Latin America’s Economy and Blockchain Technology

• Leveraging Blockchain technology can help with the resurgence of the financial systems of Latin America and Caribbean.
• Blockchain Technology has the potential to shore up trade within the Latin American region and with the rest of the world.
• Blockchain’s decentralized nature can help with smooth and quick remittance payments without the intervention of legacy systems.

It’s quite evident that foreign trade has benefited from Blockchain technology as it ensures data is recorded in a secure way, providing all parties involved in transactions with encryption and transparency. Lots of rules and regulations implemented by legacy systems and government authorities have proved to be quite adamant for underdeveloped economies in the Latin America region. Adapting cryptocurrency as an alternate solution to the fiat economic model can boost the economies of various countries.

Backlogs in the Current Economic System

Central Banking and Fluctuating national currencies have given rise to hyperinflation from time to time in Latin America, with Complex Government politics and financial policies only strengthening the adverse effect. Countries like Argentina have faced the scrutiny of Inflation in the past, and thus, in order to alleviate this monetary issue and make trade effortless and trustable, Blockchain technology, with the advent of cryptocurrencies like Bitcoin and many others, has provided a new platform for people looking to trade within regions in Latin America or the rest of the world.

A decentralized monetary system has much more chance of being trusted as it provides certain immutability and transparency and is immune to any domination or scrutiny by Government politics or legacy systems. Both the banked and unbanked have been empowered through Blockchain-based currency, and it has the potential to accelerate and soar  economic development, which tends to stagnate otherwise.

The outdated Political systems have had adverse effects on remittance companies in Latin America. Hyperinflated currencies and high costs have severely affected the financial ecosystem and the common man. Since its advent in the late 2000s, Bitcoin has grown significantly in Latin American province and the unbanked section of people looking for remittances and trade has significantly benefited from access to the Bitcoin Global monetary system.

Simplifying Cross-Border Trade

It might sound extreme, but there has been speculation that the technological prowess that blockchain-based Cryptocurrency is bringing might completely replace the current outdated Legacy network labeled as SWIFT. Latin American aborigines can save millions once the trade gets decentralized and remittance payments get stability while achieving real-time currency exchanges. Thus, boosting cross-border trade will be inevitable with this robust digital decentralized economy network coming into full-fledged existence.

The Latin Initiative taken by several groups in Latin America, focuses on stimulating and spreading the use of Bitcoin and Defi (Decentralized finance) governed by smart contracts. Public corporations and private organizations have proposed the ‘Nuevo Sol’ network to build a network of trust, reliability, and integrity with the Blockchain Ecosystem. By means of tokenization, this new mechanism will ensure a decent value for each country’s natural resources and will ensure economic equality for all its citizens.