These transactions are anonymous so it is difficult to identify the sender and receiver, but the operation is public on the global network. There are advantages and risks.
Cryptocurrencies are already used in Ecuador to pay for the sale of land, a car or for a service. Although its use is not widespread, it is enough that the buyer and the seller are familiar, trust and accept this digital currency in private exchanges.
There are of different types. The first emerged in Japan in the midst of the global financial crisis and the housing bubble, in January 2009. In fact, this month marks thirteen years of its appearance.
They are digital currencies not controlled by the central banks of the countries and without the support of the banking systems. So they are not subject to inflationary processes that reduce purchasing power.
The Purchases are made over the internet with an official currency (such as the dollar), through bank transfers or with the use of debit and credit cards, among other options. It is required to create an account with a password on one of the digital platforms, which function as a wallet to pay, receive or sell them.
In Ecuador they are used more as an investment option. “Anyone in our country can freely purchase cryptocurrency. However, they are not recognized as an official means of payment, ”says Juan Carlos Gallegos, consultant for the Gallegos Valarezo & Neira law firm.
“Cryptocurrencies are a form of digital payment (unconventional) for international use that is acquired through the internet, through a monetary transaction, which allows immediately, except in Ecuador, access to the purchase of associated goods and services. It is a transaction that lacks a specific jurisdiction and that, despite not being regulated by the legislation of a certain country, can be carried out by anyone, anywhere in the world ”.
Article 94 of the Financial Monetary Code establishes that The United States dollar is the only legal tender in Ecuador, therefore cryptocurrencies are not a recognized means of paymentsays Gallegos.
“Even though the purchase of bitcoins (one of the most popular and consolidated cryptocurrencies) is not prohibited in Ecuador, exchange transactions carried out in the national territory with United States dollars are the only ones recognized by the monetary system ”, he says.
A statement from the Central Bank of Ecuador even emphasizes that “They do not have support, as they support their value in speculation. They are not controlled, supervised or regulated by any entity in Ecuador., which is why they represent a financial risk for those who use it ”.
The advantages are precisely that the system does not depend on any authority or Central Bank, which prevents counterfeiting, reduces transaction costs and possible privacy violations.
The way to invest is buy while waiting for an upward appreciation. “Its value has increased by approximately 40,000% since its launch. In April 2021 it reached its historical maximum price of $ 63,587 (per bitcoin unit). The predictions are consistent with its price increase in the near future, ”says Gallegos.
Hence, fractions of bitcoin are bought and, if invested responsibly, he says, they can generate substantial economic income.
As of Saturday January 8, the bitcoin unit was trading at $ 41,914.72, according to the website coingecko.com, on which the price of other cryptocurrencies is also published.
There are transnational companies that already invest in cryptocurrencies. “There are several brokers and exchanges regulated by the most important international organizations to buy cryptocurrencies in Ecuador ”.
The risks of investing in cryptocurrencies
All types of investments carry risks.
One of them is that the volatility of cryptocurrencies is very high, so you have to be willing to lose when supply and demand reduce their value, as happens when you physically buy a country’s official currency. , says Alberto Acosta Burneo, analyst and director of the publication Weekly Analysis.
The development of the technology led to this point, Acosta says. “The impact is that cryptocurrencies remove the monopoly of money from the different states by limiting the power to continue manipulating their respective currencies, because citizens increasingly have an alternative to protect themselves. That is why in several countries they try to limit its use, because it is a way of taking power away from the central banks and the politicians who manipulate the power of money ”.
The other consequence is that national borders are crossed without limitations. “Transactions are made from different parts of the world. Governments love to limit the flow of capital and with cryptocurrencies they can’t. This concept does not exist and that is not liked, because the power cannot collect taxes, such as the tax on the exit of foreign currency”, Assures Acosta.
The trend is that governments are moving towards creating their own digital currencies, he adds, but at the end of the day that prompts citizens to look for alternatives that have monetary freedom. “There are many ordinary people who invest in them, there are companies that have started to use them, it is an asset in many portfolios and, as such, the interest is at all levels.”
The use in Ecuador is gradual as the population discovers how to use them and gains confidence in them, says Acosta.
The problem is that being volatile, then, they have very large fluctuations in their price. “It is very complicated with a currency with which today you can buy ten units, tomorrow you buy one hundred and the day after tomorrow thirty; It is very difficult to transact, because its value varies a lot, ”says Acosta.
