On April 28, MercadoLibre (MELI), Latin America’s largest online marketplace, launched a real estate section dedicated to cryptocurrencies. Although the company does not settle real estate transactions directly, it legitimizes the category as a payment system.
The 8 81 billion retailer is the second largest company in South America and is present in 18 countries, including its three largest markets, Brazil, Argentina and Mexico.
The group also owns Mercado Pago, a digital payment system for online and offline transactions, along with Mercado Envios, a logistics platform that provides fulfillment, warehousing and shipping services.
Current offerings include homes, condominiums, vacant lots, land and commercial real estate located in Buenos Aires, Santa Fe and Cordoba.
A new use case for cryptocurrency in South America
Although this might seem like a niche market, more than 300 real estate agents participated in the Mercado Libre webinar explaining the basic mechanics of cryptocurrencies and their potential impact on the sector. The news could have had a reduced impact as fewer than 90 offers have been placed in the section, and prices continue to be displayed in US dollars.
As is already the case with properties paid in US dollars, Argentine pesos or Brazilian reais, the transaction is handled outside the Mercado Libre platform and is combined between the parties. Therefore, after choosing the preferred property, the buyer contacts the real estate agent and requests to perform the transaction in cryptocurrency at the closing exchange rate of the operation.
However, what analysts might not have foreseen is the potential of Bitcoin (BTC), Ether (ETH) and Tether (USDT) to effectively serve as a medium of exchange in Argentina.
As expressed by Juan Manuel Carretero, Commercial Manager of vehicles and properties of Mercado Libre:
“Probably, as cryptocurrencies become mainstream, it will no longer be a separate section, but a filter of payment options like any other.”
According to Statista, the gross volume of free market merchandise accounts for 25.4% of all e-commerce sales in Latin America. Its sales are expected to reach 2.25 billion by 2021. Thus, capturing 5% of the volume 1.25 billion in volume generated each year.
Countries with inflation problems could lead cryptocurrency adoption
Argentina could end up being the example of cryptocurrency adoption, as the country’s gross domestic product declined by 10% in 2020, and its accumulated inflation reached 42.6% in the last 12 months.
Considering that people have limited themselves to buying $200 of foreign banknotes per month by the central bank, cryptocurrencies have been effectively functioning as a reservoir of wealth for their citizens.
It may be only a matter of time regarding how long it will be before cryptocurrencies gain prominence as one of the leading digital payment options and markets in Latin America. Meanwhile, the section dedicated to real estate should be interpreted as a test drive for consumer demand.