Latin America’s Macro Context
Volatility followed uncertainty as the Argentine Peso started going through massive inflation rates in 2019, and never stopped since. Though disappointed but not surprised, history repeated itself and most Argentines had to learn to live in survival mode. Financial education never seemed more important for new generations, trying to thrive against all odds.
At this point, for many Latin Americans, crypto became a safer bet for getting ahead of the curve: the possibility of the massive upward movement in cryptocurrencies like BTC and ETH gave them a brighter chance at building their future. Used to financial habits like buying hyperinflated black market dollars to keep their savings secure, decades of distrust in the official banking system, and government economic decisions, this context made cryptocurrencies look like a very good bet.
As Argentina recorded the 10th highest country rate of cryptocurrency adoption worldwide, according to the 2021 Chainanalysis index, younger generations started seeing it as a viable way to maintain (and grow) their savings to battle a reached and growing 55 percent annual inflation rate.
Vitalik Buterin, the founder of Ethereum, visited Argentina at the end of 2021 and found himself eager and surprised by the quality and quantity of all the regional entrepreneurs building their businesses and products inside the blockchain: a new kind of venture betting on technology, innovation, and social development arrived to stay. Understandably, some people might be doubtful, but could this undeniable interest in cryptocurrency make Argentina the first country in LatAm to go crypto? Many big tech companies are starting to make the shift, as it’s the case with Mercado Libre, an Argentinian native company, and its new native token MercadoCoin.
What is the local government’s authority’s stance?
Alberto Fernandez, Argentina’s current president, publicly stated that cryptocurrency is a topic that should be handled with care.
A new business model: blockchain entrepreneurship
Argentinian crypto entrepreneurs are exploring new ways of battling inflation and devaluation to develop groundbreaking solutions: products like Belo, Lemoncash, Ripio, Decentraland, and the list goes on. Mercado Libre, one of the most established online marketplaces in Latin America, skyrocketed its revenues during 2020’s extended and mandatory quarantine curfews dictated by the government. They clearly showed they know how to make the most out of a bad situation and managed to turn dire circumstances in their favor.
People couldn't get out of their houses, so Mercado Libre made sure everyone got what they needed with optimized online sales, on-the-go delivery timings, excellent user experience, and witty marketing strategies.
MercadoCoin: new crypto market opportunities
On August 18th, Mercado Libre struck again with the official launch of their own cryptocurrency: MercadoCoin. It was released on the Brazilian market where they have a strong user base, of which 500 thousand were granted early access to their native token.
The company stated that they are planning on broadening that number up to 80 million Brazilian users, and after that expanding to other Latin-American countries: this is just the testing phase.
Mercado Coin’s utility
MercadoCoin has the aim of securing and gaining the fidelity of Mercado Libre’s clients through a scheme of cashback and rewards. Marcos Galperin, its founder & CEO, says it’s part of a customer loyalty program initiative: it is said that once you spend a significant amount of money on the platform, a MercadoCoin cashback percentage will be granted to said user. These tokens will then be available to make more purchases inside Mercado Libre, favoring the growth and development of its ecosystem. Considering that MercadoCoin’s price is volatile, it could also be used for financial speculation. Who decides to use this digital coin with that intention must be conscious of the risks it might convey. As always, do your own research.
MercadoCoin’s listed price
MercadoCoin has a listed price USD 0,10. As it’s not a stablecoin, its value is determined by the action taken by the buyers and sellers tied to the global market, social macro events, expectations and many other options, just as it happens to other cryptocurrencies like Bitcoin (BTC), Ether (ETH), and many more.
How Can I Buy MercadoCoin?
At this moment MercadoCoin is only available to trade in Brazil through Mercado Pago, Mercado Livre's own digital wallet that, before this launch, only operated through fiat. This token is not yet found on cryptocurrency exchanges, but we will see what happens in the near future.
Strategic alliances
According to the information disclosed by its own developers, MercadoCoin it’s a token ERC-20, developed inside the Ethereum network and it will be part of a user fidelity program. The starting price of USD 0.10 will be possible thanks to their partnership with Ripio, one of Argentina’s first crypto exchanges. What does it mean? Well, it means that Ripio will be the backend through which Mercado Livre users will operate to secure payments with MercadoCoin.
Galperin, Mercado Libre’s CEO, is not a newbie when it comes to crypto: his enterprise has already bought as many as 160 Bitcoins for their treasury, an amount that would translate into more than 3.7 million USD. Why did he choose to do a partnership instead of going solo, then? The answer: because of regulations. Partnering with Ripio allows him to smooth things on that front because they operate on local currency, avoiding any legal problem that might arise for Mercado Libre.
MercadoCoin’s roadmap: what are they aiming for?
Their goal is to be one of the heavyweights of crypto business in Latin America, offering its platform users a new payment option that might grow its value in time.
By adding a crypto element to their already soaring business, they are venturing themselves inside uncharted territories that might have a lot of room to grow. If the adoption goes smoothly, we might start seeing it spread through all of Latin America.
Their Ripio partnership paired up with the number of active users Mercado Libre has throughout all Latin America is a big deal that could potentially help spread mass crypto adoption for big, medium, and small businesses & users that accept Mercado Pago as an official transactions platform to receive and make payments, taking crypto from an incognito into an everyday thing.
Although those are the high hopes, right now it’s only designed as a cashback system with the logic that if you use MercadoCoin on your transactions, Mercado Livre will reward you. Are you ready for what’s coming?
Conclusions
A roaring idea that has been circulating on the crypto hubs of LatAm for some time now is that a new economy is rising, and it will consist of crypto and regional currencies. As these countries are constantly receiving hard hits from inflation cycles, their local coins weaken and send social temper into turmoil. This idea might actually be a different approach to an ongoing structural problem.
We’ll have to wait and see how this case develops, but it’s surely one of 2022’s highlights for Latin American crypto enthusiasts, entrepreneurs and investors. Rather Labs, as a blockchain consulting company, has a qualified team that can help enterprises develop this technology and can clearly see the growth benefit it can have on products with Mercado Libre’s reach and size: a growing community of more than 40 million users is already expecting to see what happens.
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