DAI's boom in Latin America
Cryptos in Latin America gain a space that grows every month due the explosion of bitcoin, which last year climbed to 20 thousand dollars, to settle this year around 8 thousand dollars.
Stable coins, like DAI, are a new global trend to appeal to those who prioritize price stability, as they greatly reduce the relative volatility of other cryptocurrencies by tying them to a fiduciary asset.
Unlike other digital currencies, a DAI will always be worth a dollar. A smart contract on the blockchain "governs" the issuance of this currency without the need for a "central bank" unlike other stablecoins that can be managed by some company.
DAI promotes what is known as DEFI (Decentralized Finance). In other words, its platform offers services without the regulation of a central bank in which the creativity of users generates new tools, some of which do not exist in the traditional financial world.
Launched in 2017 by MakerDao, Dai is a cryptocurrency generated by its users through a security deposit, which maintains its stable value around USD 1.
The virtual currency was developed by the MakerDAO foundation, a Decentralized Autonomous Organization (DAO) that manages the Dai Stablecoin System on the Ethereum blockchain.
Due to its decentralized nature, it is resistant to censorship since no entity has full control over the network. This quality is highly valued by those who must send remittances to other countries, or making deferred payments over time.
DAI stability is based on approaching the value of USD 1 continuously via economic incentives from users. Supposedly, when Dai is worth more than USD 1, ETH holders will seek to create more DAIs to sell it and earn a return. Otherwise when Dai is worth less than USD 1, those who have to recover the ETH that they used to issue Dai previously, will seek to buy Dai at a cheaper price, bringing the price of Dai back to USD 1 by joint demand.
The context in Latin America: Argentina
Throughout 2019, Dai consolidated itself as the stablecoin of choice in Latin America, where its marketing volume grew more than 1000% throughout the region, with Argentina, Brazil, Colombia, and Mexico being the main countries.
In Argentina, talking about restrictions to get US dollars is an everyday thing. It has occurred on successive opportunities, in a country that has a very complicated and unstable economy, accompanied by external debt, successive devaluations of the Argentine peso, great tax pressure, and now also complications from the Covid-19 crisis.
In this scenario, more and more people are interested in learning about alternatives and that's where cryptocurrencies become relevant. This makes the purchase of DAI a very good alternative to save or store value legally, avoiding restrictions.