Bitcoin Adoption Expands in South America
In 2021, El Salvador made headlines when it became the first country in South America to officially adopt Bitcoin as a second legal form of currency. While the experiment has had its ups and downs, it has overall been received positively.
As a result, other countries in South America are now discussing the possibility of adopting Bitcoin as a second legal currency. Is this good or bad? Keep reading to discover our take on the situation.
What Countries Are Considering Bitcoin?
Both Colombia and Suriname have recently announced that they have entered discussions on the benefits of adopting Bitcoin as a second form of legal currency within both their countries.
Colombia is at the head of these talks because of the potential President Gustavo Petro sees in cryptocurrency. As the president of Colombia, he knows that his citizens need to seize technology in order to pull ahead in the world. Plus, Colombia is leading the transition in hydroelectric power and methane burning as fuel--making it an excellent location for cryptocurrency mining (which takes a lot of power).
Petro hopes to highlight the low cost and environmental friendliness of this power to draw Bitcoin mining companies to the South American country. He additionally sees the importance of having a currency not tied to the government because while he is a decent president, one look at neighboring Venezuela shows how badly the government control of currency can go if the power is misused. He hopes the adoption of Bitcoin as a second legal form of currency can take his country in a different direction and bring prosperity to his people.
The president of Suriname, Chan Santokhi, listed similar reasons for wanting to adopt Bitcoin within the borders of Suriname. Currently, while Suriname does have its own currency, it has had major problems with inflation to the point where many citizens choose to transact in US dollars or the Euro instead of the local currency. Santokhi hopes that Bitcoin, since it is not tied to a government but rather supply and demand, can help stabilize the monetary policy within the country.
Suriname is also behind the rest of the world when it comes to financial services. Santokhi hopes that adopting Bitcoin for everyone will help fill some of the nation's gaps when it comes to financial services like banks—allowing all citizens to have a digital way to pay even if they don’t have a bank account.
Related: New Environmental Concerns Arise from Bitcoin
Is Bitcoin Adoption Good?
When El Salvador adopted Bitcoin, critics around the world categorized it as a failure when many citizens immediately went to cash out the small amount of Bitcoin they were given. However, these critics are missing the bigger picture.
In South America, there are many countries where the government cannot be trusted with control of the money (Venezuela), and Bitcoin removes some of this control, giving the citizens a chance to improve their situation on a worldwide scale.
Unfortunately, many of the citizens in these countries are so used to living from hand to mouth that when they are given money, as they were in the Bitcoin adoption, they see no other option but to cash it out immediately.
They mostly do so because they are so dire for food and other items needed to survive daily life, that the idea of saving it seems foreign to them. Plus, in these countries, saving money has always been a poor choice because of the sketchy governments who were liable to change the currency or devalue it massively at any time.
Adopting Bitcoin, while it gave citizens an option other than government money, was not an immediate fix. Now that the systems are in place to accept Bitcoin and other digital currencies everywhere, hopefully, some of these social issues will eventually fix themselves—especially because it is no longer a requirement to trust the government in order to use fiat currency.
Of course, the poor education in these areas also led to many citizens not understanding how Bitcoin works, and many cashed out because they thought it was another system they couldn’t trust. The supply and demand dictated value of Bitcoin looked like another inflation-affected government currency to them, which caused many to cash out immediately.
Hopefully, education will increase in these countries enough to maintain the Bitcoin systems being put in place. But regardless of that, the use of Bitcoin in these countries is a good thing. It gives many individuals who have been at the mercy of the government for too long financial freedom, even if they don’t realize it.
Not to mention that it gives countries like Colombia a leg up to compete on a global scale, especially if the legalization of Bitcoin is able to draw large companies to set up shop on Colombian soil.
Related: Bitcoin in El Salvador: One Year Update
Are There Dark Sides to Bitcoin Adoption in South America?
Like anything in life, there is a downside to Bitcoin being adopted by the government in Colombia and Suriname, and this is that groups like the cartel and terrorist organizations can more easily launder money.
Of course, they were doing this anyway, though with the government currency (and US dollars), so we don’t see this as a valid reason to discourage the adoption of Bitcoin in these areas. We just hope that education in these areas improves so that the citizens of these countries can truly reap all the benefits of an economic system that isn’t tied to the wills and whims of an untrustworthy government.
Overall, we hope that Colombia and Suriname eventually go on to accept Bitcoin as a second national currency. Not only will this help them compete with other countries worldwide, but it will also help protect vulnerable citizens who have been subject to the whims of an unstable government for too long.
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