Bitcoin is being widely adopted across the world, in developed countries like the United States and developing African countries alike. But Brazilians don’t seem to be interested in jumping on to the bitcoin bandwagon.
Surprisingly for a country which is the 5th largest when it comes to number of internet users, the adoption of bitcoins is very low, with less than 0.1% bitcoin wallet downloads. A number of reasons ranging from lack of knowledge to regulatory issues can be listed for slow adoption of bitcoin in Brazil.
With Portuguese being their native tongue, most Brazilians are not proficient in English. Whereas most of the literature available on the internet concerning bitcoins is in English, making it inaccessible to the general public.
Regulations on Bitcoin in Brazil
The Brazilian Central Bank is not friendly towards bitcoins and other cryptocurrencies. The Central Bank of Brazil issued a warning last year stating all the potential risks associated with virtual instruments. It explicitly states the possibility of being subjected to investigations and financial losses, discouraging people from using bitcoins. Not to mention the taxes on assets (Brazil, like US, categorizes digital currency as assets) and strict foreign exchange regulations associated with cryptocurrencies. Any foreign exchange transaction that doesn’t adhere to the regulations is a crime, the very thought of committing a crime, unwittingly has got many Brazilians afraid of using bitcoins.
A lot of bitcoin users in unstable economies use bitcoin as a hedging tool against inflation. Brazilian Real (BRL), unlike other Latin American currencies has proven to be a stable and reliable currency. So, Brazilians don’t find the necessity to hedge bitcoins. Those who use it as an investment tool stick to trading and arbitrage to make gains.
Due to the higher forex costs in the country, Bitcoins in Brazilian exchanges cost more than other international exchanges, which is again a drawback for people who want to buy bitcoins in Brazil.
Investments and Market Opportunities
Both Argentina and Brazil have been the hosts of Latin American Bitcoin Expo in 2013 and 2014 respectively. But in stark contrast, the Argentinian market has attracted a lot of bitcoin based startups and investments.