Why Cryptocurrency is Taking off in South America

Bitcoin | © Antana/Flickr
Harry Stewart

Unless you’ve been living under a rock, you’ve probably heard of cryptocurrencies like Bitcoin, decentralized digital money whose unprecedented growth has sent the financial world into a tizzy. Yet, remarkably, cryptocurrencies have very little practical use, causing some economists to speculate the investment bubble is primed to burst. But that’s not the case in South America, where a number of regional factors have seen Bitcoin become a viable transactional currency for the masses.

Famous for its peaks and troughs, Bitcoin has seen savvy investors enjoy truly astronomical returns or, more recently, some heartbreaking losses. Nevertheless, a relatively reliable international banking system coupled with Bitcoin’s excessive transaction fees has meant few people in the developed world actually use the currency outside of investment.


In South America, however, Bitcoin and other cryptocurrencies are now in the domain of everyday users as well.

One reason is a lack of access to the traditional banking system. A 2014 study by the World Bank found as few as 49% of Latin American adults had a bank account, largely due to the complex bureaucratic process and costs involved. But what the majority do have is access to a smartphone or computer meaning it’s easier for them to manage certain financial transactions through Bitcoin than a bank.

Furthermore, substantially fewer Latin American adults have a credit card so everyday payments are typically made with cash. To an extent, cryptocurrencies are filling the gap by acting as a secure online alternative for both small and large transactions. Conversely, credit cards are already well established in more developed countries which explains why high-fee cryptocurrencies have failed to take off as transactional currencies in the Western world.

Entel Tower, Santiago, Chile

Then there are the migrant Latino workers who live in prosperous countries abroad and send wire transfers back home each month, losing up to 5% of their paycheck in international transfer fees. Bitcoin is much cheaper, meaning their often impoverished families receive considerably more.

Finally, inflation is endemic to South America. Many countries in the region have suffered through periods of severe hyperinflation, causing the hard-earned savings of countless citizens to become seemingly worthless overnight. Even today, Argentina and Venezuela still have strict controls over the purchase of foreign currency. Bitcoin provides a unique way to circumvent such regulations by converting savings into a decentralized currency which is impossible for any government to control.

In Venezuela, for example, inflation has become so bad that cash is now unfeasible. Despite its notorious volatility, many Venezuelans are turning to cryptocurrencies to store their savings as well as purchase everyday essentials.


So does the case of South America demonstrate that cryptocurrencies have the potential to become true transactional currencies? Perhaps, but only time will tell. For now, at least in the developed world, they largely remain in the domain of high-risk, high-yield investors.

landscape with balloons floating in the air


Connect with like-minded people on our premium trips curated by local insiders and with care for the world

Since you are here, we would like to share our vision for the future of travel - and the direction Culture Trip is moving in.

Culture Trip launched in 2011 with a simple yet passionate mission: to inspire people to go beyond their boundaries and experience what makes a place, its people and its culture special and meaningful — and this is still in our DNA today. We are proud that, for more than a decade, millions like you have trusted our award-winning recommendations by people who deeply understand what makes certain places and communities so special.

Increasingly we believe the world needs more meaningful, real-life connections between curious travellers keen to explore the world in a more responsible way. That is why we have intensively curated a collection of premium small-group trips as an invitation to meet and connect with new, like-minded people for once-in-a-lifetime experiences in three categories: Culture Trips, Rail Trips and Private Trips. Our Trips are suitable for both solo travelers, couples and friends who want to explore the world together.

Culture Trips are deeply immersive 5 to 16 days itineraries, that combine authentic local experiences, exciting activities and 4-5* accommodation to look forward to at the end of each day. Our Rail Trips are our most planet-friendly itineraries that invite you to take the scenic route, relax whilst getting under the skin of a destination. Our Private Trips are fully tailored itineraries, curated by our Travel Experts specifically for you, your friends or your family.

We know that many of you worry about the environmental impact of travel and are looking for ways of expanding horizons in ways that do minimal harm - and may even bring benefits. We are committed to go as far as possible in curating our trips with care for the planet. That is why all of our trips are flightless in destination, fully carbon offset - and we have ambitious plans to be net zero in the very near future.

Winter Sale Offers on Our Trips

Incredible Savings

Edit article