• Creimerman Product Team

The next great investment opportunity in Cryptocurrencies: The Inflation Crisis in Latin America

Crises create opportunities! Back in 2008, with the bursting of the United States housing bubble and the following collapse of the international banking crisis, people lost confidence in the financial system, giving space to the creation of a new alternative and decentralized currency: Bitcoin. A digital currency based on blockchain technology that has become the investment opportunity of the century. Bitcoin reached parity with the dollar back in 2011 and currently has reached its peak in over USD 23,000. That means that if you had purchased USD100 in Bitcoin in 2011, you would have increased your investment by 2.300.000%! And what is more, it is expected to reach USD 397,00O by 2030… Amazing, uh?


And bitcoin is just the beginning.The technology that allowed its creation, called blockchain, not only has open the doors to more than 2500 altcoins - cryptocurrencies alternatives to Bitcoin -, but has a crazy amount of applications that are not enough explored, like smart contracts, secure sharing of data and tracking systems, and not only in the tech industry, but in healthcare, government, and business, among others.


Now, we want to introduce you to a booming market: cryptocurrency in countries with high inflation.


But first of all, what is inflation? Economists don’t usually agree on its cause, but to cut a really long story short: the effect in the countries that suffer from it is the devaluation of the legal currency, and therefore a sustained price increase of goods and services. The main consequence is that people’s purchasing power diminishes day by day.


But, how is a country with that problem an investment opportunity?

Easy: there is a market of people looking for different alternatives that allow them to keep their purchasing power as high as possible. Usually, exchanging their currency for US Dollars is the chosen alternative… but it is not always possible. Countries that have high inflation are mostly countries where the governments have protectionist policies, in an attempt to save the legal currency’s value, and therefore limit or even forbid the purchase of dollars (yes, really). Examples of these countries in Latin America are Venezuela and Argentina, in positions 1 and 3 of the world’s countries with highest inflation. Number 2 and the following are African countries, like Nigeria.


How can people keep their purchasing power then?

All these three countries have found a way: CRYPTOCURRENCY. Once again, crises create opportunities. Latin America has become the region with the largest amount of cryptocurrency users in the world. For instance, at the end of 2014, in Argentina there were 5.000 users of Bitcoin, making it to the world’s top ten list. And currently, with the new government having taken office, limited access to the US Dollar, and the emerging of the COVID-19 crisis, it is calculated that there are between 10.000 and 15.000 active Bitcoin users, having grown 300% in the last six years only in Argentina! And there are even more Bitcoin holders, but those are harder to calculate (the drawback of a not regulated business).

But that is hardly all of it. The investment opportunity in Argentina lies in its massive national entrepreneurial environment, the quality of the technical knowledge of the people that work on it, and the internationally competitive development costs you get one of the most respected and influential cryptocurrency communities in the world. And Argentine entrepreneurs are not only pioneers in the industry, but in recent years they have produced the most interesting projects on this technology: from digital wallets and investment platforms to global credit solutions.


And the numbers reflect that reality: ever since the quarantine started, Argentina’s cryptocurrency users have tripled, and daily operations have quadrupled.


And the world is noticing this opportunity. For instance, Bitso, a cryptocurrency exchange business based in Mexico that started back in 2015 with a seed round of UDS2.5 million, and last december had a later-stage investment of UDS 62 million, expanded its operations to Argentina last February, and has raised its trade volume of Bitcoin by 68% during the last three months[8] in the country, compared to the previous period.


To sum up, cryptocurrency fintechs are offering greater opportunities for investors in countries with a high level of inflation, and especially in Argentina - where their market has raised exponentially during 2020. The opportunity lies in the potential of cryptocurrencies of replacing centralized currencies, as the idea of free, independent and decentralized money is undoubtedly a very attractive goal to young people, international traders and businesses, and even to people that’s left outside of the banking system, but still has an internet connection. But that happens all over the world… investing in cryptocurrencies in countries where high inflation and distrust in the financial system motivate people to look for other options is the real deal. Specially in latinamerica, with the combination of knowledge and competitiveness. It is “the future of money”, as the IMF has recently stated… and today is your opportunity to get ahead!

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