Juan Mayén, a Honduran entrepreneur, just opened his country’s first crypto ATM, La Bitcoinera, earlier this week. Located in Honduras’ largest city, Tegucigalpa, inside the building where Mayén works, the ATM is a step forward in the entrepreneur’s goal of giving Hondurans access to cryptocurrency markets. .
Since Salvadoran President Nayib Bukele first announced his intention to make bitcoin legal tender in June, officials from other developing countries, particularly Latin America, expressed interest. By making bitcoin (BTC-USD) legal tender, Bukele believes the government can use cryptocurrency to boost the country’s economy. In particular, the Salvadoran government plans to achieve this by eliminating the costs associated with cross-border transactions through traditional banking services.
Like El Salvador, the neighboring country of Honduras receives a high percentage of its GDP (23.4%) in cross-border payments, according to the World Bank.
While there is no clear evidence that the Honduran government will follow suit, entrepreneur Mayén said his country is already seeing some of the “ripple effects” of El Salvador’s adoption of bitcoin. On the one hand, cryptocurrency billionaire Brock Pierce met the current President of Honduras, Juan Orlando Hernández, earlier this week.
Seeing Pierce’s social media posts, Mayén and other members of BUIDL – a crypto-themed group of hundreds of Hondurans on the social media platform Discord – contacted Pierce. A few days later, Mayén and a few other members of the BUIDL met in the presidential suite of the Intercontinental Hotel in Tegucigalpa to meet Pierce. Mayén showed Pierce the ATM that allows customers to buy bitcoin and ethereum (ETH-USD) with a 10% markup.
Although Mayén, 28, is proud to have helped open his country’s first crypto ATM, his long-term goal is to launch Honduras’s first online crypto exchange in the coming months. With the announcement of El Salvador’s adoption, in addition to Bitcoin’s latest bull run, Mayén told Yahoo Finance he felt a growing urgency to launch his crypto exchange.
According to the entrepreneur, the longer it takes to launch his exchange, the less his country’s currency, Lempira, will be able to buy bitcoins.
“There will only be 21 million bitcoins in total,” Mayén said. (By design, the bitcoin blockchain has a maximum supply of 21 million BTC that can be mined. Once the total bitcoin is mined in 2140, the asset’s payment network will be based solely on fees. The purpose and use of bitcoin will likely change by this point, but owners like Mayén agree the price will be much higher.)
“It’s a warning sign. If my exchange is launched a year later than expected, the price of BTC could be higher and our Lempira will buy even less bitcoins, ”Mayén said.
“Starting a business is so difficult”
Since getting his MBA from the University of Memphis in Tennessee and returning to Honduras, Mayén has trained a team of developers to create the exchange.
“It’s going slower than I would like,” he said, referring to the start of the exchange.
Calling the exchange BitReal, Mayén and his team spent “nights and weekends” building the exchange, having to use normal working hours to earn additional sources of income.
“Starting a business is so difficult if you don’t have the connections or the capital,” he said.
Mayén has supported herself by trading cryptocurrencies like bitcoin and ethereum and translating educational materials on cryptocurrencies, thanks to a grant from the Ethereum Foundation.
“For me, trading bitcoin, ethereum, and NFT has provided me with enough capital to keep me going so that I can start my business in Honduras,” Mayén said.
Once a minimum viable product is built for BitReal, Mayén will try to raise capital so that he and his team can work full time on the business and hire more people. But finding the right tech talent or starting a crypto business in Honduras is far from easy.
A developing country with a relatively high emigration rate, or what Mayén called “the brain drain,” Honduras has not experienced the same level of crypto adoption as El Salvador. Nonetheless, Mayén and others formed BUIDL Honduras, a crypto-focused community of hundreds of Hondurans on Discord.
A higher level of confidence
Before opening up crypto ATM, peer-to-peer (P2P) exchanges were the only way for Hondurans to gain exposure to cryptocurrency. This type of money transfer service has proven to be essential to the adoption of crypto in developing countries. Since peer-to-peer exchanges do not hold crypto or other currencies, they are not required to interact with traditional banking systems and therefore face fewer financial regulations and therefore can more easily serve customers. populations that do not have a bank account.
On the other hand, receiving crypto from a peer-to-peer exchange comes with its own set of issues. Coupled with Honduras’ high crime rate and exceptional vulnerability to illicit funds, it can be risky to trust the opposing party in a peer-to-peer crypto transaction.
Using the platform, Localbitcoins.com or Paxful is a common route for peer-to-peer buyers and sellers. Another is to post offers on Facebook where people trade on an ad hoc basis and credibility is difficult to assess. For example, if someone is looking to buy $ 1,000 worth of bitcoin or ethereum with cash, they must first find a seller and then meet with them in person. This allows individuals to become an obvious target for theft or scams. A centralized exchange, Mayén said, will give people a greater level of trust.
“No more going to the streets or shopping malls with thousands of lempiras. Do not ask yourself “what if the person I meet is not legitimate and is a member of a gang or an assault”, or a person who assaults, “said Mayén.
By global standards, illicit funds permeate many parts of the Honduran economy, including the highest levels of government, said Julia Yansura, a specialist in Honduras and other Central American countries who works for the group of Washington-based think tank Global Financial Integrity. For example, Juan Orlando Hernández, the current president of the country, has been reported as a prominent figure in a drug trial in the United States earlier this year, according to the New York Times.
Better access to crypto without adequate anti-money laundering requirements is another entry point for illicit flows, Yansura said. “That said, in a country like Honduras there are many easier ways to launder money than through the use of cryptocurrencies,” she said.
Meanwhile, in El Salvador, the government is rolling out commission-free ATMs, as well as its own digital wallet called the Chivo wallet. While Mayén and his team are aware of the competitive hurdles they face, they also believe they can bring a safer cryptocurrency exchange to Honduras before the end of the year.
“BitReal will have a full staff to serve people,” Mayén said. “We will also be offering educational content on what crypto is, much like other exchanges do. For trust in particular, we plan to grow the brand and provide excellent customer service.”
David Hollerith covers cryptocurrency for Yahoo Finance. Follow it @dshollers.