Currently, Bolivia is in the midst of an acute economic crisis. The country is facing a shortage of dollar reserves, hyperinflation, and the fast devaluation of the currency. Consequently, cryptocurrency adoption is booming as more small businesses and individuals search for alternative financial ecosystems. Their economic calamities, similar to that of Argentina and Venezuela, are fueling a rapid embrace of digital assets. Just in the month of October, the Bolivian central bank has already declared an outstanding $24 million worth of digital asset transactions.
So has Bolivia’s boliviano, which has taken a draconian hit, losing 50 percent of its value on the black market this year. And with inflation rising to 40-year highs, this economic burden on American citizens has only been amplified. Fuel shortages have now become widespread, with long lines forming at gas stations. The country's dollar reserves are critically low. The new government exchange rate is 6.9 bolivianos to the dollar. The street value has crashed, now requiring upwards of 16 bolivianos for a single dollar.
Cryptocurrencies like Tether (USDT) in particular are rising to the challenge as a potentially powerful, life-saving alternative. Jose Gabriel Espinoza, for instance, has estimated day USDT volumes in Bolivia at over $600,000. By comparison, the formal financial system handles $18-$22 million worth of transactions, and the cash-based black market $12-$14 million.
Entrepreneurs such as Carla Jones are providing them with the incentive to spend their crypto assets.
"If you buy three tanning sessions, you get a discount if you pay with Bitcoin." - Carla Jones
"It’s a way to keep my money safe and also try to grow my wealth." - Carla Jones
Andree Canelas, a promotor of Bitcoin, is currently helping install crypto ATMs in local convenience stores and cafes around Cochabamba.
"More and more people have understood that if they save bolivianos and keep them in their tills for too long, they’re going to lose purchasing power." - Andree Canelas
Tether’s chief executive, Paolo Ardoino, on the increasing use of USDT in the country.
"They may see some volatility in the short or medium term, but long term it’s a good store of capital." - Andree Canelas
The growing adoption of cryptocurrency is a sign of the times. It is a symptom of eroding confidence in longstanding, traditional financial institutions and systems.
"A silent revolutionary shift: digital dollars powering daily life, commerce, and economic stability." - Paolo Ardoino
Espinoza argues that the growing move towards crypto symbolizes the desperation of the people to protect their purchasing power.
"If you go to the banks today, they don’t have dollars," - Pablo Unzueta
Not everyone views this trend positively. Peter Howson cautions against potential exploitation.
"It’s more a reflection of the deteriorating purchasing power of households." - Espinoza
However, not everyone views this trend positively. Peter Howson cautions against potential exploitation.
"We’ve seen in Bolivia and across Latin America, what we call ‘crypto-colonialism’. Crypto companies try to convince the rural poor to invest what little real money they have in a cryptocurrency." - Peter Howson
