LATAM is an exciting place for crypto as it gains popularity in most countries. While El Salvador and Bolivia are at extreme ends of legal acceptance trends of Bitcoin, most countries are trying to pass regulations for the local crypto market.
Nations like Venezuela and Colombia have robust user communities. Other countries, such as Ecuador, have grey legal zones, where crypto is not a legal tender. Still, it can be used amongst private parties without issue. While no official goods or services can be bought, transactions between private parties happen constantly and can be notarised.
Without a doubt, LATAM is the right place to invest in crypto projects for three reasons.
Volatile local currencies lead to increased demand
A large unbanked population is price sensitive to traditional transaction fees
Accessible and specialised labour markets create lean companies
Local currency instabilities. People are looking for a more stable currency in some countries. That is what crypto brings to the table; that is the case of Venezuela and Argentina, where the exchange rates have been so detrimental to the local populations. A decentralised currency brings safety and stability that local governments cannot; even if the volatility remains, many feel safer with Defi than with their central governments.
Low transaction costs. Given that a large percentage of the population is unbanked or underbanked, low-cost alternatives that avoid high transaction fees, such as cryptocurrencies, are appealing. Especially when considering, all you need is a mobile phone, which is ubiquitous in LATAM. Smartphone connections in Latin America were expected to reach 500 million at the end of 2021 – an adoption rate of 74%, according to a report by GSMA. With some regions coming almost 100%!
Specialised Labour. The region has a good number of university graduates with different skills; given the regional situation, they are relatively cheap in comparison. Currently, it is cheaper and easier to find specialised labour in LATAM than in the northern hemisphere.
What will it mean to our world when LATAM, like many other regions, joins the foray of widespread Crypto adoption? At 1931.io we view that question from two sides: who will mine all that supply, and what energy sources will they utilise?
Our answer: why not us, and let’s make it renewable. Let me offer a bit of background to understand where we are coming from and why was 1931.io created. As a millennial Ecuadorian, I can recall when electricity used to go out in my city for several hours. One summer, it happened at least weekly. We did not generate enough energy power to sustain ourselves as a country. We adapted and invested, and for two decades, we turned the situation around.
The consequence? 93.2% of our energy is renewable, with hydroelectric energy being our primary power source. Furthermore, the latest project to begin construction this year will be the biggest one yet. As the Guardian put it, LATAM is obsessed with hydroelectricity. Ecuador is not alone; Brazil, Peru, Bolivia, and other countries are heavily invested in hydroelectric energy; given the geography, it makes sense.
What is crypto mining? Since a central bank or government does not emit cryptocurrencies, they must be mined. As they are not a physical good, they cannot be minted or printed as the US Dollar or Euro. In addition, most coins have a limited number of tokens available, meaning that eventually, all coins will be mined and in circulation.
There are two types of crypto mining: proof of stake and proof of work. The first model requires no specialised hardware; it is a basic validator software. It is capital intensive, meaning the more you have staked, the more you will make. On the other hand, proof of work is the competition between miners to resolve a complex problem first. This requires dedicated hardware, the so-called miners.
Crypto mining is perhaps the wrong term. Nothing is extracted; it is a race to solve a complex mathematical problem. Those who solve it get rewarded in BTC or another currency depending on what they are solving.
In the proof of stake model, you have cattle (coins) and let them reproduce (validation notes) and make money with the offspring (reward). The more coins you have, the more money you make, to the point that in some cryptocurrencies, a few people/institutions control one-third of the staking pool. While this is not a general rule, it is an excellent example of the monopolies that can happen in this type of model.
About Luis Cadavid
Luis Cadavid is a farmer, crypto investor, scholar, and c-level executive. He has written numerous articles on various topics. He is the founder of 1931.io, a sustainable crypto mining in Ecuador. He firmly believes that sustainability can be done profitably.
About 1931.io
1931.io is a sustainable crypto mining company founded in Ecuador. We specialise in creating sustainable crypto mining projects. We find or make renewable energy sources and combine them with the right climatic conditions to create efficiency. We started with the idea of democratising crypto mining due to the high costs of the machines and doing so in a sustainable way to create a viable mining operation for today and tomorrow. But unfortunately, the bad reputation of crypto mining has been a turn-off for many investors who want to do things better.
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