The Pomp Podcast - #1320 Mauricio Tovar | Bitcoin Saves People In Latin America

Starting point is 00:00:00 What's up, everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. Today's episode is with Mauricio Tovar. He is the founder of Tropicus. In this conversation, we talk about Bitcoin in Latin America, what they're seeing going on in that region,

Starting point is 00:00:39 how stablecoins play into this, whether people are using Bitcoin to save, spend, speculate, or anything else. I always enjoy talking to founders and Mauricio has a very unique perspective. So I hope you enjoy this conversation. You learn something new about Bitcoin in Latin America. Here is my conversation with Mauricio Tovar. Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for

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Starting point is 00:02:47 bonus if you use promo code POMP100. BetOnline. The game starts here. BetOnline.ag. Go check them out today. All right, guys. Bang, bang. I've got Mauricio here. What is going on with Bitcoin and cryptocurrencies in Latin America? It seems like there's tons of reports here in the United States and in the Western world of what people perceive to be happening. You're there on the ground, though so what exactly is going on yeah a lot is happening and it's not uh thank you very much for having me anthony by the way um it's not a coincidence that developing countries and latin americans are leading the adoption of crypto because in region like the states and europe people see crypto like the possibility to speculate and win money in latin america we see

Starting point is 00:03:36 Bitcoin and crypto as the possibility to save our wealth. Why? Because in our region, our local currencies have been devaluated a lot in the past decades. And we don't have some options by the financial services like you have, guys, in the States and Europe. So crypto is an alternative for that. And that's why we need this kind of solutions. And in my perspective, that is why we are leading the adoption of crypto and Bitcoin.

Starting point is 00:04:12 And when you see the average person who is using these technologies, who are they? Are they business owners? Are they individuals? Are they wealthy? Are they not wealthy? Are they using it to store value? Are they trying to transact? What are they doing?

Starting point is 00:04:26 And who are they? Yeah, it depends. We are a region with common problems, but with some specific issues by country. In places like Venezuela, they are using it not only to escape from inflation, but also for remittances. Colombia has a very big diaspora of Venezuelans. And we share these remittances between the countries and Bitcoin and stable coins are alternatives for that. In places like Argentina, they are using it to save money, just to escape from inflation and to avoid some restrictions that historically they have by the last governments. And in places like Colombia or Brazil that we cannot open U.S. dollar bank accounts, it's an alternative to access to dollars without restrictions.

Starting point is 00:05:25 So, yeah, there are some different use cases. None of them are wealthy people. Of course, there is some part of the speculation. We cannot avoid that. But most of the people is just trying to save their money using stable coins mainly, and Bitcoin, the people that can have a more broad, long-term vision in their investments. And what about government? Are they excited about this? Are they not excited about this? Are they asleep at the wheel, not paying attention? Are they encouraging adoption and uses? also there is a variation it depends on the country places like el salvador that is pushing a lot about bitcoin it's a legal tender tender there places like bolivia it's illegal to use

Starting point is 00:06:17 cryptocurrencies and the rest of the of latin america is like in a gray area brazil is maybe a very good example of regulation of exchanges of regulation of cryptocurrencies and it's a very interesting market but it's a different language you know it's very big brazil but it's a different language and the rest of the of the countries like in colombia where i'm based there's some announcements that they're pushing about crypto about regulation of exchanges actually i met the the colombian president and he speaks very well about uh the bitcoin uh use cases for the the benefit of the population uh but it's not clear in most of the of the countries the regulation is not that clear a lot of announcements but not uh not specific actions like el salvador

Starting point is 00:07:11 or rescue. And in these countries where the adoption is being pushed, it seems like the leaders of these countries believe that Bitcoin can even the playing field on a global stage, it can really not only enhance an individual's financial position, but also the country's. Is that coming to fruition? Like, you know, and I'll give you a good example. In Argentina, as an example, Malay has balanced the budget. It's got a surplus for the first time in like 12, 15 years, whatever it is, he seems to be excited about Bitcoin, but I don't think that much of the progress he's made so far is due to Bitcoin. If you go to El Salvador, my understanding is, again, there's been immense progress. They're very excited about Bitcoin. They've opened up the

