- Bitso is the leading crypto exchange in Latin America, with over 4 million users in five countries.
- In Latin America, the company hopes crypto can help cope with high inflation and devalued currencies.
- This article is part of “Master Your Crypto”, an Insider series that helps investors improve their cryptocurrency skills and knowledge.
El Salvador has rolled out a crypto wallet for the country’s 6.5 million residents. The digital wallet is operated in part by a Mexican startup called Bitso, whose name is a mix of bitcoin and peso. If you’re following the rise of crypto in Latin America, Bitso is the startup to watch.
Quantcast and Harvard Business School alumnus Daniel Vogel started the crypto exchange in 2014, long before the market collapsed in 2017, and trust in cryptocurrencies has increased this year around the world.
After raising seven funding rounds totaling $314 million in mid-2021, the valuation surpassed $2 billion, cementing the company as Latin America’s first crypto unicorn, speaking of a startup crossing the billion dollar mark. . It allows users to exchange different currencies using pesos, among other functions, including international money transfers.
“There is no doubt that Bitso paved the way for much of the crypto ecosystem in Latin America, starting before traditional investors understood the potential of decentralized financing,” Claire Diaz told Insider.-Ortiz, a Latin American researcher. America focused angel investor at VC3.
While US crypto is an asset, it is a must-have in Latin America
Vogel attempted to plug a hole in Mexico’s banking system, citing a significant number of unbanked citizens with little affordable access to financial mechanisms such as money transfers.
Eight years later, Bitso is one of the few internationally regulated crypto platforms in Latin America, offering low-cost remittance options – the ability for migrants to send digital currencies home – and 35 cryptocurrencies to its 4 million users in Mexico, El Salvador, Brazil, Colombia and Argentina.
The bottom three of these countries are among the top 20 crypto adopters, according to a 2021 report from blockchain data firm Chainalysis.
While crypto followers may be largely ideologically driven, Latin Americans may have immediate basic needs that digital currencies can meet, as the BBC noted in April.
Take Argentina, for example, where previous economic crises have caused citizens’ confidence in its financial institution to decline in recent decades. The country faces an annual inflation rate of 61%, Bloomberg reported. The last US measure, by comparison, was 9% – a record high thanks to supply chain problems and rising oil prices.
Bitso moved to Argentina in 2020. In that market, Diaz-Ortiz said, if you work for a foreign company that deposits your salary into a local bank, your dollar is converted to pesos of about 130 pesos per dollar, rather than the free market value of 300 pesos or more per dollar. dollars.
The crypto “is arguably a smarter choice than the Argentine peso,” she added.
According to a 2021 World Bank report, an estimated 6 billion people worldwide have a bank account.
Globally, at least 2 billion people do not have a bank account or access to a full suite of banking tools, Diaz-Ortiz said, adding: “Most of these people live in countries with economic systems that are nothing like the United States. states and could benefit from decentralized financing solutions.”
But crypto is probably not the ultimate solution, especially with adoption increasing, government debt mounting, and the industry still plagued by fraud and theft.
Latin American Market Not Immune to Crypto Battle
Chivo, the name of El Salvador’s digital wallet and slang for “cool,” was intended to be an easy gateway to crypto for the country’s people and an essential step in the government’s experiment with a national digital currency.
But it has seen bad use by individuals and vendors, hacking issues and technical issues.
Sixty-one percent of Salvadorans abandoned the app after downloading and withdrawing its $30 sign-up bonus, according to an April report from the U.S. National Bureau of Economic Research.
And like any crypto player, Bitso faced some cold wind during the crypto winter. It laid off 80 of its 700 employees in May, among other Latin American crypto startups, over the need to rethink skills.
Despite the shaky start, Diaz-Ortiz said Latin America is still ready for crypto adoption.
“Ultimately, the best solutions in decentralized finance will always come from founders who address these challenges and use their resilience to innovate,” she said. That’s why, she added, Latin America is such a good place for web3 right now.
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