Peru’s road to cryptocurrency adoption has been a long time coming. One could even say that it’s overdue. However, since the end of the last year, cryptocurrency trades have only grown in volume throughout the Land of the Incas, with more exchanges opting to set up camp there in recent months.
At the same time, Peru presents a novel challenge to crypto markets due to its current lack of widespread banking integration, making the country more fertile than most for direct cryptocurrency adoption.
In 2014 a startup contest, Digital Bank LatAM, was held in Peru with the aim of finding promising projects that could improve the banking industry. Only one cryptocurrency-based project entered the competition, and it was not well received.
The startup was BitInka, and its creator, Roger Benites, was quoted as saying at the time:
“Banks still frown upon bitcoin, and in a country like Peru where almost no bitcoin businesses exist, showcasing the product created a lot of questions. The judges placed BitInka as a bank, and they did not understand how using bitcoin to collect funds would benefit them.”
That neglected startup has since gone on to become the number one cryptocurrency exchange in Latin America, with multiple coin-to-fiat trading pairs, and more being added regularly.
BitInka’s road to success perhaps mirrors that of the Peruvian nation itself: the ideas existed years ago, but it has taken a long time for them to take hold.
Ripe for crypto?
According to financial researchers, RFi Group, in 2017 around 70% of Peruvian citizens were either unbanked or underbanked, with only 30% having regular access to a bank account. An initiative has since been launched which aims to raise that number to 75% by 2021, but how much of that will be within the traditional banking sector, and how much will be in the form of a private wallet key?
Peru’s relative lack of banking access presents a unique opportunity for cryptocurrency. In many countries, when the blockchain arrives it has to battle it out with the traditional banking sector just to get its foot in the door. In Peru, a significant portion of that battle could be avoided, assuming that the news of crypto’s arrival reaches enough ears.
The Peer-to-Peer cryptocurrency exchange, LocalBitcoins, showed a record month for crypto transactions in November 2017, as reported by CryptoCoin.News. Peru was one of the countries, along with Chile and Argentina which saw unprecedented growth in its P2P crypto trades, and it found itself competing with the likes of Norway, Czech Republic, and the United Arab Emirates.
Fast forward six months later, and in May of 2018 Peru broke its own record by posting $600,000 worth of crypto transactions in the space of a week (1,944,396 PEN).
While the LocalBitcoins platform doesn’t represent the entirety of the market, it does shed some light on the relative popularity of cryptocurrency in various countries. For example, Brazil’s weekly trading volumes during the same time were $900,000: not a huge increase for a country seven times the size, and six times more populated than Peru.
National coins are often a target of ridicule among the crypto community, and for good reason. PeruCoin is not affiliated with the Peruvian government, and its online hype doesn’t necessarily amount to much.
However, its very creation is a sign that cryptocurrency is on the mind of Peruvians and, likewise, that Peru is on the mind of the crypto world.