A new study says that sending money home, not trusting fiat currencies, and wanting to make money are the three most important reasons why people in Latin America are using cryptocurrencies.
Chainalysis said on October 20 that between July 2021 and June 2022, the value of the cryptocurrencies that people in the seventh largest crypto market in the world got went up by 40%, reaching $562 billion.
The growth will be helped by the fact that the total remittance market in the region is expected to reach $150 billion by 2022. When it comes to the adoption of crypto-based services, Chainalysis found that it was “uneven, but quick.”
They talked about a single Mexican exchange in the “world’s largest crypto remittance corridor” that sent and received more than $1 billion between Mexico and the US in the twelve months before June 2022.
Compared to the previous year, this was an increase of 400%, and it made up 4% of the whole remittance market in the country.
According to the analytics firm, however, the region’s skyrocketing inflation rates have also played a significant role in the acceptance of cryptocurrencies, notably the adoption of the United States dollar-pegged stablecoins.
The company also said that “stablecoins,” which are cryptocurrencies that are designed to stay tied to the price of fiat currencies like the US dollar, are popular in the region’s countries with the most inflation.
According to the International Monetary Fund, the region’s inflation rate hit a 25-year high in August, coming in at 12.1% among the five main Latin American countries.
So, regular people have started using and holding stablecoins as a way to make day-to-day transactions and protect themselves against their own national currencies falling in value.
The article cites a Mastercard survey from June which revealed that more than a third of people are already making everyday purchases with stablecoins. Moreover, Chainalysis found that small retail transactions (less than $1,000) were the most common use case for stablecoins among people of Venezuela, Argentina, and Brazil.
The business noted that since December 2014, the bolivar, the national fiat currency of Venezuela, has lost value by more than 100,000%.
The survey showed that people in Latin America’s larger, more developed countries were the ones who used cryptocurrency the most.
Over 45% of total crypto transaction volume took place on DeFi platforms in Chile, with Brazil close behind with just under 30%. With about $150 billion in cryptocurrency value received, Brazil topped all other countries in the area.
According to Chainalysis, “Latin America’s more DeFi-centric crypto markets are not unlike those of Western Europe or North America, where market participants are embracing cutting edge, returns-focused crypto platforms more so than savings-centric centralized services.”