There’s no doubt that cryptocurrency has continued to enter the consumer mainstream over the course of the last decade, with even developing nations following the lead of countries such as the UK.
Take Venezuela, for example, which recently announced that a new gambling hall in the capital of Caracas would begin to accept wagers placed using cryptocurrency.
This represents a huge step forward for digital tokens, while according to Scott Lawson of online-casinos.com, it also signifies the first time that legal gambling has been allowed in Venezuela since 2011.
In this post, we’ll look at how cryptocurrency has become commonplace in Latin America, while asking whether this is contributing to wider economic growth.
The Rise of Digital Currency in Latin America
The rise of cryptocurrency has represented a global phenomenon in recent times, with one of China’s biggest banks having recently opened up registration for digital wallets using the nation’s central bank tokens.
While the same levels of adoption aren’t synonymous with Latin America, there’s no doubt that the uptake of cryptocurrency and its underlying blockchain technology is on the cusp of a meteoric rise in the region.
Of course, some will argue that this is largely due to the lack of regulation in Latin America’s crypto markets, which make these entities ideal for money-laundering, corruption and funding illicit purchases.
However, this doesn’t come close to accounting for the rate of growth in the region, with this being driven primarily by innovative companies and households who are looking to avoid using increasingly unstable fiat currencies.
According to a study published by Statista in 2019, the Latin American region actually holds the largest number of cryptocurrency users in the world.
In fact, Argentina, Brazil, Chile, Colombia and Mexico all fell within the top 10 cryptocurrencies overall, while Venezuela would also have featured in this list as participated in the global study.
This trend has undoubtedly been heavily influenced by financial and economic instability in the region, with populist and socialist governments in Brazil and Venezuela having overseen immense disruption, mismanagement and corruption.
Inflation has remained at a disproportionate high since reaching its highest level in 13 years back in 2015, for example, while this macroeconomic metric increased by a staggering 53.8% in 2019.
Venezuela has also suffered with hyperinflation indefinitely since 2016, at which point the national rate of inflation hit 800%. This breached the 4,000% mark in 2017, before peaking at a staggering 1,700,000% in 2018.
Although this has since dropped once again to 4,000 (as recently as July), the national currency remains almost worthless and inherently unstable for households and businesses alike.
Throughout Latin America, this is one of several macroeconomic trends that have driven an increased demand for cryptocurrencies, while governments have been happy to regulate such assets in order to provide some form of economic relief.
What About Cryptocurrency Gambling in Latin America?
It’s also interesting to note that the rate of cryptocurrency adoption in Latin America has risen in line with the region’s fast-growing iGaming market, which peaked at a cumulative value of £2 billion in 2019.
This is more than three-times larger than Southeast Asia, which is currency considered to be the fastest-growing tech market in the world.
This is encouraging various experts to predict that Latin America could well emerge as the next major iGaming hub in recent years, with many of the region’s 26 countries contributing to this trend.
While increased mobile penetration in Latin America is helping to drive this trend (the number of people owning smartphones has increased to approximately 30% of late), it’s hard to ignore the role that cryptocurrency has played in this.
This is borne out by the aforementioned decision to allow cryptocurrency wagers at selected gambling locations in Venezuela, creating a further link between these lucrative and high-growth markets.
Of course, scepticism remains about President’s Maduro’s very own cryptocurrency ‘Petro’, which is pegged to the value of oil and has seen wild fluctuations as this asset’s price has plummeted during Covid-19.
However, this hasn’t stopped citizens from turning to much more established tokens such as Ethereum and Bitcoin, which offer far higher market caps, potential applications and inflated value to residents in Venezuela.
This trend is sure to continue too, particularly with the International Monetary Fund (IMF) predicting that the Venezuelan currency could ultimately set a new inflation peak of 10,000,000% in the near-term.
With these points in mind, we should expect cryptocurrencies to continue their move into the consumer mainstream in Latin America, with the iGaming market providing an obvious and lucrative application.