the ability for citizens to transact in an untraced manner in a global market will allow them to obtain the goods and services they need at a competitive price.
Venezuelans will now be able buy toilet paper from foreign suppliers without needing to use a currency that has been grossly debased. Venezuelans will be able to start their own businesses while they are still in Venezuela. This will allow them to finance their ventures and possibly flee to Colombia. More than 26% of Venezuelans access the internet every day. Venezuela has not yet filtered the internet and buying Bitcoin is much safer than keeping Bolivar. The government’s tight grip could be loosened by Bitcoin usage, rendering it ineffective by adopting the private cryptocurrency.
There are less tax revenues to collect, a population that is financially and literally armed (you could have purchased anything on Silk Road), and less influence from political leaders as cryptocurrency usage grows in popularity. This idea can be applied to Venezuela-lite Argentina, an economy with great potential. Brazil’s economy could expand further by allowing businesses to be exposed overseas and overcoming the issue of exotic sovereign currencies. The World Cup in 2014, and the Olympics in 2016, will put a lot of pressure on Brazil’s economy to grow and maintain its appearances. Brazilian companies looking to do business abroad will benefit from lower transaction costs, currency knowledge, and nationality ambivalence when dealing with Bitcoin customers.
The acceptance of Bitcoin and other cryptocurrency will make it easier to transact securely and remove the need to convert currencies. Brazil may be more command-oriented than Argentina, but they should strive to meet global expectations and reach their aspirations. Bitcoin and its competitors offer greater freedoms, monetary security and entrepreneurship opportunities. They also offer greater privacy and transaction security. It could be used to bring about a change in Venezuela’s governance, much in the same way that social media was used to bring the Arab Spring to life. The black market is an alternative to the economic problems in Venezuela.
A digital wallet in the cloud can prevent assets being taken away. This is much safer than keeping funds in a bank that is regulated by Venezuela. The previous section describes entrepreneurship at a lower level than in Colombia, Mexico and Chile. Colombia and Mexico are cities that aim to become global players in the digital space. Lower transaction and exchange fees would make it easier to attract business from the United States, Canada, Europe and other countries. International transactions will be easier for users of credit cards and PayPal if they don’t have to pay transaction fees. Latin American outsourcing could see growth as call centers and development and design companies, as well as independent contractors, are able not only to bid competitively as they do now but they will also be able accept Bitcoin and other cryptocurrency. This will help drive more business. It’s not a trend, it’s a way to make transactions easier and more affordable.
It will reduce the barriers to purchase and will allow Latin American businesses to be globally connected, which can lead towards Venture Capital growth. Bitcoin will facilitate economic growth and international business transactions in Latin America. These countries will reap the benefits of Bitcoin because stability is not an urgent need. Instead, these countries have an insatiable hunger for growth. These countries have many benefits, including the ability to compete globally, lower transaction fees and transactional security, as well as improved economic development and changing perceptions. A service contract can be awarded to a startup in Medellin, Cartagena, or another firm in Indianapolis. It is a great benefit to remove nationality barriers from transactions and focus on the services provided and the costs involved.
These countries are also a win for consumers as they gain purchasing power due to the fact that some items are more costly in their home markets than in foreign markets. Immigrants and ex-pats can send money to their family members in their home country in a quick, easy, secure, and inexpensive way. This can boost local economies. Bitcoin and other cryptocurrency help make the world smaller, just as air travel, the internet and telecommunications have done. Cryptocurrencies encourage globalization, and Bitcoin will provide that opportunity for Latin America, which is eager and able to compete in the global market.