You Could Have Made 70,000% by Investing in ‘Green Beans’

As we told you on Monday, cryptocurrencies had an incredible year in 2017.

Bitcoin, the most popular crypto, shot up about 1,300% for the year.

Yet bitcoin wasn’t the one with the most gains. Ripple increased by a whopping 36,000%.

But what if I told you that you could have made even bigger gains if you had invested in ‘green beans’?

Let’s be clear. I’m not talking about the vegetable.

What is Chaucha?

I’m talking about the Chilean chaucha, a cryptocurrency coming out of Chile. It translates from Spanish to…yep you guessed it, green beans. Yet the name is also used to refer to small quantities of money.

Since it began trading in 2017 for 1 peso, prices have fluctuated between 0.3 and 1,000 pesos. According to Bloomberg, the chaucha returned about 70,000% in two months in 2017.

Its developers have based the chaucha on the litecoin technology, because it allows for more transactions than bitcoin.

Yet, like bitcoin, it is scarce. There will only be 123,456,789 chauchas mined. That’s it.

While its developers are hoping for mass adoption, they also have another expectation for the chaucha.

They are hoping the chaucha will help educate Chileans on how blockchain and cryptocurrencies work, in their own language. That is, the chaucha is also an education project. Think of it as a kind of an ‘entry level’ crypto to educate on the technology behind bitcoin.

But, before you go off and try to jump in, let me tell you, it has lost much of its value.

At time of writing it is trading at around 36 pesos (almost 8 Australian dollar cents).

One likely reason is that Chile is starting to crack down on exchanges. 

The State Bank of Chile has followed the initiative from private banks to close bank accounts for the three major crypto exchanges. The exchanges are now appealing to the courts.

The Chaucha is one of the interesting projects coming out of Latin America…and showing there is increasing interest in cryptos coming from the area.

You may have heard that it is quite popular in crisis stricken Venezuela. According to the BBC.com, transactions made in Venezuelan bolivars to buy bitcoins increased by 700% in 2017.

Yet Colombia almost doubled that number.

Transactions made with Colombian pesos to buy bitcoins increased by 1,200% in 2017.

This is just behind China (2,000%) and Nigeria (1,400%).

As you can see in the map below from Coinmap — a website that tracks the merchants that accept cryptocurrencies around the world — cryptos are quite hot in most of the Latin American major cities.

Coinmap Crypto Hotspots 18-04-2018
Source: Coinmap
[Click to enlarge]

Why are cryptos so interesting for the area?

Apart from the attractiveness of recent gains, inflation and hyperinflation are both quite common in the area.

As Bloomberg reports, trading volume in cryptocurrencies has increased quicker in countries with capital controls and weakening currencies.

And, as Bloomberg continues, growing interest in Latin America could give bitcoin another boost:

The Venezuelan bolivar, Carlos Mosquera Benatuil will begrudgingly admit, is a “real” currency. Bitcoin isn’t—it’s basically just a very long line of computer code. Yet there’s no question which the 35-year-old Caracas native prefers.

‘Mosquera is one of Latin America’s many bitcoin believers, scarred by the hyperinflation that’s ravaged the economies of Brazil, Argentina, Bolivia, Peru, and now Venezuela. The region’s tech-savvy middle class, he says, began adopting bitcoin a few years ago to protect their savings from rising consumer prices and currency controls. Now, Latin America’s wealthiest investors want in on the action. The growing interest from them could help propel investments in the currency going forward.

I mean, don’t get me wrong. While people are using them to stave off hyperinflation, they are still very volatile. You could still lose all your money.

And, as much as the rest of the world, regulators are not still really sure how to deal with them. They could ban them at any time.

But, it does give people another option for their finances.

And, there is another reason why cryptocurrencies are attracting attention in the region.

You see, banking is expensive.

Only half of the population in Latin America and the Caribbean had a bank account in 2014.

Bank accounts worldwide 18-04-2018
Source: Business Insider
[Click to enlarge]

Yet, while not many people have a bank account, there are a lot of mobile phones.

According to the World Bank, back in 2012 84% of households in Latin America and the Caribbean subscribed to some type of mobile service.

There are a lot of Latin Americans living abroad…who send money back home.

According to PRnewswire, remittances to Latin America and the Caribbean made up over US$70 billion in 2015. Cryptos provide a cheap and fast way to receive funds.

And that’s another reason why we could see even more interest in cryptos coming out of the area.

Best,

Selva Freigedo,
Editor Markets & Money

PS: If you are interested in getting into this space, don’t miss out on editor Sam Volkering’s step by step guide on cryptocurrencies. You can access it here.


Selva Freigedo is an analyst with a background in financial economics. Born and raised in Argentina, she has also lived in Brazil, the US and Spain. She has seen economic troubles firsthand, from economic booms to collapses and the ravaging effects of hyperinflation, high unemployment, deposit freezes and debt default. Selva now writes from her vantage point here in Australia. She is lead Editor at the daily e-letter Markets & Money. And every week, she goes through each report and research note produced by our global network of trusted advisors to find the best investment opportunities for you in Australia and overseas. She packages these opportunities for you in Global Investor.


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