Starting point is 00:07:57 optionality for Bitcoin. But most of the progress made to date are things like, you know, getting crime down, less violent society, things that aren't necessarily directly linked to the adoption of Bitcoin. Yeah. In the case of Argentina, Millet has been in the power only two months. Before him, it wasn't like a very strong push about cryptocurrencies from the government. It was more from the population, from the need. It was more from ground to top than in

Starting point is 00:08:30 El Salvador, top-down. This was in the other way. I don't think actually that Milley is that Bitcoiner. He has been talking good about Bitcoin and how central banks are, he tells to their people, scams with some of the arguments that we, the Bitcoiners, put in the field. But he's more a dollar guy than a Bitcoin guy. Actually, he wants to dollarize the economy. He wants to kill the Argentinian peso. That's for sure. But he didn't talk yet about using Bitcoin.

Starting point is 00:09:15 He talks about dollars. In the case of El Salvador, it's very different. Bukele talks directly, and he has a law about Bitcoin adoption. It's a legal tender. I agree with you that maybe the education of the population is not the best in the past years. But he invests in Bitcoin and now his investments are winning money for the country. That was a very strong critic for him. But right now he's a genius, you know.

Starting point is 00:09:49 So he waits for the right moment. And yeah, I think that more other countries will follow the path. If the Bitcoin price will increase and Bukele will be the first. And yeah, there's other priorities in the country about security. Maybe Bitcoin is not the best or the main bet, but is leading the state bet for these cryptocurrencies in Latin America without any doubt. And when you see so much of the day-to-day on the ground, what are you most excited about? Or what, like, if I was to say to you, tell me some information or data that proves that this is actually working on the ground. What would you tell me?

Starting point is 00:10:37 Well, look, for example, if you go to Buenos Aires, to Argentina, and if you need to exchange dollars for Argentinian pesos, You can go for any of the physical exchanges that they call Cuevas there, and you can exchange USDT or USDC for local currencies, for the local currency, for the Argentinian peso. If you want to pay in some places with crypto, you can pay in Argentina using crypto. But also some use cases we saw in Tropical News exactly is people that the last option that they have is crypto and DeFi to take loans or to save money in U.S. dollars and to yield that money. We know people that have financed their wedding using loans on DeFi with Bitcoin as a collateral. We know people that is buying some photo cameras to work with them and to pay the loan with them. We know people that is building their own home with this kind of loans, but also more small cases. For example, people that can ask for a loan in the morning and pay it in the afternoon because these loans are flexible and you don't need to wait three, six months or one month to pay it.

Starting point is 00:12:08 So those kind of use cases, real use cases, some people say if some of these services didn't exist, I wouldn't be solving my problem. So thank you for existing. That's the main messages that they say. If I was to tell you, prove to me it's not working, critique the adoption so far, critique the technology, critique what's going on in Latin America, what would you tell me? What would you point to as things that don't look so great or things that need to be addressed and there's areas of improvement? That is a good question. These kind of solutions, Latin Americans know about them for years. And the adoption, we are leading the adoption, but the adoption is not massive. Maybe Argentina is leading with no more than 20% of the population using it.

Starting point is 00:12:57 And the rest of the countries are below that percentage. And I think that is because it's not easy to use. The USUI, we need to improve it. And also, we need to talk more the language of the people and less the language of our ecosystem, because we are part of the community. We want to talk about the things that we want to talk about Bitcoin, about monetary policy, about how this can solve in the future these problems. But the people need to save money to access dollars, to access to a loan in a fair interest rate. And that's it. And we need to speak in that language. And we need to improve the UX UI if we want this to be massive in our region. What are the areas that you see Tropicus filling in? Is it a replacement for the legacy banks? Is it an augmentation? Is it a small percentage of someone's wallet share or bank account? Or is it trying to get the majority?

