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 one step forward in the entrepreneur’s goal of giving Hondurans access to cryptocurrency markets.
Since El Salvador’s president Nayib Bukele first announced intentions to make bitcoin legal tender in June, officials in other developing countries, especially in Latin America, have signaled interest. By making bitcoin (BTC-USD) legal tender, Bukele believes the government can use the cryptocurrency to boost the country’s economy. Most notably, the Salvadoran government plans to accomplish this by eliminating the fees inherent in 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’s no clear evidence the Honduran government will follow suit, the entrepreneur Mayén said his country is already seeing some of the “spillover effects” of El Salvador’s bitcoin adoption. For one, the 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 composed of hundreds of Hondurans on the social media platform Discord – reached out to Pierce. Days later, Mayén and a couple other BUIDL members found themselves in the presidential suite of Tegucigalpa’s Intercontinental hotel meeting with Pierce. Mayén showed Pierce the ATM which lets customers buy the bitcoin and ethereum (ETH-USD) at a 10% markup.
Though Mayén, 28, is proud of helping open his country’s first crypto ATM, his long-term goal is to launch Honduras’ first online crypto exchange in the next few months. With the news of El Salvador’s adoption, on top of bitcoin’s latest bull market run, Mayén told Yahoo Finance that he’s felt an increasing urgency to get his crypto exchange off the ground.
According to the entrepreneur, the longer it takes to launch his exchange, the less bitcoin his country’s currency, the Lempira, will be able to buy.
“There’s only going to be 21 million bitcoin in total,” said Mayén. (By design, the bitcoin blockchain has a maximum supply of 21 million BTC that can be mined. Once total bitcoins are mined in the year 2140, the asset’s payment network will rely solely on fees. The purpose and use of bitcoin will likely change by that point, but owners like Mayén agree the price will be much higher.)
“That’s a warning sign. If my exchange launches a year later than I plan, the BTC price could be higher and our Lempira will buy even less bitcoin,” said Mayén.
‘Starting a business is so hard’
Since earning his MBA from Tennessee’s University of Memphis and returning to Honduras, Mayén has formed a team of developers to create the exchange.
“It’s going slower than I’d like,” he said, referring to launching the exchange.
Calling the exchange BitReal, Mayén and team have dedicated “nights and weekends” to building the exchange, having to use normal working hours to earn additional sources of income.
“Starting a business is so hard if you don’t have the connections or the capital,” he said.
Mayén has supported himself by trading cryptocurrencies like bitcoin and ethereum and translating cryptocurrency education material, thanks to a grant from the Ethereum Foundation.
“For me, trading bitcoin, ethereum and NFTs has provided enough capital to sustain myself so I can build my company in Honduras,” said Mayén.
Once a minimum viable product is built for BitReal, Mayén will try to raise capital so he and his team can work on the business full time 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 rate of emigration, or what Mayén called “brain drain,” Honduras hasn’t seen the same level of crypto adoption as El Salvador. Nonetheless, Mayén and others have formed BUIDL Honduras, a crypto-focused community made up of hundreds of Hondurans on Discord.
A greater level of trust
Before opening the crypto ATM, peer-to-peer (P2P) exchanges provided the only way Hondurans could gain exposure to cryptocurrency. This type of money transfer service has proven essential to crypto adoption in developing countries. Because peer-to-peer exchanges don’t custody crypto or other currencies, they aren’t required to interact with traditional banking systems and thus face fewer financial regulations and so can more easily service populations who don’t own a bank account.
On the other hand, receiving crypto from a peer-to-peer exchange comes with its own set of problems. Coupled with Honduras’ high crime rate and exceptional vulnerability to illicit funds, it can be a risk to trust the opposite party in a peer-to-peer crypto transaction.
Using the platform, Localbitcoins.com or Paxful is one common route for peer-to-peer buyers and sellers. Another is posting offers over Facebook where people exchange in an ad hoc fashion and credibility is difficult to assess. For instance, if someone is seeking to buy $1,000 worth of bitcoin or ethereum with cash, they must first find a seller, and then meet them in person. It opens individuals up to becoming an obvious target for theft or scams. A centralized exchange, Mayén said, will give people a greater level of trust.
“No more having to go to the streets or malls with thousands of lempiras. No more wondering ‘what if the person I’m meeting is not legit and he or she is a gang member or asaltante’, or person who mugs,” said Mayén.
By global standards, illicit funds permeate many parts of the Honduran economy, including the highest levels of the government, said Julia Yansura, a specialist in Honduras and other Central American countries who works for the Washington-based think tank Global Financial Integrity. For instance, Juan Orlando Hernández, the country’s current president, was reported as a prominent figure in a U.S. drug trial earlier this year, according to the New York Times.
Greater access to crypto without adequate anti-money laundering requirements poses another point of entry for illicit flows, Yansura pointed out. “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 ATMs with zero commissions, as well as its own digital wallet called the Chivo wallet. Though Mayén and his team are aware of the competitive obstacles they’re facing, they also believe they can bring safer cryptocurrency exchange to Honduras before the year’s end.
“BitReal will have a full staff to serve people,” Mayén said. “We will also offer educational content on what crypto is, much like other exchanges do. For trust specifically, we plan to build up the brand and deliver terrific customer service.”
David Hollerith covers cryptocurrency for Yahoo Finance. Follow him @dshollers.