Latin America is widely believed to one of the markets that could most benefit from digital currency, as the region’s consumers and businesses have been afflicted by volatile government-backed currencies, capital controls and high remittance costs.
Given these challenges, a small but passionate local bitcoin industry has emerged in Latin America, with the aim of giving local consumers access to both an alternative currency and a modern payments technology. Further, market leaders such as Bitex.la and BitPagos are now expanding with assistance from large, international investors.
Despite its position of interest in the bitcoin space, bitcoin awareness remains low in some parts of the region, according to Roger Benites, the founder of Peru-based bitcoin startup BitInka. Benites said his belief has never been stronger than in the aftermath his company’s entrance into Digital Bank Latam 2014, a startup incubator challenge in his home country.
The event, which took place on 23rd September, aimed to showcase exciting new ideas that could improve the domestic banking industry. BitInka entered the contest aiming to appeal to banks looking for solutions to fiat exchange restrictions in the region.
Despite the potential appeal of the idea, however, the audience at the event wasn’t receptive to BitInka’s pitch.
Benites told CoinDesk:
“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 [competition] placed BitInka as a bank, and [judges] did not understand how using bitcoin to collect funds would benefit them.”
While most contestants showcased platforms aimed at social media in marketing, BitInka was the only bitcoin company that entered, according to Benites.
Talking bitcoin to the banks
Speaking to CoinDesk, Benites voiced his pride at being able to compete at Digital Bank Latam, even though BitInka didn’t exit with a top prize.
Contestants pitched their startups to the event organisers, who selected the finalists over a two-month review period. Benites surmised that judges were interested in seeing how one might affiliate bitcoin with a bank, but that by the final selection, they felt differently.
“It’s tough to talk bitcoin here in South America, especially to banks. They see it as a threat […] They saw it mostly as we were trying to build a bank,” he said.
Startups were notified three weeks in advance of their one-shot presentation pitches, which were limited to seven minutes.
“All of the judges were CEOs of the major banks here in Peru and did not see the path we tried to explain on applying their product to our platform,” he said.
Emphasizing the context in which they showed, he said BitInka’s focus on how the platform can be useful for micropayments and remittances was eye-opening for many in the audience. The electric money law was only implemented in Peru last year, allowing banks to issue clients electronic money as a means of achieving greater financial inclusion.
A credit card payment platform called Culqui won. It is an app that uses a QR code to process credit cards, and a contestant from the incubator that sponsored the event, said Benites.
He added:
“We wanted to get into the competition to spread the word that we are coming to town. We are currently seeking investors and partners that we can use as payment processors, if there are any more contests where we can showcase the product we will compete in them.”
Bitcoin as a trading index
Benites described BitInka as a digital wallet merged with a bitcoin exchange. Users can send and receive bitcoin as well as fiat currencies. BitInka currently supports the US dollar, Argentine peso, Bolivian boliviano, Peruvian sol and Venezuelan bolivar.
“We’re targeting the countries that have exchange restrictions […] where people could benefit from a platform like this one,” he said.
The company has local bank accounts in the countries in which it operates, as well as partnerships with money processors like DineroMail in Argentina and Alignet in Peru. To put fiat into the wallet, users can access their local deposit collection point.
Benites explained:
“Peru, Bolivia, Argentina and Venezuela have laws on electronic money. We are using this as our advantage.”
Consumers who reside in Ecuador and Bolivia will be unable to buy bitcoin, but can send money to others using bitcoin as a trading index, or exchange rate – which Benites says will be stated clearly in its legal terms. He added that BitInka uses the term “trading index” instead of “exchange rate” because “bitcoin is not a legally declared coin, but it can be a good if two or more people choose to buy and sell it”.
BitInka is headquartered in Peru; it has a branch in Bolivia, and Argentina and Venezuela locations are forthcoming.
Pete Rizzo contributed reporting.
Image via Shutterstock