Starting point is 00:14:07 Right now, we are the last option for the people that don't find any other option in the market, by the banks or the fintechs, but we want to be the first option. That's why we have been evolving the product, starting with Bitcoin as a collateral, loans, savings in US dollars, and we are entering in a new phase, in a new version of Tropicus that is for companies and employees, where companies can save money in U.S. dollars that are backed by U.S. dollar treasury bonds, and they can, with that treasury, delegate loans to their employees with better interest rates than the market, and their employees don't need any collateral and with a very few or very small check about their credit

Starting point is 00:15:00 history. So that is going to open a more broad market because right now there's some limitations in this kind of technologies. Sometimes you need collateral to ask for a loan, collateral in Bitcoin to ask for a loan in US dollars. But some people say, I don't have collateral, but I'm going to pay you. Please give me some options. And these options with companies and their employees is what we call in the region, because this market exists, is salary collateralized loans. that are backed by the own salary of the employees, the possibility to access to loans with better interest rates

Starting point is 00:15:40 without the need of collateral. And in that process, what could go wrong? What are the risks? There are some risks. Of course, there are smart contracts. So smart contracts and the technology is very new. And people need to be aware about that, that we are using a smart contract that is that is the risk a technology risk in the financial part

Starting point is 00:16:07 you can think that companies once the that the employees pay their loan but they are backed by their own salary and the severance payment if the employee asks for a loan and they don't pay they can take that that money from the salary and the severance payment and they agree of chain about how they can manage the debt between them. There are some risks in the interest rates of the treasury bonds because right now they are high in the short term and they can go down, but we are going to offer other possibilities to yield. For example, we are looking for electronic bills that is recognized by the law in places like Colombia, you can tokenize those electronic bills and they can be another source of deal that the companies understand very well because

Starting point is 00:17:06 they trade with their own bills every day. So, yeah, we're looking for that. There are some risks. We are very open in our platform to show those risks. But, yeah, there are domains. Now, how much of the adoption around stable coins is happening in Latin America, one? Two, and is it remittances where people from America or other developed nations are trying to send money back and there's what adoption is happening? Or are people in Latin America actually going and buying these assets and saying, no, I want to store my wealth in something other than my native currency?

Starting point is 00:17:40 Yeah, I have to say that most of the adoption of stablecoins in Latin America is in Tether, using the Tron network. It's led by places like Argentina, that they use a lot. All of the Cuevas or these physical exchanges use this kind of solutions on a daily basis. In places like Colombia, it's more for cross-border payments, same situation in Venezuela, they have both, remittances, cross-border payments, and protection from inflation and devaluation of the local currencies. Mexico is another country that with the United States have a lot of remittances. And actually, there is a communication of the biggest exchange of Mexico that right now they are doing more than 2% of all remittances between Mexico and the United States using crypto. So those are the adoption. and also in payments. You can see in places like Argentina that people are trading between them

Starting point is 00:18:59 using stablecoins, mainly USDT opted for. And what about Bitcoin in that? Are people trying to use, I know like Strike and many of these platforms will allow you to send dollars, pesos, whatever your local currency is across the Bitcoin network. Is there some of that going on as well yeah before before the the increase of adoption of stable coins bitcoin was the king in latin america there was a lot of adoption for remittances for payments and other use cases uh but after after that important growth of stable coins uh people the population is using mainly stablecoins. I think that there's like two kind of investors, if you want to call it, is like short-term investors or people that cannot afford long-term investments that only can save

Starting point is 00:19:59 part of their salary or use a few dollars per month. They cannot use Bitcoin because with the volatility of Bitcoin, if they have some emergency, they need that money and they need that that money uh maintain the the power the purchase power uh for any situation other situation other case is people that can afford more long-term uh investments and in that group bitcoiners are um using not only bitcoiners but people that invest in bitcoin are part of it but yeah in the daily basis, we use more stablecoins that, for example, for payments, Lightning Network or something like that. Some exchanges in Latin America, that is a very good news, allow Latin Americans to withdraw their money or to send money to the exchange using Lightning Network. And we have a very good

