The blockchain is no longer just another trendy topic in the tech world. Governments and businesses all over the globe are actively considering blockchain as the next innovative step in many industries from healthcare to banks, and even food safety. With countries such as Estonia, Japan, and Malta holding the top spots as blockchain hubs, other regions are taking notice and coming up with new initiatives to push blockchain development.
South America is experiencing major blockchain advancements in the form of internet connectivity, as internet access is a big part of using blockchain in different verticals. From 2010 to 2015, internet connectivity in households nearly doubled in Latin America, showing that 43.4% of houses had access to internet. In 2018, it is estimated that roughly 70% of the population has internet access. Countries such as Panama, Nicaragua, Brazil, Venezuela and Argentina among others are showing that the rise in connectivity lays the groundwork for up and coming blockchain startups and initiatives.
The Blockchain as an Economic Bandaid
Blockchain’s potential impact is associated with reducing corruption, making the voting process more transparent, and improving record keeping processes. Providing the necessary transparency for a country’s population would allow them to see how their government operates, which in turn would combat corruption. While these are effective uses of the blockchain, other innovative ways of using it have recently come to light.
Panama is looking to keep up its development momentum with blockchain. As an example, the United Nations Development Program (UNDP) has been underway, which allows domestic and international stakeholders to look into new financial technologies and mechanisms for investment access. In this case, stakeholders from the UNDP are dedicated to gathering experts from around the world to discuss how technologies like blockchain are being implemented in practice, so that Panama can adapt and not be left behind.
In Venezuela and Argentina, many people already use blockchain and cryptocurrencies to manage their funds due to their hyperinflation issues. Venezuela is the most extreme example these days, stuck in hyperinflation with economic activity decreasing 30% every year. Argentina is also suffering from its highest inflation rate since President Mauricio Macri went into office.
The blockchain trading platform Latoex, for example, has launched its Andes trading platform, meaning that people who are interested in fiat money and cryptocurrencies have the ability to convert traditional assets to token assets. Another such example is Costa Rica, which has legalized payment in cryptocurrencies for workers.
Corporations and Blockchain
While startups are taking the Latin American blockchain industry by storm, major corporations in the region have also started to take notice to the continent’s growing potential. According to The Industry Today, blockchain technology has an expected growth of 30.3% CAGR from 2018 to 2023, which would create US$0.51 billion by the year 2023. IBM is one of the major players to seize the opportunity by announcing plans to invest US$5.5 million in a blockchain solution hub based in Sao Paulo, Brazil. What’s more, the Santiago Stock Exchange has taken on IBM’s blockchain solutions to manage short sales in Chile.
NEM is a smart asset company that has aided blockchain development in LatAm. The smart asset company has aided in many underdeveloped countries, and is now present in regions such as Colombia, Mexico, Brazil and Argentina.
In Colombia, NEM has helped startups implement and use blockchain tech in cities such as Bogota, Medellin, and Cali. Their efforts in Mexico and Brazil are being seen as newer ways of battling corruption and reducing scandals, while in Argentina they are helping to support local entrepreneurs.
As blockchain continues to catch the eye of corporations, industries such as automotive manufacturers could also benefit from the technology. Using a decentralized ledger, dealerships can track specific parts that consumers need for their car repair, as well as providing more extensive identification codes for cars, and redefining the entire value chain of the automotive industry. This provides some benefits for Latin America, where it can be challenging to find original car parts.
Blockchain Opens Doors for Environmental Sustainability
Blockchain’s characteristic of being able to offer transparency is one of the main reasons there are conversations around Latin America to use the tech as a tool to understand and deal with the impacts of climate change. The impact of blockchain on environmental sustainability was solidified in 2018, when the World Bank announced the US$110 million bond for blockchain, with emphasis on carbon market trading.
In essence, through instant authentication, coupled with smart contracts and immutable data records, the individual efforts of companies can be converted into a combined initiative with the blockchain. The aim would be to reduce companies’ carbon footprints through reporting emission rates on one central platform, making access to data more simplified.
Additionally, the Inter-American Development Bank approved a US$100 million loan to Ecuador, in hopes of helping the country create a more reliable electrical grid. Through the loan, Ecuador will be able to strengthen national transmission and distribution systems. This loan will be used on other projects to increase environmental waste capabilities and improve energy prospecting and analysis.
Other energy projects in LatAm include Eloncity’s renewable energy storage program to be launched in Mexico in 2019, ARG using blockchain to manage renewable energy grids in Latin America, and the Chilean Sello Sol, which traces energy production from photovoltaic plants with blockchain. IBM has also set up “The Plastic Bank” initiative which had pilot programs in Peru and Colombia. The goal of the initiative is to reduce plastic waste in oceans and lower global poverty rates
Cryptocurrencies, corporations increasingly moving south and the innovative initiatives for environmental sustainability are rapidly placing Latin America as a worldwide blockchain hub. As the blockchain develops, we will continue to see more major players establishing themselves in South America.
Nabyl Charania is Chairman & CEO at Rokk3r Inc.