The demand is determining these fluctuations. “They still have the capacity to incorporate large groups of people who want to participate and buy it. This strongly influences their quotes. It is a currency whose market is the world, ”says Acosta.
The other difficulty is that they need an intermediate system to do the transactions. “It is not like a credit card purchase, which is immediate. When using bitcoin it is validated with many of these independent nodes, there are a lot of actors that have to validate and that takes time. This is solved with wallet-type applications that make it easier to deal with cryptocurrencies, ”says Acosta.
Similarly, minimum knowledge of investment in financial instruments is required, adds Gallegos.
It also depends on foreign platforms, since there are no nationals to acquire them. “Due to its lack of regulation and control, it is susceptible to fraud. The purchase of cryptocurrencies can be made with funds from illicit activities, due to the absence of a public or private entity that controls such operations, ”says Gallegos.
Experts point out that there are also benefits
Studies indicate that 800 million people have used them at some time, mostly in developing countries with weak and devalued currencies, says Juan Francisco Bolaños, co-author of the book Underground economy. Its use in Ecuador does not even reach 10% of the population that has ever used it. “It is very difficult to measure.”
Venezuela, Argentina, Colombia, Brazil and Mexico are among the countries in the region that register the highest use, he says. “Like disruptive technology like the internet, cryptocurrencies are here to stay. Adoption will occur in phases. Official currencies lose value, so people turn to stronger forms of money. In Turkey there is a high adoption rate as the Turkish lira is aggressively devaluing at 70% annual inflation, ”according to Bolaños.
In the country it is not so much a basic need, since the economy is dollarized, with single-digit inflation.
Bolaños lists three benefits. The first is that it is a decentralized payment system that does not depend on intermediaries, such as a bank. “Transactions are person-to-person from my wallet to the recipient’s.”
The second is that being 100% digital they do not have jurisdiction with the potential to become the money of the internet. “Although payments are already made online through the traditional financial system, there are many entry barriers for users and there are restrictions on the movement of capital internationally.”
The third is precisely a reduced cost of transactions. Being disruptive, it has an impact even on the raison d’être of the political form in which the world is organized through nation-states and its function based on economic control and the issuance of currency.says Bolaños. “In the case of Ecuador, the State guarantees its hegemony through the control of money, but I can use the crypto to send them to relatives abroad and I would not pay, for example, the foreign exchange tax (ISD)” .
Before its use, some States force to declare the possession of cryptocurrencies to collect income tax on that patrimony.
Víctor Pazmiño, an expert in digital language development, is one of those who receives cryptocurrencies in exchange for his computer consultancies, so he has an account in the applications to buy, sell and exchange them; those who pay you also have it.
He first knew about them on the internet and investigated to start an investment of $ 300, with which he acquired fractions of etherium, another crypto that is used, in 2019. “I made a transfer from my bank account and they opened one for me wallet (‘wallet’, in English), as they know how to say ”, he explains.
In your case, you have the help of a friend, who moves this capital and makes the monitoring and investments. “Those $ 300 today are already $ 800 (in almost three years). What happens is that the etherium and with that cryptocurrencies that are down are bought; but beware, you also lose, because there are some that are ghosts, “he says.
In his history it is clear that he has gained more than lost. Usually lose when the price of the crypto you acquire falls to the ground. Another risk is falling into a pyramid scam that operates on the web by raising funds in exchange for high interest rates in a short time.
One way to identify is that they always ask more people to initiate this supposed investment, experts say.
There are signs to identify these illegal schemes. The first sign is the offering of very high returns that do not occur regularly. The second is when they ask for the delivery of cryptocurrencies, because they supposedly act as custodians, so the scammer loses control over them. And the last thing is when they request a recruitment of more presumed investors in the system, says Bolaños.
Cryptocurrencies are bought from Ecuador on the electronic platforms capitalika.com and bitpointlatam.com. In the first bitcoin is acquired, ether Y tether. The second offers about ten types.
Its most common use is to send money abroad at a lower cost. “When sending $ 100 with an international transfer via the traditional system, eventually the financial cost will be higher than what I want to transfer, a bank charges between $ 50 and $ 80 and it takes a few days to be effective; On the other hand, with cryptocurrencies, very independent of the value that is sent, the cost can be pennies for each transaction and it is carried out almost in real time, ”according to Bolaños. (I)
Paul is a talented author and journalist with a passion for entertainment and general news. He currently works as a writer at the 247 News Agency, where he has established herself as a respected voice in the industry.
