While blockchain technology is gaining a lot of traction across the world nowadays, Mexico has also been able to become one of the first countries in Latin America to regulate blockchain and cryptocurrencies.
The Mexican Congress has approved a bill to regulate the blockchain technology, including cryptocurrency firms and crowdfunding. They did not recognize cryptocurrencies as currency, but as digital assets for which they set up rules to prevent money laundering and corruption. It is the responsibility of the Mexican Central Bank to monitor the companies working with cryptocurrency.
As Mexico ranks on 135th position out of 180 on the global corruption index, the Mexican government started investigating in the multiple use cases of the blockchain to bring transparency, prevent illegal activity and reduce corruption throughout the country.
In a nutshell, we have covered the following aspects in terms of blockchain development in Mexico in our article:
Let’s understand what all has been done for blockchain development in Mexico.
Here are some of the initiatives taken around the blockchain development in Mexico
A community called “Blockchain MX” has been formed in Mexico to encourage and promote the use and development of blockchain. The mission of Blockchain MX is to eliminate the problems of corruption from Mexico by bringing trust and transparency with the blockchain.
The Blockchain Association in Mexico was established by seven founding members, Bitso, Lvna Capital, ConsenSys, Volabit, Exponent Capital, GBM and BIVA. The aim of the organization is to educate citizens in the use of blockchain technology. According to the provisional president of Blockchain Association, Felipe Vallejo, “the technology has an objective of creating safer, transparent and efficient procedures.”
We shall now discuss the founding members of the first Blockchain Association in Mexico.
Bitso is the Mexican Bitcoin Exchange that allows users to join the world of crypto with as little as $100 MXN. They have useful APIs which enable developers to build Bitcoin applications in Mexico.
- Lvna Capital
Lvna Capital is a crypto hedge based in Mexico, aimed at seeking value in the blockchain ecosystem.
- ConsenSys Academy
ConsenSys Academy in Mexico is aimed at educating citizens on the blockchain technology by providing them the professional training from experienced blockchain trainers.
Volabit is a cryptocurrency trading platform in Mexico which allows users to buy and sell the amount with a click of the button. The platform charges only 0.8% for every buying and selling of cryptocurrencies.
- Exponent Capital
Exponent Capital is the first cryptocurrency investment firm in Mexico which believes that the decentralized model can eliminate the intermediaries from the financial system. They are contributing to the development of the financial system with blockchain technology.
Incorporated in 1992, GBM is a controlling entity of financial activities in Mexico. Having its subsidiaries in Mexico, the United States, Brazil and Chile, the organization has been able to position itself as a business group with some of the reputed financial entities for international and national investment.
BIVA is the second stock exchange in Mexico which is aimed at contributing to the growth of the stock exchange through latest technologies.
The government of Mexico has undertaken a project called Blockchain “HACKMX”. The project uses the blockchain to track and validate bids for public contracts.
Mexico’s national digital strategy coordinator, Yolanda Martinez detailed Blockchain HACKMX and tweeted, “With blockchain applied to public contracts, it becomes possible to know whether a company that serves the government should be trusted or not.”
She also told that the blockchain solution would store current and previous records of the bidding process to enable auditors to audit the facts in a quick and seamless way. The goal of HACKMX is to enhance transparency in the federal hiring process and organize the post-contract auditing process.
Digital Government Vertical in Mexico
As a part of the Blockchain HACKMX project, Digital Government Vertical was launched in the Talent Hackathon Campus Party 2017 to encourage the hackers and tech-savvy to transform public services with the unique features of blockchain technology.
Talent Hackathon was organized between 5th to 9th July 2017 which included 5 Government Institutions and Jalisco State Government. The participating teams came up with the blockchain solution to bring disruption in the governmental processes.
Here are the five government projects that were discussed in Talent Hackathon Campus Party
The task was to develop a prototype to integrate e.firma (service tax administration) with blockchain that should confirm the authentication, integrity, reliability and non-repudiation of transactions for any signing act.
- Public property registry
The participants had to develop a functional prototype for Public Registry of Property and Commerce. The solution should allow anyone to verify the information available about any property in Mexico.
- Digital Identity
Building a technological solution which should allow complete accreditation of identity of persons living in the country and Mexicans living across the world and ensure their authenticity with the blockchain technology.The digital identity solution should use Unique Population Registry Code (unique identity code for citizens and residents of Mexico) and any one of three biometrics used by RENAPO (National Population Registry).
- Transactional Transfers Support
The task was to develop a functional prototype on blockchain which should enable to maintain the traceability of information of transactions for the support granted to a property. The solution aimed to identify the duplication of supports if any.
- Certificates of Deposit
Developing a prototype which should integrate Register of Certificates, Warehouse and Goods with blockchain to execute transactions related to Certificates of Deposit. Also, a blockchain based solution should verify the authenticity of certificates by back tracing them.
