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Ola! Brazil Welcomes Bitcoin

Michael Hudson
11 June 2016

Ah, Brazil...Home to flamboyant Portuguese, the Carnival of all carnivals, and the sexy Samba. Bustling Rio de Janerio and majestic Christ the Redeemer statue. Iguaçu Falls and the tropical Amazon rainforest. Idyllic Ipanema and Copacabana beaches.  Aromatic coffee and chilled Caipirihinas. Avid football fans. And a woefully dismal economic climate.

Brazil’s economy has experienced contraction for five consecutive quarters and recent political instability isn’t doing anything to help matters. Following President Dilma Rousseff being removed from office and facing an imminent impeachment trial, interim president Michel Temer has stated that while spending won’t be cut on health and education, severe sacrifices need to be made in an effort to address their massive budget deficit and restore growth.

And so Brazilians face the harsh fiscal, and emotional, realities of recession – a weakening currency at the mercy of hyperinflation, stringent capital controls and limited capacity to earn enough income to counter rising living costs. 

Her Latin America sisters are no better off either. It’s been reported that Venezuela has officially run out of money to be able to print more currency, the Bolivar, with 2016 inflation rate forecast for a whopping 720%. Argentina and Mexico also struggle with a deteriorating Peso, creeping inflation and growing unemployment rates.

With these facts, it’s not surprising that we’ve seen a dramatic increase in adoption of bitcoin coming from the Latin America region over the last year.

Bitcoin, being a decentralised, digital currency holds properties that allow people to circumvent many of the restrictions imposed by governments and central banks when fiat currency is under stress, and counter the monetary policies that impact on an individual's’ ability to control their wealth.

While bitcoin is experiencing a surge of interest globally - for these very same reasons - figures for 2015 reported from the Latin American economies are particularly notable.

  1. BitPay (a bitcoin payment processor) merchant transactions rose 510%
  2. Total merchant transactions from the region increased by 1,747%
  3. In Brazil, bitcoin trading grew by 322% and bitcoin wallet adoption by 461%

Furthermore, when examining bitcoin (XBT) performance compared to the local currencies in 2015 it becomes evident why these nations are favouring the digital currency. Bitcoin outperformed the Venezuelan Bolivar by 400%, the Brazilian Real by 92%, the Mexican Peso by 65% and the Argentine Peso by 41%. These are powerful results by anyone’s standards.

So while the fundamental issue of increasingly ever-present capital controls and out-of-control inflation fuels growing uncertainty in traditional financial systems and lack of confidence in fiat currency, bitcoin continues to prove itself as a worthy alternative, offering the ability to bypass centralised control. It allows users to transact globally without hindrance or permission, serves as a safe haven for preserving existing wealth, and gives individuals ultimate power over their finances.

It’s no wonder that more and more Brazilians are saying “tchau” to the Real and “ola” to bitcoin!

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