From the fall in the value of Bitcoin to the data breaches at Axie Infinity and layoffs on huge exchanges, crypto is in a rough patch. But in many countries in Latin America, where much of the population yearns for a better financial future, investors remain optimistic about the transformative power of cryptocurrencies.
To understand how Latin American startups are preparing for the crypto winter, we spoke to five investors who have bet on companies that go further than traditional finance. They shared their thoughts on the market as a whole and also discussed how Latin America’s woes are creating a tailwind for cryptocurrencies.
For example, volatility is less of a deterrent to cryptocurrency adoption in countries like Argentina where legal tender is not entirely reliable. When his economy minister resigned on Twitter on July 2, everyone knew that the local currency would plummet against the dollar. But on Saturday, there was little they could do to avoid being bitten. Web3 investor Matthias Nisenson found a solution: “Thanks to cryptography, I was able to short the pesos over the weekend!”
Nisenson says the situation has taught him how “cryptocurrency can protect some people from their politicians.”
This focus on solving real problems for the wider population is a common concern among entrepreneurs and investors in the Latin American cryptocurrency and DeFi space. But for this to work, startups first need to address UX issues.
“We recognize that we are still in the early days of crypto as a platform for expanding financial inclusion,” said Pato Utard, co-founder of Newtopia VC. “Not only because immature DeFi protocols have yet to prove their reliability and security over a longer period of time, but also because the general user interface for crypto applications, especially for scaling, is still too complex to use and understand.”
For example, adapting Axie Infinity wasn’t exactly easy. The need for a simpler UX is one of the reasons investors still look to play-to-earn and similar models.
“There are several options such as exercise to earn (Stepn), learn how to earn, etc. Lots of exciting opportunities for alternative income sources while incentivizing desired behavior,” said Kristin Chang of Tribal, a fintech company. which recently launched a venture arm called Tribal Ventures.
According to Chang, another source of optimism is that “Latin America is actually ahead of the curve in terms of women in crypto.” Argentina-based investor and author Claire Diaz-Ortiz agreed, noting that “something is wrong when it comes to women on web3.”
Read full survey to find out how crypto investors in Latin America think about the sector, why they are positive about El Salvador’s bitcoin experiment, and how best to approach them for presentations.
Credit: techcrunch.com /