As protests have turned to civil insurrection in the South American Republic of Chile, the relatively new Bitcoin space in the nation has been rising to meet the occasion.
Making headlines in October 2019 with a fare-dodging campaign in the country’s capital, Santiago, dissatisfaction with the country’s government quickly escalated to involve the widespread barricading of streets and frequent clashes between the police and protesters. At the latest count, 27 people have died in these confrontations between citizens and the government. The Chilean president, Sebastián Piñera, has announced that he will capitulate to one of the protesters’ key demands: agreeing to hold a referendum on a brand new constitution.
A Country Under Protest
ONG Bitcoin Chile is a nonprofit organization dedicated to education and advocacy for the decentralized technology in the country, and Bitcoin Magazine spoke with its vice president, Jazmin Jorquera, about the situation on the ground.
“The final spark was the public transportation tariff increase, 30 chilean pesos (less than a 4 percent increase, to give you an idea),” Jorquera explained. “This hike was the straw that broke the camel’s back, a final act of arrogance after months of economic turmoil and the government’s overt contempt for demands for change.”
The increase in fares, coupled with government statements betraying ignorance over the daily costs incurred by many Chileans, has led to a climate in which citizens do not feel confident in their financial futures.
“The problem was that during the last months, many of the ministers of the actual government gave completely arrogant and irreverent statements, such as: ‘Get up earlier’ or ‘the flowers are cheap,’ in reference to the price increase in consumer goods,” Jorquera said.
Additionally, she claimed that “during the last few years, we have seen an increase in complaints about collusion, fraud and many economic frauds, without any sentence or effective jail, only some ridiculous[ly low] fines. But on the other hand, some minor crimes were heavily persecuted, especially related with the lower classes.”
Given this account, it’s particularly telling that public statements from Piñera in early October 2019 includes the reassurance that “Chile looks like an oasis because we have a stable democracy, the economy is growing, we are creating jobs, we are improving salaries and we are keeping macroeconomic balance.”
“So we were facing a kind of impunity from the upper class,” Jorquera explained. “Imagine that the actual President of Chile was sentenced for bank embezzlement, since he’s always playing on the edge of the ethical businesses. So, we knew we didn’t have the best role model, and we kind of agreed to play his rules, but I assume the Chilean elite surpassed the limits that the population could accept, and now, here we are; discussing a new constitution and critical changes to our neoliberal model.”
In addition to the call for a new constitution, protesters are demanding reform to the health system, pensions, minimum wage, the country’s water rights sales system, the educational system and more.
A Region of Bitcoin Adoption
The region of Latin America has shown strong interest and propensity for decentralized, digital currencies like bitcoin while the traditional world of financial systems is failing it. In addition to the record levels of adoption and trade volumes in Venezuela, for example, other nations like Argentina have also seen growing levels of attention.
Transaction volumes in bitcoin traded over LocalBitcoins have shown a rising interest in Argentina since late 2017, with the volume of bitcoin bought and sold reaching spikes surpassing $20 million and then $30 million in a tremendous boost toward the final months of 2019. The trade volume in Chile, however, had already reached $50 million by the second half of 2017 and has been steadily climbing ever since. With the trading volume approaching the $250 million mark in December 2019, it’s clear that Chile has a robust and interested Bitcoin community in the face of its political issues.
Manuel (Manu) Beaudroit is one of the founders and the chief marketing officer of Bitex, a cryptocurrency exchange that is currently the most-used in Latin America. He runs the daily operations of the exchange within Chile’s borders and has a unique perspective on both the daily lived experience of the current unrest and the thinking that guides larger firms in the crypto space on these issues.
“The unrest has impacted Chile by making people in many cases lose their jobs and companies to stop any investment project,” said Beaudroit. “In our case, we saw a 44 percent increase in visits from Chileans since the unrest started.”
Although many businesses have slowed down their plans in Chile, Bitex announced in December 2019 that it’s planning to massively expand operations in the nation as 2020 rolls around. Since the Chilean peso has hit new lows despite the nation being one of the most developed on the continent, Beaudroit has said that “by next year, we see things accelerating.”
