Many things that can be said about Brazil, but income equality is not one of them. The recent troubles during the World Cup demonstrated that the great majority of the population has been anything but happy at the government’s (mis)management of the country’s money. The good news is, however, that Bitcoin is making a strong attempt to fill the gap left by Brazil’s Central Bank.
In January of 2014 Brazil’s inflation had grown to 5.91% and was still climbing. Rodrigo Batista, president of online brokerage Mercado Bitcoin announced that the trading volume had grown from zero to R$10.5 million (US$4.4 million) in less than one year. Brazilians were looking for a way store their wealth after the value of the real had dropped 9.6% in only three months and Bitcoin seemed like a good alternative, especially after its huge price surge in 2013. Batista, a former program developer for Morgan Stanley (MS) in Brazil, said in an interview in Sao Paulo back in January:
“Fear of inflation is a determining factor for some people to take risks on Bitcoin here. There are no good investments here with inflation at 6 percent plus high tax rates. If the real continues to weaken a lot, it will also continue to benefit the market.”
Bitcoin certainly seems to be gaining steam in South America’s biggest economy. The Brazil Bitcoin group now has more than 10,000 members and there are now both Whatsapp and Facebook groups exclusively dedicated to both buying and selling Bitcoin.
Brazilians are also able to buy Bitcoin at any bank or drugstore by using zipzap with an upper limit of US$400 per day and finally there are about five operating Bitcoin exchanges. The usual payment processor for Brazil is pagecoin.com, which is reportedly making arrangements with several e-commerce platforms.
Additionally, the Brazil based real estate developer Technisa recently announced that it would also be accepting Bitcoin, making it one of the largest BTC accepting merchants in the world with net operating revenue of more than US$728 million (R$1.8 billion in 2013). The company’s marketing and media manager, Gustavo Reis, noted that about 40% of Technisas total revenue was generated online:
"In this context, it’s natural to keep updated about new technologies, trends and forms to enhance the user's experience. Bitcoin fits perfectly in this scenario, because it’s new, its growing fast and [has] potential to be a game-changer in the payment system."
BitPay, one of the world’s leading Bitcoin payment processors, has been heavily involved in the Latin American market. Cointelegraph reached out to their regional representative, Alberto Vega, to explain the recent developments in Brazil:
“Brazil is Latin America's most influential country, an economic giant that over the past few years has made major strides in its efforts to raise millions out of poverty. Latin America accounts for 170 million underbanked or unbanked, which is a valuable segment for e-payments, being Brazil among the most interesting markets worldwide. With credit cards charging up to a 15% for payments, Bitcoin appears as an alternative to save money both for the consumer; the merchant and bringing under banked a great solution.
Bitcoin in Brazil is gaining volume and momentum while more and more companies start accepting Bitcoin. Companies like Bitpay, Mercadobitcoin, Bitinvest and Bitcointoyou are working the great opportunities this rising market offers.
“This year the Latin American Bitcoin Conference (LABitconf) has moved from Argentina to Brazil, due to the importance Bitcoin is gaining right now in Brazil.”
While the Central bank has not been unfriendly toward virtual currencies they, like many other countries, have issued warnings about the potential danger of loss of assets from unregulated businesses and exchanges. The Brazilian tax agency did rule that Bitcoin was taxable, following the footsteps of the United States Internal Revenue Service, which some may view as a positive sign that full ‘acceptance’ is not only possible but probable in the future. The tax applies to anyone holding R$1,000 or more (about US$450) and a 15% Capital Gains tax on amounts exceeding R$35,000.
Did you enjoy this article? You may also be interested in reading these ones:
- Fernando Ulrich: “Few banks grasp the implications of cryptocurrencies”
- CoinFest 2015: Journey Around the World
- Brazil World Cup 2014 gets unique Bitcoin Bookies