- Andrew Bailey, the governor of Bank of England (BoE), recently dismissed cryptocurrencies as a means of payment.
- Data shows that LatAm users have routinely turned to cryptos to hedge their risks during hyperinflation.
Andrew Bailey, Bank of England’s (BoE) governor, made some pretty scathing remarks about cryptocurrencies’ viability as a payment method. As per Bailey, crypto assets are “unsuited to the world of payments.” Plus, he cited volatility as the main reason why they aren’t a good investment opportunity.
However, it’s not all doom and gloom. Bailey believes that stablecoins can be pretty useful as they can remove friction from payments and offer more benefits.
If stablecoins are to be widely used as a means of payment, they must have equivalent standards to those that are in place today for other forms of payment types and the forms of money transferred through them.
Latin America – Finding solace in cryptocurrencies
As per Chainalysis’s “Geography of Cryptocurrency Report,” Latin America has made it a habit to continually mitigate economic turbulences with cryptocurrencies. The continent represented 5% – 9% of all cryptocurrency activity occurring worldwide in any given month.
The following factors have accelerated crypto adoption and growth in LatAm:
- Individuals often don’t get back accounts since they have uneven income and earn via unconventional methods, such as doing gig work for Uber. Without access to a bank, many young people turn to cryptocurrencies.
- Another unfortunate problem with LatAm countries is hyperinflation. The lack of stable and robust fiat currency has pushed people into adopting cryptocurrencies to safeguard their life’s savings.
Let’s expand on the second point.
A thorough analysis of peer-to-peer (P2P) exchange trading volume shows a clear relationship between currency devaluation and cryptocurrency adoption. Users in Argentina, Uruguay, Colombia, and Chile had specifically turned to cryptocurrency when their native fiat started to lose value.
Conclusion
It looks like Governor Bailey’s remarks about cryptocurrency’s credibility as a means of payment is a bit lacking. LatAm countries have shown us time and again how their citizens have repeatedly turned to cryptocurrency to hedge their losses during hyperinflation times.
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