When it comes to cryptography, particularly its rules, Costa Rica is very laid-back.
For example, Article 166 of the Labor Code of Costa Rica enables employee wages to be paid using forms of compensation like cryptocurrency if they surpass the amount covering the minimum wage.
Although you can pay people in crypto, and valued businesses such as Coinbase serve the nation, the adoption here lags behind that of many nations. Where currency inflation has been a tragedy, countries like Venezuela and Argentina have embraced cryptography in greater numbers than Costa Rica, which has a currency pegged to the US dollar.
Costa Rica has Latin America’s third-highest public debt.
But for the US, it is a delicate moment. I’ve seen 10 percent inflation in our currency over the past couple of years against the US dollar. The pandemic response, as in many parts of the globe, if not most, has only worsened unemployment. Half the jobs in Costa Rica are unemployed or underemployed.
That’s tens of thousands more individuals than it was in 2019. Costa Rica has Latin America’s third-highest public debt, which is unsustainable. Costa Rica owes outside debtors 66.2 percent of its gross domestic product. For loans, the nation has to shift to outside financial institutions.
Some analysts expect interest payments to hit 38% of central government revenue in 2020, or 21.4% of general government revenue.
We see debt problems beginning across the globe, where nations are unable to meet their debt obligations. We’ll see fiat currencies crash. For so long, central banks can only keep adding liquidity to the economy. We see several nations working on digital currencies for central banks for that purpose. The same will be true for the central bank of Costa Rica.
Crypto adoption in a more practical way
The Colonia will be a hot potato one day. People are going to get to the stage where they touch it, get burned and then try to move it on quickly. For now, people are unaware of how much they need a crypto-like life raft.
Fortunately, we are rapidly getting to a point where Costa Ricans can hold stock in, say, Tesla, with a smartphone in hand. Bitcoin (BTC) and ether (ETH) may function not only as currency, but also as a whole financial sector, from loans to securitisation of future collateral.
Instead, the government could consider embracing crypto in a more meaningful way than digital currencies from central banks, which are still not decentralized at all. Litecoin could be adopted by the Costa Rican government, for example (LTC).
They’re able to mine it. Or maybe they will take part in the ether and become a validator. The code could then be trusted by Costa Rica and not by other countries. If approved by the government, Costa Ricans would have alternatives. Hopefully, this would make it easier to build more wealth for individuals here.