20 teams participated in the Talent Hackathon event, out of which 10 teams were shortlisted as finalists. The winning team developed the public tender solution on the blockchain to make it more reliable. Creating a smart tender process, the winner team explain that the system uses a hybrid blockchain.
The smart tender process built on the hybrid blockchain solutions ensures that any authenticated citizen can take part in decisions and vote at a local, federal or state level. Also, it enables certified evaluators to rate and vote proposals without revealing identity.
The objective of the initiatives taken at Hackathon is to develop a Mexican Blockchain to build use cases of blockchain within the public sector.
The projects that will be undertaken by the Mexican Government are those which were executed under the Digital Government Vertical within the Talent Hackathon of Campus Party 2017.
Let’s understand some of the significant problems faced by the citizens of Mexico and how it can be solved with the help of blockchain.
- Forced Displacement
The population of Mexico grows at an annual rate of 1.4 percent which remained constant since 2000. But during the last ten years, some areas experienced a drop in the rate of population growth.The “Special Report on Forced Internal Displacement in Mexico” published by Comisión Nacional de los Derechos Humanos (National Commission for Human Rights) says that displacement has been observed due to the violence perpetrated by armed groups and their uncontrollable crime activities.
Unicef Venture Fund Team is exploring how blockchain can bring change to overcome the issues of displacement. Blockchain Hackathons are being organized in Mexico to develop projects like Digital Identity, Payment Systems and Cryptocurrency to help global migrants and refugees.
With a global digital identity, refugees can become the owners of their identity, while the blockchain based payment system can help displaced people transfer money without a bank system.
- Problem of Corruption
Corruption is considered a chronic disease throughout the entire Latin America. In Mexico, it has become the main topic of discussion in political campaigns.Being an oil-rich country, Mexico is a security-poor nation which loses billions of dollars a year to thieves. Pemex, the biggest oil and gas company, based in Mexico, released a report in 2018, stating the staggering figure of $1.6 billion as the amount they lost annually to fuel theft.
Therefore, the private and public sectors are recognizing the importance of blockchain to bring trust and transparency to the business operations with its features like auditability, traceability and immutability.
- Vicente Fox, Former Mexican President, is working on a project which integrates blockchain with local agricultural activities. Fox has investigated applications of blockchain in reducing corruption within the Mexican government.
So, he is currently educating himself about the blockchain to bring technology to Mexico. He had been a part of the global Blockchain Economic Forum in Singapore in February 2018 where he got the inspiration to learn how to apply the technology in Mexico.
- Also, Mexico earns more money from Remittances than oil revenue. As a result, tech enthusiasts believed that cryptocurrency could be a significant opportunity for businesses to avoid paying international fees.
Because cryptocurrencies are based on a decentralized model, there is no need to send payment through intermediaries from the US to Mexico. The two prominent cryptocurrency exchange startups, Bitso and Volabit, are helping businesses in settling payment through easy-to-use apps.
- One of the Mexican state-owned petroleum companies, Pemex will assist Petroteq, Oil & Gas Company in building a blockchain-based supply chain management software, PetroBLOQ.
Pemex also made headlines that they are the first petroleum company to introduce cryptocurrency as the mode of payment.
- Being the eleventh most-populous country with a population of more than 120 million, the World Bank classifies half of the population as poor and they are barred from accessing formal financial assets.
To make it possible for everyone to access financial assets, organizations like Bankcoin.global are piloting cryptocurrency e-commerce and smart contracts in Mexico.
- As both private and public sectors are experimenting with the potential of blockchain technology, tech-savvy have come up with the blockchain academies such as Blockchain Academy and Telefonica Mexico to educate blockchain development from the beginner level.
- Currently, Mexico’s insurance sector only constitutes 2.1% of the country’s GDP with only 30% of the vehicles insured. The country lags behind Chile, Nicaragua and Brazil due to the complex mechanism of validating car insurance policy.
Therefore, the Mexican Association of Insurers is planning to explore blockchain solutions to validate insurance policies, improve compliance and reduce the auditing time.
No doubt that a lot has been done to promote the blockchain development in Mexico, lack of trained and experienced talent is one of the main issues holding Mexico back from becoming a leader in the blockchain.
A study done by various tech companies in Mexico ranks blockchain ecosystem in Mexico at just 3/10 on the global scale. As compared to North America which is the global market leader for blockchain, Mexico lacks people who can program and work on the blockchain technology.
Innovation Evangelist for TCS Latin America, Arun Ramachandran said, “There are very capable people in Mexico, but most are moving to the US. We want to reverse the tide by giving them the opportunities to grow their knowledge of blockchain at home, taking the technologically versatile people and training them to fully understand how blockchains work.”
Though blockchain technology has just begun to develop in Mexico, both the public and private sectors are aware of the blockchain’s potential to bring transparency and security to the ecosystem. Mexico is expected to become the powerful leader in the blockchain in the coming years.
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