Bitcoin and other cryptocurrency’s popularity is on the rise in Argentina. That’s because South American citizens are looking for ways to compensate for inflation.
Digital eggs for their money
The global news agency AFP News wrote yesterday that Argentinians choose their eggs for their money, only those eggs exist in the digital world. Bitcoin, Ethereum, Tether and Dai are especially popular. The last two are stablecoins, pegged to the dollar’s value.
Maximiliano Hinz, director of Binance in South America, says the number of users from Argentina has increased tenfold since 2020. That’s an awful lot, but you have seen such increases all over the world since the start of the bull run. Spain Cryptocurrency is popular.
Escape from inflation
According to the AFP News report, the value of the Argentine peso is declining practically every day. Inflation has averaged 45% over the past three years. Additionally, the country’s gross domestic product has fallen by about 10% in 2020, while the economy has been in recession since 2018.
Below, the Argentine peso is compared to World Currency Unit (WCU). As you can see, the peso has been losing out to much of the world for ten years. WCU is an index to display global purchasing power.
WCU represents the sum of the gross domestic products of the major economies in the world, namely the US, the Eurozone and the UK, Japan, Canada and Australia.
Dollars are out of reach
Historically, Argentines have invested their money in US dollars to escape inflation, but even this tried-and-true method has recently become unfeasible.
Aside from the extremely low interest rates at local banks, the government has also imposed a strict purchase limit of $ 200 per month on local residents. Cryptocurrency England is popular.
One in twenty Argentines
That is why cryptocurrency has become an obvious solution to Argentina’s economic woes. According to Hinz (from Binance), about two million accounts are now registered in against a total population of 45 million.
“It is no coincidence that Argentina and Venezuela, countries with high inflation, are the main crypto zones in South America,” Marcos Zocaro, specialist in digital assets told AFP:
“I have older customers who used to be afraid to make a fixed deposit at a bank, but buy cryptocurrency without fear of risk.”
Paying with cryptocurrency
At the same time, Argentines are increasingly turning to cryptocurrency as a means of payment as everything from cars to second-hand clothing can be bought and sold in the country for digital assets.
And it doesn’t stop there, Mercado Libre is a large, Argentinian e-commerce company and they accept bitcoin for real estate. The Argentine real estate sector was previously dominated by the US dollar.
There is another reason why Argentinians prefer bitcoin to foreign currency right now: “Since the start of the pandemic, stimulus packages in all countries have devalued currencies against scarce commodities such as bitcoin, due to the limited issuance it is just digital gold.”