The BRIC economies were hotly tipped to reshape the global financial landscape, but Brazil and Latin America’s potential has still yet to be realized. Could a new digital currency designed to work alongside local currencies unlock a wealth of cross-border opportunities?
“I really think that cross-border payment is the next agenda—the next frontier,” said Jean Pesme, World Bank’s global director of finance, competitiveness, and innovation, during The Development Podcast. Another international development priority, says Pesme, is to use blockchain to promote financial inclusion and faster remittance.
For many business owners exporting products, it’s hard to entertain the idea of having to wait weeks to be paid. But that’s the situation facing entrepreneurs in Latin America. “It comes down to cashflow, and there’s a lot of uncertainty. You can’t have transparency of where your money is, and how long it will take to get paid, so it’s a case of wait and see for the business owner,” Gilbert Verdian, founder and CEO of Quant Network, explained.
According to Deloitte, a complete structural transformation of the LATAM economy is needed to fuel growth. The World Bank says there is “enormous potential” in renewable electricity, but the largest transformation may result from accelerated digitization, which could create job opportunities and boost financial services in the region. Verdian wants to be part of this transformation, and it seems certain that blockchain—the revolutionary technology behind digital currencies that promises to automate transactions and transform industries—will play a key role.
THE STRONGEST LINK IN A NEW CHAIN
An ambitious project called LACChain is designed to help Latin American businesses bank better and has the potential to be transformative, not least by increasing banking inclusion.
LACChain uses blockchain and integrates it into the core banking infrastructure, enabling users to receive payment in the form of a new digital Latin American dollar straight away and then redeem it as local currency from their bank. “Real-time digital assets make getting paid instantaneous. All users need is a phone,” says Verdian.
“Not only will this make it easier for people to send and receive payments, but more importantly, it will allow them to access new markets, because LACChain is cross border,” Verdian explains.
This means businesses can not only sell to local customers, but access new ones in the 12 countries where LACChain payment is accepted, helping them grow. Furthermore, the new digital currency will remove a lot of friction and risk when operating cross border. “You don’t have to worry about currency fluctuations because it’s all the same Latin American Dollar,” Verdian explains.
His company’s technology is instrumental in making this possible.
A QUANT-UM LEAP
The LACChain project began in 2018, but Quant joined in 2021 to solve the problem around cross-border payments, domestic payments, and remittance using its Overledger blockchain platform.
Quant spearheaded the Blockchain ISO Standard TC307 adopted by 57 countries and organisations worldwide and solved interoperability with the creation of one of the world’s first blockchain-agnostic API gateways, Overledger. It’s proved such a hit thanks to the use of low code, which enables users to create interoperable smart contracts and tokens more cheaply, easily, and in a matter of minutes instead of months, as it does not require the use of specialized programming languages.
“Through our Overledger gateway, we enable participants to connect their private, public, and permissioned blockchains to LACChain. Networks and DLTs that were siloed can now connect,” Verdian explains.
Interconnected smart contracts and tokens can be used for more than moving money across borders. For example, they can also be used for supply-chain traceability by tokenizing inventories and raw materials to track them and ensure products are produced sustainably.
FORGING A CONNECTION
Interoperability across disparate blockchain ledgers is a hot topic in blockchain world. Oracle certified the Overledger Gateway as an interoperability solution for its Oracle Blockchain Platform last year, enabling its customers to orchestrate transactions spanning Oracle Blockchain and other permissioned and public blockchain ledgers more easily. “It’s powerful for Oracle customers because they get the best of breed technology, and it’s been beneficial for us as we’ve seen a big increase in inbound inquiries and referrals from the Oracle team,” Verdian says.
The partnership began when Quant joined Oracle for Startups in 2019 and has allowed the scaling startup to tap into Oracle’s network of customers, resulting in new clients in the financial payments and energy sectors. “It’s a win-win. Oracle gets to differentiate and provide an innovative solution to their customers, and we get to work with Oracle and our customers to solve business problems,” he adds. Since the certification of the Overledger Gateway, the two companies have worked together in the IETF TC/307 Blockchain interoperability workgroup to advance much needed standards in this area.
CONNECTING THE FUTURE
LACChain is a great example of how blockchain technology can improve financial inclusion, digitisation, and drive evolution in new technologies in Latin America, and beyond.
Approximately 1.6 million people have already directly benefitted from its services* so far, with the payments and trading element of the project powered by Quant’s technology due to go live in 2023, according to LACChain.
“It’s been more than a year since we started an ambitious line of work with Quant to enable a solution for tokenized money on LACChain,” says Marcos Allende Lopez, LACChain technical leader. “As a committed partner, they’ve brought exceptional expertise and technical proficiency to the project.”
Quant’s work with LACChain to support interoperability and secure smart contract creation facilitates a range of use cases to help communities sustainably build the digital infrastructure of the future. “That’s when local businesses and citizens can actually start trading, and they’ll have the wallet on their smartphones and be able to use LACChain like any other app,” says Verdian.
As if connecting 12 countries isn’t enough, Verdian and LACChain have a bigger vision, where LACChain will be able to connect to other regional DLT ecosystems in America, Europe, Asia, and Africa. “We’re seeing the beginning of regional trade networks already,” he says, but Quant wants to see a time when all these closed-loop ecosystems are connected in one big global trading network.
“While blockchain technology is still nascent, as more companies, institutions, and governments embrace it, its potential can be fully realised.”
Then, the world is an entrepreneur’s oyster.