Argentina is known for its amazing natural beauty, buzzing nightlife, and soccer obsession. It is however also faced with a lot of economic hardship. The country’s economy is not doing so well with Billions of dollars’ worth of debt to clear. Reuters expects its inflation rate to reach 53 percent by the end of the year.
Overdependence on the dollar
One of Argentina’s biggest economic challenges is its overdependence on the U.S dollar. This is because the country’s fiat currency- the peso- is quite unreliable and unstable. Argentinians have thus resulted to doing what people in debt-ridden economies do to preserve their wealth and find stability, convert the currency to dollars. A lot of Argentinians are now hoarding the dollar and abandoning the peso. This has led to Argentina’s central bank finding it difficult to build its own dollar savings and therefore a significant drop in the country’s foreign reserves.
New currency restrictions
The country has responded to this through a new macro-economic policy rolled out by the newly elected President Alberto Fernandez. The central bank sliced the amount of dollars an individual could buy to $200 a month via bank account and $100 in cash until December 2019. This move is meant to preserve the central bank’s dollar savings and curb more hoarding of the dollar. RSK lab’s Diego Gutierrez believes that this new macro-economic policy presents an opportunity for Bitcoin. He told Bitcoin magazine;
“These new Forex restrictions in Argentina are very important for Bitcoin. Every time the friction of the traditional financial system grows in the form of capital or Forex controls, Argentines seek for alternatives. The traditional alternative for the middle class was always the U.S. dollar and OTC exchanges, but more and more, Bitcoin is also becoming an alternative.”
Opportunity for Bitcoin
The country’s citizens are increasingly following in the footsteps of their Latin American neighbors such as Venezuela. Local exchanges for Bitcoin are popping up every day, as are Bitcoin brokers, and other blockchain startups. According to CoinATMRadar, Argentina has about 11 Bitcoin ATMs most of which are concentrated in the country’s capital Buenos Aires. The country has recorded some high Bitcoin trading volumes as well. Barely a week after Fernandez’s victory 14.15 million pesos were traded on local Bitcoins in Argentina.
Central to Argentina’s Bitcoin binge has been Latin focused exchange Bitex. The exchange has partnered with Argentinian bank Banco Masventas to enable customers’ process international payments steadily through Bitcoin’s Blockchain. The service is now live in four Latin American countries; Chile, Paraguay, Argentina, and Uruguay.