One week to Christmas in 2017, headlines shouted that Asians were going mad for Ripple. It’s commonly accepted that Asia is a cryptocurrency hub, where electricity and parts manufacturing are cheap. But there are other parts of the world where crypto is the very savior of local economies, such as in Venezuela and Brazil, though politicians seek to control it through regulatory frameworks. In Brazil, Bitcoin is already bigger than their stock exchange.
As naysayers await a cryptocurrency bubble, Bitcoin is becoming a serious investment vehicle. Investors in Brazil aren’t concerned about such rumors in a country where the Central Bank believes cryptocurrency is a financial risk, and it speaks volumes to the local economy when crypto is bigger than their stock exchange.
Brazilian Bitcoin investors have outshined the total number of people registered in the Sao Paulo Stock Exchange (B3) and Tesouro Direto, run by the Brazilian government. Brazil’s three leading Bitcoin exchange houses that account for 95% of cryptocurrency transactions registered at least 1.4 million new users in December 2017 alone. The number is double the 619, 0000 individuals registered in B3 until the end of 2017 or the 558, 000 who invested in public bonds in November 2017.
The Fear of Missing out (FOMO) and more people trading in Bitcoin led to the growth of Bitcoin, whose price went close to $20,000 USD at the end of last year. Bitcoin Market CEO Rodrigo Batista says “Being right: the variable that explains this [the number of investors] is the price of Bitcoin.” It doesn’t matter that the price of Bitcoin and other cryptocurrencies slumped last week, prices are moving back up, and with this growth is renewed interest.
While Bitcoin is still considered a high risk by some mainstream news writers and central banks, it has continued to attract people from all backgrounds, since users can invest from small amounts to large ones, as people put their faith in digital assets rather than government-backed securities. If things continue this way, the crypto economies may be all that’s left standing while global Fiat economies are burdened with huge debts that likely won’t ever be repaid.
Contrary to popular opinion, bold financial analysts are predicting a financial bubble that has been building up since 2013 in the West, Asia and Middle East. The conventional banking system is under fire as mortgages and student debt continue to rise while creditworthiness is dwindling. For many people in failing economies, Bitcoin and other cryptocurrencies may provide relief that is separate and distinct from the debt accrued under the prevailing systems.
Venezuelan President Nicolás Maduro suggested a revolutionary solution in December last year to deal with his nation’s dwindling economy. Under his plan, the government would launch its own cryptocurrency known as the Petro to help them skirt through the financial blockade by the United States. However, he may be reinventing the wheel since many people are mining Bitcoin in Venezuela already, and it’s more commonly accepted than the fledgling socialist coin. Still, it’s possible that they will succeed, and the president believes that apart from helping them overcome the negative effects of the economic sanctions, the cryptocurrency will also help them weed out corruption.
If Bitcoin continues to outpace the local stock exchange in Brazil, the country’s government may soon follow Venezuela’s path by embracing the technology one way or another.