Peruvians have lately demonstrated an exponential growth of interest in crypto, according to several of the country’s top cryptocurrency exchanges. Some put this down to rising inflation and political turmoil.
A Chilean crypto exchange Buda.com reported volume growth from a mere $20 thousand in 2020 to $74 million in 2021. For the period from the beginning of the current year through August, this number amounted to $22 million (this decline is largely due to the falling Bitcoin prices).
Buda.com is just one of the numerous exchanges operating in Peru, which stands alongside Argentinean Beunbit. The latter is highlighting a surging interest in stablecoins, which account for 90% of the fiat currency on the platform, according to Matías Romero the country’s manager to CoinDesk.
Álvaro Castro Lora, a lawyer and founder of the Peruvian Blockchain Association, says that despite the U.S. dollar being a legal tender in the country, exchange rates are usually unfavourable.
Another assumption of surging volumes of crypto trading in the country is that people have negative expectations of possible future legislations: capital controls, foreign exchange restrictions, and devaluation of the local currency.
Additional reason to shift from fiat savings to crypto, according to Álvaro Castro Lora, is inflation which jumped to almost 9%. It does not seem that dramatic and seems to be in line with the U.S. trend and definitely not the worst in the region, compared to Argentina’s 71% or Venezuelan astonishing 137% as of July 2022.
We can see, how not only technical development encourages cryptocurrency usage, but also negative circumstances that either block access to international relations, or depreciate fiat money.
We have already seen some countries turning to cryptocurrency to avoid sanctions, like Cuba or Iran (where by the way some exchanges operate despite the U.S. restrictions). Western countries suspected that Russia might use cryptocurrency to maintain trade or withdraw capital. Peru is an example of a country that uses crypto not due to external factors, but rather because of domestic instability. But no matter what the source of those factors are, the positive side is that people are overcoming their fear of “crypto things” and see a practical application for this technology.