He also noted that an influx of people moving to the country has been a significant factor in its adoption of bitcoin.
“The crypto ecosystem in Chile is small, but growing fast as migrants move to those latitudes,” Beaudroit told Bitcoin Magazine, using “those latitudes” as a colloquial phrase for the long, skinny country nestled between large mountain ranges on the border with Argentina and the coastline of the Pacific Ocean. “Society is pretty conservative in terms of the investment that they perform, therefore this type of movement is being driven mostly by migrants and young people.”
Plan B in Chile
In a country marked by economic unrest, political upheaval and an influx of new people, it shouldn’t be surprising to see Bitcoin adoption increase. But if it is to be a lasting tool that truly impacts financial sovereignty and freedom, the Bitcoin community will have to grow and take root in the right way.
Jorquera emphasized the importance of Chile’s Bitcoin community organizing itself — building up the knowledge to use this technology and its possible applications without waiting around for the government to intervene financially.
“I think that is the path that we must follow, acquiring knowledge and preparing for when there is a kind of ‘financial awakening’ and we must respond to all that demand,” she said. “If we are waiting for the government to use blockchain to control its expenses, that is not going to happen; we’d be shooting ourselves in the foot. But if we see a kind of ‘corralito’ like in Argentina or a blue dollar, restrictions to withdraw money, it would be a completely different story and there we would definitely begin to see more interest in Bitcoin.”
Using the data from Bitex’s Latin American operations, Beaudroit indicated that bitcoin is primarily used for international payments, rather than as a safe haven asset to protect long-term wealth.
“In our case, we provide cross-border payments using bitcoin, and we see a much more interesting use of crypto in transfers rather than saving for the long term,” he said. “People are always looking for better solutions to move money abroad, mostly for business reasons. Remittances are also a big deal in Chile, as they send 1.5 billion [pesos] a year to countries like Colombia, Haití, the Dominican Republic and Perú.”
Jorquera elaborated on the prevalence of cross-border bitcoin payments from Chile, tying it to the country’s relatively stable status in the region. But with the recent unrest, that dynamic may be changing.
“We must make something transparent: we are surrounded by countries that have had financial problems and governments with very poor management,” Jorquera explained. “We Chileans were supposed to be a kind of oasis. However, that oasis exploded and it is very reasonable that there are people who believe it is necessary to protect themselves … But I think it is very much in line with the signs that have been seen for a while: countries' debt continues to increase, governments questioned, climate crisis, corruption, rising prices. People are looking for options, and I think Bitcoin is the best option at the moment.”
The Future of Bitcoin in Chile
Of course, much remains to be determined about how significant bitcoin will come to be in Chile. But with general awareness and adoption increasing worldwide and no end to the country’s civil strife in sight, it’s worth speculating on just how influential the cryptocurrency can be.
“In my opinion, Bitcoin can play an interesting role by redesigning the under layers of the financial sector while opening up the system to migrants, by letting them access and public and open tech,” Beaudroit said. “There's a big opportunity in using the tech in the financial industry, and this can allow fintechs to synergize with incumbents and create much richier business models, more inclusive and democratic.”
In addition to adoption at the financial services level, bitcoin may have major implications in the hands of the economically oppressed in Chile and elsewhere.
“I am very concerned about financial instability, not only in our country but worldwide,” Jorquera said. “We know that the people who suffer most from crises are the poor, who are the most vulnerable. The people who generate the crises, at least in my country, simply enjoy impunity. The only thing we have left as a community, as all the people that are involved in Bitcoin, is simply to continue spreading the knowledge and make this more understandable and friendly for anyone, regardless of their background.”
There’s little doubt that Chile is a locale to watch as bitcoin, and cryptocurrency at large, grow in a country full of people more than ready to accept it.
“[Although] crypto is still a nascent industry, the impact that we can reach by smartly implementing this technology will be groundbreaking, and the financial sector is well aware of this,” Beaudroit concluded. “Latin America is fertile ground for this type of tech, since there are endemic problems which crypto overall can help tackle, from fighting corruption to enabling better and cheaper remittances channels.”
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.