Starting point is 00:20:58 adoption in that sense from exchanges. What about on-chain financial services, things uh you know d5 web3 whatever you want to call it um that was like this promise of you know banking the unbanked and uh many other you know platitudes or kind of phrases that people use what's the current status of that i know you guys are working on things that are kind of tangentially related but how about outside of just the bitcoin ecosystem and and maybe the uh education level of the potential users and their interest in adopting it yeah it's a small portion in the crypto ecosystem that use DeFi. That's why we created Tropicus, actually, because we believe in the benefits of the technology and how it can solve the problems of Latin Americans. But only a few

Starting point is 00:21:44 people have been using it for the past two years. There are some projects, very interesting projects, DeFi projects and Web3 projects in places like Argentina. I think that Buenos Aires is leading this movement in Brazil, in Mexico, Colombia, and Chile. Those are the places where entrepreneurs are using their own problems to solve or to present solution to the market and to open the possibilities to compete with the fintechs and with the banks to offer financial services. And when we see maybe 10 years out from now,

Starting point is 00:22:28 What is your prediction as to where this is all going? Are we going to get the Bitcoinization of Latin America? Are we going to just be dollarized via stablecoins? Is all of the financial services going to be on chain? Is it going to be, no, actually look more similar to what it looks like today than anything? Yeah, my analysis about that is that in the short term, for the Latin Americans, Bitcoin is a riskier alternative. But in the long term, it's not. And people will saw that with the time.

Starting point is 00:23:02 And places like El Salvador will be a very good example to show that long term investments in Bitcoin will be the best options, not only for governments like El Salvador, but also for the population. It's going to take time. In the meantime, in the short term, it will be better for Latin America's stablecoins like U.S. dollar or stablecoins, USD stablecoins. But I also see a trend, and this is very weird to hear, but I see a trend of Latin American cryptocurrencies that you can see, you can think that it's a shitcoin, you know. But people, for example, don't want to access to loans in U.S. dollars because their debt should increase with time. They want loans in local currencies and they understand the finance better in local currencies. And we will need this kind of local currencies crypto. I'm not saying CBDC is a sorry play that because of the risk of privacy and centralization.

Starting point is 00:24:04 But I think that the private sector will open this possibility. So I think that with the time, most people will use crypto, will use Bitcoin as a long-term investment. I don't see a Bitcoinization in less than 10 years, but you don't know. Bitcoin, it's a, it do things that you don't believe. The Salvador example, we didn't believe that it will happen ever or in the short term. You don't know, but right now with the path, I don't think that in 10 years we will see a Bitcoinization, a full Bitcoinization of one country in Latin America yet. But sometimes I'm pretty sure it will happen. And let's say that these technologies do get adopted.

Starting point is 00:24:54 Does inflation get under control and people become less dependent on central banks and their decision making? or are there two parallel kind of systems and people stuck in the old one are still hurt by the high inflation and people in the new system are protected? That is a very good question. If you analyze that, if people start to save more money in US dollars,

Starting point is 00:25:15 crypto US dollars, for example, they are going to escape from the local currencies and that will push those local currencies to devaluate more. So we need to think about it Because if we bring options to the population to escape from inflation and devaluation and the local currency maintained, like, for example, if for any reason the Argentinian peso will maintain it in the time and is not replaced by U.S. dollars, for example, that is what Millet wants, people that stay in Argentinian peso will suffer more. So, yeah, it's a good question. You never know what is going to happen.

Starting point is 00:25:57 But if everybody starts to save money in a different currency than the local, that local currency will lose more value than expected. And what would you say is the most surprising thing about your future view that people aren't thinking about right now? Like the thing you believe that other people haven't wrapped their head around yet? Yeah, I think that problems that we have in Latin America that are very particular, specific, they're problems of developing countries. Those problems and the kind of solutions that we have in the region, like these salary collateralized

Starting point is 00:26:38 loans that other regions in the country even understand, are going to be the differentiation of Web3, crypto and blockchain technologies, because we are building from the needs that we live every day. Argentinians, Brazilians, Venezuelans, Colombians, we are trying to build the solution for ourselves. And I think that that knowledge, that experience that we have in each of our countries

