In the bustling shopping area of Cochabamba, Bolivia, an emerging trend is redefining everyday transactions. Shoppers can now exchange their coins for cryptocurrency at local ATMs, beauty salons are offering discounts for Bitcoin payments, and residents are utilizing Binance accounts to purchase fried chicken. This shift comes as Bolivia grapples with a serious economic crisis, characterized by dwindling dollar reserves, soaring inflation rates—reaching levels not seen in 40 years—and fuel shortages that have led to long queues at gas stations. The value of the national currency, the boliviano, has plummeted by 50% on the black market this year, while the official exchange rate has been artificially stabilized by government measures. In response, many Bolivians are exploring crypto options, such as Bitcoin and stablecoins like Tether, as a safeguard against the devaluation of their currency.
While official statistics regarding cryptocurrency usage are inconsistent, it’s noteworthy that digital asset transactions reportedly reached $24 million in October, according to the latest figures from the central bank. Analysts believe this figure has seen a considerable increase since then. Mauricio Torrelio from the Bolivian Blockchain Chamber remarked that Bolivia’s rapid adoption of cryptocurrency now positions it alongside countries like Argentina and Venezuela in terms of crypto engagement. However, the overall market remains significantly smaller compared to its South American counterparts and other domestic transactions.
Jose Gabriel Espinoza, the former head of Bolivia’s central bank, estimated that daily trading volumes for USDT are around $600,000. This is a mere fraction compared to the $18-$22 million seen in the formal financial sector and the $12-$14 million circulating in the cash-based black market. “Although cryptocurrency is gaining traction, it remains a developing market,” he stated. Torrelio noted that Binance has emerged as the local favorite due to its low transaction fees and user-friendly peer-to-peer trading options. Despite being the world’s largest cryptocurrency exchange, Binance has faced global scrutiny, recently agreeing to pay over $4.3 billion in fines after admitting to violating money laundering laws in the United States.
In Cochabamba, Pablo Unzueta, owner of the steakhouse Bros, offers customers the option to pay using their Binance accounts or to purchase Bitcoin through an ATM linked to Blink, a cryptocurrency wallet from El Salvador, the first country to adopt Bitcoin as legal tender in 2021. “If you go to the banks today, they don’t have dollars,” Unzueta explained to Reuters. “Using Bitcoin to pay for meals or saving in Bitcoin represents a forward-thinking approach for a city like Cochabamba.” He illustrated the ATM process by inserting a one-boliviano coin, approximately $0.14, into the machine. “The goal is to transition from traditional saving methods to leveraging this technology.”
Carla Jones, who runs a local spa and salon, is also incentivizing customers to pay with cryptocurrencies, attracting a younger clientele while offering a means to secure her finances. “If you buy three tanning sessions, you receive a discount for paying with Bitcoin,” she shared. “It’s a method to protect my funds while also seeking to grow my wealth.”
Bolivia’s Economic Turmoil
Bolivia is currently enduring its most severe economic crisis in decades. A significant decline in domestic gas production has necessitated expensive fuel imports, further depleting foreign currency reserves and complicating the nation’s capacity to finance imports. The scarcity of dollars has given rise to a black market for currency, creating a stark disparity between formal and informal exchange rates. In the streets, over 16 bolivianos are required to buy a single dollar, contrasting sharply with the official rate of approximately 6.9 bolivianos per dollar.
Advocates for cryptocurrency have promoted blockchain-based tokens as potential solutions to this crisis. On June 7, Tether’s CEO, Paolo Ardoino, shared images from a duty-free shop in Santa Cruz, Bolivia, showcasing products priced in USDT, a stablecoin pegged to the dollar. He described it as “a silent revolutionary shift: digital dollars powering daily life, commerce, and economic stability.” However, economists caution that this development does not indicate stability. “This is not a sign of economic health,” Espinoza remarked. “It illustrates the declining purchasing power faced by households.”
Peter Howson, an assistant professor at Northumbria University in the UK, expressed concerns over Bolivians’ susceptibility to the fluctuating nature of cryptocurrencies. He noted, “We’ve observed what is being termed ‘crypto-colonialism’ in Bolivia and across Latin America, where crypto companies attempt to persuade the rural impoverished to invest their limited cash into cryptocurrency, which may lose value quickly, leading to vendors rejecting it.” Meanwhile, in Cochabamba, 35-year-old Bitcoin enthusiast Andree Canelas is actively involved in setting up crypto ATMs in local establishments. “More and more individuals recognize that if they hold onto bolivianos for too long, they risk losing their purchasing power,” Canelas stated. While he acknowledged the risks associated with cryptocurrencies, he believes, “They may experience short-term volatility, but in the long run, they represent a viable store of capital.”
