In the face of economic turmoil and instability, is Bitcoin really a panacea?

Economic stability has long been a goal for Central American countries. Latin America and the Caribbean have suffered from economic instability for decades. Rampant inflation and the devaluation of currencies and assets have made these countries' economic situations unstable and often become havens for criminal activities. Bank and government corruption is often cited as the main cause of these economic disasters, especially when it comes to centralized control of currencies. Luis Cuende, founder and project director of Aragon, believes that it is time for cryptocurrencies to play a major role in the economic renaissance of these regions and enter a new era of economic stability. And Cuende is not the only one who thinks so.

Economic stability in the spotlight

Before Bitcoin came into Satoshi’s mind, Latin Americans had been suffering from extreme inflation and wild fluctuations in the value of assets and currencies. Regional currencies, such as the Venezuelan bolivar, have experienced wild inflation at unpredictable rates, leading to widespread poverty across the country. Regarding Latin America’s economic problems, Cuende explained that these countries “have suffered decades of economic hardship, and it’s easy to relate to the development of cryptocurrencies there, and that governments shouldn’t be dictating the value of people’s money.”

Cryptocurrencies are designed to withstand economic turmoil. This will create a more stable store of value that is not influenced by a central authority like a government or bank, and protects the integrity of savings and transactions. Latin American governments have ignored their citizens for decades; cryptocurrency offers a chance to fight back.

Regarding cryptocurrency adoption, Luis said:

“We don’t really need permission from a bank or a government to facilitate this, so what’s going to happen is people will use cryptocurrencies more and more, they’ll self-organize, and maybe even self-govern. I think that’s pretty systemic.”

If you think about fiat currency, you see crazy fluctuations in value because governments can print it at any time, but crypto is the opposite of that. What makes crypto so interesting is that its overall value can only go up - there is no other way.

Global support for Bitcoin

Recently, the United Nations released a report detailing the potential use of cryptocurrency as a means of de-risking the Caribbean financial system. This is just the latest blockchain research report, survey, and call from the United Nations, all of which are dedicated to providing international aid and improving the global economy.

The report on the Caribbean boils down to three main options:

1. Take Bitcoin or another fully encrypted, private commodity-like currency.

2. Use a permissioned blockchain run by a consortium of institutions.

3. Central bank digital currencies (CBDCs) are issued by the central bank.

While utilizing a permissioned blockchain or a central bank-issued digital currency is feasible, Luis discussed how these options could lose the point of cryptocurrency and therefore could be an inefficient solution for Latin America. “The most important thing, especially in Latin America, is accountability… If they use an actual blockchain, then I would love it. That accountability is what is needed in the fight against corruption in Latin America.”

Global Economic Stability and the Future of Blockchain

The possibility of a global solution based on cryptocurrency is growing by the day, as the United Nations and the European Union join the list of governments and organizations that are actively pursuing blockchain technology.

With the total market capitalization of digital currencies surpassing $90 billion, it’s no surprise that many eyes are on this emerging technology. Dubai, Zimbabwe, Norway, Delaware; as more governments turn to blockchain, it’s only a matter of time before Latin American countries embrace it.

However, as Luis said, if the government and banks don't implement these changes, then people can do it themselves.

“Governments and banks have a lot of power and they are aware of what’s going on… We are seeing banks move into cryptocurrencies and I think that trend is only going to accelerate.”