Bitcoin in Latin America

Status

2021

Jorge E. Cuéllar , interviewed by Evgeny Morozov:

"In Latin America, crypto has been around for at least 5 to 10 years. Generally, it has always traded digitally, but the more formal financial entities around it are a relatively recent phenomenon. In places like Panama that are deeply embedded in global financial markets, crypto exchanges – and “we accept Bitcoin signage – have been scattered across strip malls, retail plazas, and shopping centers for some time, especially in financial hubs like Panama City.

In other countries – where it continues to operate in a legal gray area – crypto circulates among enthusiasts and Internet speculators, even though national business sectors and politicians in the region are exploring ways to integrate it into existing economies, to create new revenue streams. The idea is to use cryptocurrency to resolve problems around national debt, inflation, unemployment, and wealth-creation (as in Paraguay, Mexico, Puerto Rico).

In Uruguay, crypto adoption is viewed as a key part to its tech sector innovation. Venezuela is also a very interesting case where a weak economy has spurred the use of crypto and propelled the state to launch a centralized cryptocurrency called the “Petro,” which is dependent on the extractive activity in the Orinoco Mining Arc. Many of these projects are the result of solvency crises, of economic stagnation, and of falling commodity prices for things like oil.

* Are there any institutional entities pushing for the greater use of crypto at the moment?

It says something about the growing popularity of Bitcoin in the region that there now exists a dedicated Latin America Bitcoin Conference, which has been a yearly event since about 2013. It is promoted by Bitcoin Foundation Iberoamerica, an organization that brings together various national initiatives to push region-wide adoption and blockchain experimentation. Alongside these summits, national organizations teach people about crypto and blockchains, often enrolling them in specific services and wallet apps.

Under the guise of “not-for-profit” initiatives, these groups devise social projects, often with government support, to lead Bitcoin awareness campaigns. Financial evangelism of this type is common to Latin America, but the crypto-specific ones have accelerated in the last few years, following the same routes of micro-credit schemes before it.

Take Argentina’s 2018 “bitcoineta,” which was a bus tour that took crypto promoters across cities and towns all over the country to introduce people to Bitcoin and drum up excitement about adopting the technology to their lifestyles and businesses. The success of these campaigns is not yet visible, but for a region that remains one of the most unequal on the planet, the idea that crypto might be a way out of endemic poverty is rather appealing. This, at least, might be the case for the poor.

For others, from petty entrepreneurs to businesspeople, crypto is an enticing vehicle to accumulate and speculate; in general, crypto seems to have a lot of upside for investors accustomed to risk.

* Are there some countries in the region that are pushing back?

We can take Bolivia as a counterpoint. It banned cryptocurrency for commercial exchange since 2014. The reasoning of the Bolivian state was that they needed to protect people from being taken for a ride in a Ponzi scheme; comparisons to gambling scams were drawn. In reality, though, the Bolivian state’s hit at crypto was an effort to stabilize the national currency, the boliviano. Proponents continue to argue for crypto’s expansion in Bolivia and the overturning of this law in order to “bank the unbanked” and bring more people into a more formal economy and away from the unregulated and informal marketplace where most Bolivians operate.

* Observed from the outside, a paradoxical geopolitical dynamic seems to be at play in the region. On the one hand, many countries are primed to experiment with crypto due to the influence of earlier IMF-endorsed initiatives (e.g. the push to promote microfinance or to bank “the unbanked”). On the other hand, the very presence of Bitcoin now offers a promise of liberation from the dictates of the IMF, endowing crypto with the sort of populist appeal exploited by the likes of Nayib Bukele in El Salvador. What do you make of this dynamic?

Yes, this is quite paradoxical on the surface but is also expected to some degree as a schizophrenic neoliberalism has ravaged societies across Latin America. The IMF-imposed programs, recurrent structural adjustment, and debt servicing to which many countries in the region remain shackled, have limited the rate of development in many countries – leading to widespread frustration. In most cases, it has impoverished popular sectors and promoted further wealth concentration.

For crypto enthusiasts, entities like the IMF now stand-in for the ills of centralized finance, serving as proof that the global financial system is corrupt. But prior to crypto’s arrival, the IMF has historically stood-in as a boogeyman for the region alongside the US, representative of endless economic imperialism. For the crypto crowd, steeped in reactionary libertarian thinking that celebrates the necessity of easy economic exits, reinforcing this evil image of the IMF and other global financial institutions makes for a very persuasive tactic. It’s what allows them to push their peculiar gloss of freedom and sovereignty.

In Latin America, crypto and decentralized finance is peddled as a solution to a kind of wounded nationalism, dependency, and the stifling of national development. Placing blame on the IMF and global financial institutions is appropriate – as it is historically true – but it is also not the whole story. Opportunists like Bukele have always been in league with these entities too. In my view, cryptocurrency is Bukele’s approach to self-interested accumulation that, superficially, fits his populist slipperiness. It enables him to make arguments about national sovereignty and self-determination, while concealing the reality of self-serving profit extraction."

(https://the-crypto-syllabus.com/jorge-e-cuellar-on-el-salvadors-bitcoin-experiment/)

Discussion

Blockchain Imperialism ?

Jorge E. Cuéllar:

"In some cases, such as in El Salvador, democratic-institution building is being abandoned entirely. Here, blockchain is a tech-fix for authenticating land ownership and use, productivity, etc., as if this could magically create more trust and equality in the relations of exploitation. It is also being touted as a way to create a more efficient government that can spend its time governing rather than remain mired in bureaucratic procedure and decorum.

By using blockchain technology to ensure the integrity of hard assets like land, the usual suspects – the World Bank, the US State Department, and so on – are doing little to address questions of land reform and inequality. Rather, they are adding a software layer of “stability,” of great use to investors and speculators as it generates verifiable data via the blockchain.

Rather than being liberatory or empowering, this is a way of sorting people (and their assets) as deserving or undeserving, as worthy, or worthless. These so-called digital inclusion efforts are, in my view, about opening new spaces up for capital, and to prepare these terrains for the future, still unknown kinds of exploitation."

(https://the-crypto-syllabus.com/jorge-e-cuellar-on-el-salvadors-bitcoin-experiment/)