Brazil & Crypto: a possible way to change the game

Decentralization and currencies that don't respond directly to the government are key concepts for the digital revolution to take hold in the country

Brazil is a powerful nation.

It has the natural resources and manpower to handle a great economy and solidify its position even beyond the country's borders. After all, it's a continental sized country with a multi-diverse ecosystem.  

But, financial matters were always considered taboo in people’s daily lives - and if the people don’t care or don’t even comprehend how money works, how could they demand more of the government in that segment or expect actual changes in their realities? 

Even more, how can they trust in a revolutionary system like blockchain and cryptocurrencies when political, economical and cultural aspects get in the way of that path? 


Struggling economy 

That scenario seems to be changing in the last few years. 

In a survey provided by the Brazilian Association of Financial Markets and Capital Entities (in Portuguese, ANBIMA), even though it had a mild low in 2020, the number of investors in financial products have been increasing slowly but surely. 

While in 2018, 42% of Brazilians were investing in this sector, in 2019 it went up to 44%.

In 2020, there was a decrease (40%) but the research considered the Coronavirus pandemics one of the main reasons the country did not perform so well and the expectation is that the numbers continue to climb their way up once things get more settled. 

Still those are very understandable numbers, especially if you consider that 27 million Brazilians are living under the line of poverty and 71,4% have debts, beating a historical record in 2021. 

How are people supposed to invest if they don’t even have money to pay their debts?  

Against all odds, they are indeed trying, and those who can, are with eyes wide open to investment opportunities. 

Cultural stigma

As a Brazilian myself, I know this is a touchy subject. 

Money has always been a problem when you live in one of the most corrupt governments in the world perception-wise (we are in 4th place).  

So, trust in the government itself, as well as in its regulations, was always a topic worthy of discussion for hours in family dinners. That reality encouraged people to go two ways: either a very conservative one or an extremely risky one. 

Conservative always seem to win, since we have very low rates of investments in the stock market, for example. Only 3% of the populace invest in this category.

The decline of savings accounts, on the other hand, is due to the realization that leaving your savings with the bank instead of investing them was not a smart conservative choice. 

Think about how difficult it must be for a population that is not only unaccustomed to investing, but also leaves all their savings in bank accounts? 

Talk about centralized, right?

So, of course, revolutions like cryptocurrency would be a challenge to be incorporated in these people’s habits. We all know how different the crypto ecosystem can be from a bank user’s point of view. 

Totally decentralized, relying on a p2p server, everyone’s got access to the network, managed and shared by any user who wants to be a part of it, not regulated by any government and made to be developed in a deflationary system. 


Dealing with reality

Funny enough, something that is not ruled by the government is very questionable in Brazil, even when the country has suffered with corruption and bad administrations for so long. 

But, even so, banks bring more sense of security to the populace with their limits and regulations provided by the government than an open-source system. We can also add the difficulties to internet access for the most part of Brazilians to the mix of motives to not trust something so vanguardish in a digital way. 


Crypto rising 

Even with all the obstacles, Brazil has been a country to watch crypto-wise. 

Like some third-world and emergent nations that have been thriving and changing the game with crypto’s revolution, the biggest South-American country already has dipped its toes and it’s giving its first strokes into the new waters of this world. 

 According to a research made by the Economic School of Sao Paulo, Fundação Getulio Vargas (FGV), in partnership with the Brazilian crypto fund company, Hashdex, cryptocurrencies already are the third most favorite form of investment to Brazilians who invest in platforms. 

And if we think of the idea that it’s still hard for Brazil's populace to believe in the government system, the study corroborates it.

It says that the knowledge about cryptos and the interest for this segment are bigger among those who are pessimistic regarding the Brazilian economic perspectives.

Another good point is that younger audiences are more interested in investing in cryptocurrencies than older ones. It means that, with time, this subject will be pacified amongst Brazilians and it’ll be less doubts and skepticism will slowly fade.

We have even more reasons to be optimistic about this: recently, the giant payment company, Visa, said that it intends to implement a crypto system in Brazil until next year.

Even the government seems to be aware of this new sensation: the Central Bank is already on its way to develop their own CBDC, calling it e-Real, and the plans are to put them in the market by 2024. 

Stakes are high and with this global improvement that has been changing laws and regulations in so many countries (El Salvador, Cuba, US, Ukraine and now possibly Panama), the only way to go is forward. 

Brazil is no stranger to challenges and still doesn’t know the power and even the concept of a decentralized system. But, once it does, things might never be the same. 

Klever all the way,

Maluh Bastos

Editor & Writer

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