Key facts:
The boom for cryptocurrencies in Spain was due to the need for financial protection.
At the same time that banking lays off and closes offices, the bitcoin industry increases its capacity.
With an abrupt increase in electricity costs and inflation that is already hovering above 6%, the Spanish economy is not at its best. If we add the fact that the COVID-19 pandemic and its variants have not yet disappeared, and Russia’s war against Ukraine may have implications for the food and raw materials market, the possibility of a crisis on Spanish soil intensifies.
However, this may not be bad news for all the people who live in this European country. The truth is that the cryptocurrency industry like bitcoin could be silently waiting for this situation as an opportunity to continue growing in this and other countries. This is what we have concluded by speaking with an active member of the Spanish bitcoin industry.
In search of expanding its markets internationally, one of the most successful cryptocurrency companies in Spain, Bitbase, is trying its luck in countries such as Colombia, Brazil and Venezuela. It was while visiting the latter that I was able to have a conversation with Enrique de los Reyes, representative of Bitbase, where we discussed the keys that drive the massive adoption of cryptocurrencies in certain countries.
From his perspective, largely the adoption of bitcoin grows according to the financial needs of citizens. At least that is how he perceives it in his experience as a resident of Spain: «All countries have had their moment (to enter the cryptocurrency market). Spain entered the boom in 2018 and it was out of necessity…”
The subsequent pandemic, in 2020, increased the anxiety of the population for the protection of their material goods. Thus, over a period of two years it is recorded that more than 5 million Spaniards have adopted bitcoin and other cryptocurrencies as an alternative means of investment, according to figures handled by De los Reyes. For that same period, the company it represents (Bitbase) managed to install 85 ATMs and offices throughout the country, as well as having plans to continue expanding throughout the territory of this European nation.
The demand for cryptocurrencies within Spain is obvious from the handling of these numbers. With growing inflation, the price of items on the rise and a depreciation of the value of the euro due to the printing of inorganic money, Spaniards see the need to expand their financial culture to find alternatives that help them cope with the situation. According to De los Reyes, this is an unprecedented event in a population that related to its finances in a more carefree and stable way than the Latin American population.
“It is a longer-lived population, which has not worried about its economy or its finances, they are people who remain linear all the time. Why? Because its economy is linear”, said our interviewee. Given the security generated by the euro in the Spanish population, together with being the fourth largest economy in Europe, there were few reasons why the citizens of this country had to seek refuge in something as new as bitcoin.
But gradually the landscape changed. “In Spain we have had a significant devaluation with the currency, with the euro, a barbaric amount of money has been printed from the European Central Bank,” De los Reyes stressed. These elements would come together to shape a coming crisis that would corner the Spanish to stop thinking linearly and see bitcoin as an option.
When you are locked up at home due to the pandemic, or due to social control, people cannot go to the bank. They cannot go to the street, the supply of cash is limited, so what they do is get into the PC and look for alternatives. There bitcoin is introduced.
Enrique de los Reyes, representative of Bitbase in Venezuela.
For everything previously experienced, De los Reyes considers that “when a country does worse, the adoption of cryptocurrencies is better.” In this way, he considers that crypto business opportunities increase when citizens are in need of new alternatives. And although in the bitcoiner ecosystem no one is wished ill (less than one country), companies know that crises are an important moment for the acquisition of cryptocurrencies and they plan to be there for that demand.
Spain is not the only case that proves the crisis hypothesis
In addition to Spain, De los Reyes saw this trend of the crisis as a catalyst for the growth of cryptocurrencies in his native country: Venezuela. At this point in the conversation, we both agree — me too, as a Venezuelan — that by 2017, the worst time of the economy that the Caribbean country experienced, there was a boom in the adoption of bitcoin and other cryptographic assets.
With hyperinflation devaluing citizens’ finances, a shortage of basic products that generated tensions throughout the population and a highly restrictive exchange market, the life of Venezuelans was in worrying decline for that year. However, the national cryptocurrency industry did not seem to feel the economic effects, but rather did not stop growing with new miners, users and companies accepting it as a form of payment.
It was a fact: the country was doing poorly, but the adoption of bitcoin was all success at the time. Enrique de los Reyes confirms that since then Bitbase had had its eyes on Venezuela, waiting for the opportunity to welcome the demand of its citizens. The phenomenon is the same in different latitudes: faced with a weakened monetary system and an economy without encouraging forecasts, citizens look for ways to protect their income and take risks by trying new alternatives.
Spain and Venezuela are not isolated cases, the crisis has also been favorable for bitcoin in Argentina, Nigeria and Zimbabwe. Let’s take the example of Nigeria to give more context: with the devaluation of its national currency worrying politicians and inflation that hit its most vulnerable population, the use of bitcoin multiplied in the African country to the point that it was prohibited by the government. The desperation of Nigerians to seek financial alternatives was reflected in Google searches, where never before has a country consulted the word “bitcoin” so much in its entire history.
While banking layoffs, bitcoiners hire
There is no doubt that the world is going through a crisis of confidence in financial institutions, including government ones. This drop in its reputation is also linked to the blows that the collateral effects of the pandemic and the cessation of monetary aid are giving the banking industry. In this sense, there are not a few Spanish banks that are closing branches, laying off staff and merging to survive.
Economists like Funcas Santiago Carbó point out what by 2022 banks are expected to increase their demand in order to survive the unstable economic climate. In this sense, it is expected to reduce its staff and focus on attracting talent focused on the digital market. With a war raging in Europe, the forecasts are less encouraging and it is expected to have an impact on basic services that are already rising in price.
De los Reyes has been seeing this decline in the banking industry for a few years, but with more force since 2021. What worries him the most, and at the same time motivates him at the business level, is that this phenomenon is further limiting banking options and leaving people out of the system. While some will be affected in the long term by branch closures, others may find a new option in cryptocurrencies.
For the representative of Bitbase, it is obvious that the cryptocurrency industry has not stopped growing, almost impervious to all the effects of the crisis, but its biggest competitor (banks) has not suffered the same fate. “There is a sector that lays off, while another is hiring,” he says, noting that companies like Bitbase have not stopped expanding in this period.
Of all this, what he considers most revealing is that banks are slowly accepting that cryptocurrencies are here to stay and that if they do not join this movement they will be obsolete.
Traditional banking is adapting to technological banking. Not us to them. It is true that we live together, but there will come a time when they will need us and we will not need them..
Enrique de los Reyes, representative of Bitbase in Venezuela.
In short, we are seeing the first signs of a financial transition that does not seem to turn back. As cryptocurrency services become more popular and reach more and more people, it is up to those who know the virtues of bitcoin to continue educating others about its benefits and protect its goal of decentralization at all costs. In the end, what is making bitcoin stand out among other financial options is that no one, and nothing, can control it, and people like that.