Starting point is 00:27:14 will be the solutions that the world will adopt in the future and that will bring crypto as a solution and as an alternative of the traditional financial system that is going to be there too. It's like, I don't know, like other services, like places to find flights in the physical world already still exist but we most of the population use another services in the internet but all people still use this kind of of of services so yeah i think that latin america has the knowledge and developing countries has the knowledge that will bring these solutions to be mainstream around the world and when you think about your team and your vision for the product what exactly do you guys see there in terms of uh you're highly successful you accomplish everything you want

Starting point is 00:28:13 to what does it look like in 10 years what we are looking for is that people think about traffickers as the first option to access to savings for servings and to loans in latin america that is our mission to bring the best services to latin americas and that the use of our service will be very, very simple. We have been working on that for the past three years. It's very simple to use the first version of Tropicus, but we want to use that people don't feel that they are using financial services using Tropicus

Starting point is 00:28:54 and they can access the best solutions around the world at the best interest rates with the global liquidity that we can access through these technologies. So, yeah, that is our mission. And when I ask people who use the product, what would you say is the thing that they would come back and say, I didn't think this was possible, or this is the reason why I keep coming back, why retention is so high, et cetera? Yeah, that is a very good question. People don't believe that they can do what they can do with Traficus because it's a self-custodial platform. platform they can use it whatever you want they don't need to ask anyone if they they don't need

Starting point is 00:29:39 any credit history to use tropicus of course in the first version they need collateral they need bitcoin to to use it but in some parts they cannot save money in u.s dollars so when they use tropicus and they saw that there is no restriction that they can use it very open that there is no limit for them, that is the hard moment for them. They say, this is the option that I need because I tried to do it with the banks. I tried to do it with the fintechs.

Starting point is 00:30:09 I explore all the alternatives and no one of them wants to serve me like you guys. What is the thing that over the next 12 months you expect Bitcoin to do? Obviously, ETFs are a big deal. Are people in Latin America excited about ETFs? Are they buying it? The halving's coming.

Starting point is 00:30:28 There's talk of, you know, looser monetary policy. Is price going up, going down? What is Mauricio's take on Bitcoin in the next 12 months through the Latin American lens? That is a very good one. Of course, the easy answer

Starting point is 00:30:43 is to continue the path of the cycles, of the past cycles of Bitcoin. It looks like we are entering a bull market. if you look at the history and the cycles. But I always say that Bitcoin, every one year or two years, is used for something that you don't expect. So what I expect is that it's going to be

Starting point is 00:31:12 one topic in the next two months that nobody is expected to happen with Bitcoin because it happened in the past. So, yeah, what I'm expecting is a big surprise from Bitcoin, like it did in the past, but we don't know what it's going to be. Where can we send people to find you or find out more about the product? Tropicus, it's Tropicus.com. You can see all the information there.

Starting point is 00:31:41 We are serving Latin America, unfortunately for American users, we are not allowed to to do it in the front end, because, you know, the uncertainty of the regulators. And it's not our focus to solve problems. We are very focused in developing countries and Latin Americans. So, Traficus.com with Y and K. And my personal handle is Mauro Toth. Mauro and the third one of my last name, Mauro Toth, in any of the social media platforms. mainly in Twitter.

Starting point is 00:32:20 Awesome. Well, I appreciate you taking that time to do this. This is very enlightening, I think, in terms of what's happening there in Latin America and really excited to keep learning more and we'll do this again in the future. Thank you very much, Anthony, for your time. And I hope that the people that is looking to your show,

Starting point is 00:32:36 like me, knows more about Latin America, better Latin America. I think this is going to be the region of the future. We have a very young population. We have a very important nature in the region, and we expect to grow a lot. And we are betting to solve the financial problems to help on that. Thank you very much, Anthony. Absolutely. Thanks so much.

The Pomp Podcast - #1320 Mauricio Tovar | Bitcoin Saves People In Latin America

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