Within Latin America, Brazil has for many years been a burgeoning economic force.
It is a large nation with a diversified economy, ranging from manufacturing and engineering to banking and tertiary services and is part of the all-important BRICS (Brazil, India, China, South Africa) economic bloc.
Like all other nations in South America, Brazil is a developing economy, but it has been rapidly developing and is far ahead of all of the other national economies in the continent.
Today, Brazil's government has taken a very prominent step forward in announcing that the country's lawmakers have approved a bill which regulates Bitcoin and other cryptocurrencies as a payment instrument.
Investors appear to have responded well to the news, as Bitcoin began to pump almost immediately, followed by a short squeeze and then it pumped again.
Bitcoin is currently trading at $16,876.80, which is a 2.68% increase over yesterday's value. That may not sound very much on the face of it, but Bitcoin values have been very stagnant recently, so a 2.68% increase when viewed on the chart is quite significant.
Private individuals and businesses have a lot to gain from the new ruling which allows cryptocurrency to be used as a method of payment, because South American economies for many decades now have been synonymous with rampant inflation, draconian capital control laws causing people to lose their money when it depreciates, and in many countries in South America, a deep-seated distrust in the local banking infrastruture or government policy.
Around 10 years ago, neighboring Argentina ordered the liquidation of US Dollar bank accounts held in North America by Argentinian citizens, and that the US Dollars should be repatriated to Argentina and converted to Pesos. At the same time, capital controls were invoked so that nobody could transfer their Pesos out of the country without government permission.
This meant that anyone who adhered to that rule would be at grave risk of substantial loss due to a terrible conversion rate and then having to store Pesos which are notorious for depreciating at the rate of an iron girder falling off a cliff.
At that time, Bitcoin was in its absolute infancy, and still very much an unknown quantity. It had a tiny following of enthusiasts and 1 Bitcoin was worth something like $50, however a core group of Argentinian enthusiasts began to rally the cause of Bitcoin, largely because they saw it as an independent method of conducting their everyday life without the restrictions and inflationary chaos associated with Peso.
Now, many years later, Bitcoin and many other cryptocurrencies are very established globally, and South America's largest economy is opening its doors to them.
If this paves the way for greater acceptance across the South American continent, it could well be a boon for citizens as well as for the cryptocurrency market itself.
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