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Blockchain: The Great Opportunity for Latin American Economy

Blockchain: The Great Opportunity for Latin American Economy

Posted by Juan Gavasa on August 26, 2018

According to Everis consulting office, the blockchain technology can offer many possibilities for Latin American banks, since transactions can be made in a faster and cheaper way with less margin of error. 5.5 million dollars, through 2020, will go to the first solution center focused on “blockchain” in Latin America, based in Sao Paulo. The news comes out in an especially relevant moment for the development and expansion of blockchain in the whole region, which is described by specialists as an opportunity for the economy of many South American countries to get new boosts apart from traditional economy.

Blockchain technology favors the transference of digital data with sophisticated coding. This is about a new version of the traditional accounting registration books of an enterprise where all money flow is registered. Blockchain has transformed all those movements into digital operations. This transference does not require a centralized intermediary who identifies and certifies the information, but it is distributed in multiple independent nodes that register and valid them without the need of evident confidence among them. Once it is introduced, the information cannot be deleted; only new registrations can be introduced and it won´t be authenticated unless most of them agree to do it. Blockchain, is the same technology behind the peak of bitcoin and other crypto coins, since it works as high-security digital exchange platform, without any intermediary.

IBM’s New Blockchain "Hub" in Brazil: The Beginning of a New Trend

The new “hub” that was recently announced by the IT giant is designed to help “clients conceive a new generation of blockchain applications in the IBM Cloud platform, with the highest levels of security,” according to the company. This center “will allow customers throughout Latin America get into new forms of business transactions,” Ana Paula Assis, Latin America IBM General Manager, explained. With this infrastructure, to be operational in the second quarter of 2018, Brazil joins the group made up of five countries (United Kingdom, U.S.A., Canada, Japan and Germany) that has IBM Cloud infrastructure with “blockchain” capacities. This investment will also offer the U.S. company’s Latin American customers “a unique place to develop the whole life cycle of the ‘blockchain’ commercial solutions, since the very beginning, on IBM Cloud”, the company said.

There is a growing number of Blockchain initiatives in Latin America.

According to Everis consulting office, the blockchain technology can offer many possibilities for Latin American banks because transactions can be made in a faster and cheaper way with less margin of error. In fact, some of the Mexico-based global banks are already going through a test period. Such is the case of Spanish BBVA which, in November, made a piloting transaction through blockchain, electronically presenting documents (credit cards) in an import-export operation between Spain and Mexico. Different banks in Latin America are already using this tool for the processes of liquid assets confirmation, which reduces the amount of work in terms of confirmation and payment. Parallel to this, there is a growing number of Blockchain initiatives in Latin America, as well as events providing information on the new steps of this disruptive technology to which many people still do not have access.

Blockchain and The Need to Place Latin America on The Map

In April, for instance, the Internacional Argentina -Colombia- Russia Blockchain Congress) will simultaneously take place in Colombia and Argentine, with three venues: Cordoba and Buenos Aires (Argentine) and Bogota (Colombia). This congress will be focused on opening dialogues between Latin America and the international crypto community, teaching more people about the opportunities crypto coins offer, attracting for more foreign investment and adapting advanced digital economy practices based on Blockchain. In Brazil, mobile payment startup Ubank is selling tokens for Ubcoin Market, a peer-to-peer ecosystem, which will allow its users to become crypto investors simply by selling real goods and receiving crypto coins as payments. Ubcoin Market covers the gap between the crypto coin and the real world. On one hand, those who do not know much about blockchain could become investors in an easy and secure way, and, on the other hand, experienced members of the decentralized universe would have the power to spend their money without changing into trustee coins.

Ubcoin Market offers a solution for two clear and objective opportunities. The first opportunity comes from almost 2 billion digital citizens, many of which, as regularly happens in Latin America, are very interested in crypto coins, but have access limitations due to technological and legal barriers. The second point is that faced by more than 23 million owners of crypto coins who are not able to easily use their investments due to restrictions imposed by governmental and financial organizations.

The fact is that in Latin America, 49 percent of adult population do not have access to a bank account. So the main driving force to boost this type of market comes from financial technology companies or fintech, which are offering alternatives to the traditional bank market. In the coming months, the models of bank and insure business must have components based on technologies supported by the Internet of Things, machine learning, big data, blockchain, cripto coins and virtual reality. Experts are convinced that this is the only way to meet a new complexity of industries so as to foresee consumers´ behavior. Marcelo Spaziani, IBM Latin America Selling vice-president, was recently explaining that blockchain “has recently played a key role for businesses, since the different industry leaders, such as finances, insurance or supply chains, explore how to use blockchain to figure out the way to exchange value and information.”

Great Growing Expectations

As one of its consequences, the growing of the crypto assets and the expansion of blockchain technology have been of great importance during 2017 and this trend is expected to continue in 2018. Argentina, for instance, has significantly grown, becoming one of the countries with more interests and influence of crypto coins and the distributed accountability technology. Different studies confirm this insertion of the South American nation in the blockchain and Fintech environment of the continent, highlighting the investment growth and the increase of the projects that experiment with the application of blockchain technology beyond crypto assets. The Latin American Private Equity & Venture Capital Association  (LAVCA) points out that private and risk capital investment in Latin American startups has gone up to 8.4 billion dollars, figures which surely tell that Argentine has an important presence, with 110 startups (according to the most recent edition of FinTech Radar Argentina, issued on march 20th  by Finnovista).

Mexico has become the first country of Latin America to pass a law for the Fintech industry.

Mexico has become the first country of Latin America to pass a law for the Fintech industry. Among the main benefits of this new regulatory threshold, we can find the setting of operation standards for the platforms, support to new financial models, as well as generation of a confidence atmosphere for the sector industry. In this sense, the regulatory environment will create more competition in the financial world, which will allow to reduce, according to the promoters, the costs of credit management and development of new products. Finally, it is also expected to help bring more people and enterprises into a financial environment, thus fostering their development and the country´s productivity. Eduardo Guraieb, General Manager of Fintech México, thinks that the new law “will boost the investment attraction in financial technology enterprises, making Mexico the epicenter of financial innovation and Fintech in Latin America”, and in an agent that will stimulate the investment in the blockchain sector.

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