The debate on the Argentine economy dollarization continues: dollars or Argentine pesos. Bitcoin has now entered the discussion, and many believe that the cryptocurrency could be a better alternative.
As Argentina approaches the PASO elections, political candidates are rolling out their proposals to combat rampant inflation, which is estimated at an alarming 142% according to a recent Reuters poll. Among the most outstanding proposals is that of the candidate Javier Milei, who advocates the dollarization of the country.
Dollarization and Trust
Dollarization is a proposal that has generated an intense debate in Argentina. However, before considering this option, it is crucial to restore confidence in the economy and improve wages in pesos, which are currently heavily devalued in US dollar terms.
The official dollar is trading at 275 Argentine pesos (ARS), while the blue dollar, which can be bought freely but illegally, is trading at 503 ARS. The big question is: if the dollar is released, what would it be worth? This is a question that no politician can answer with certainty, since only the market can determine it.
Bitcoin: A Viable Alternative?
In this context, a disruptive proposal arises: Bitcoin. Despite its volatility, Bitcoin has proven to be an asset that preserves value much better than the Argentine peso. In addition, Bitcoin is a dollarized asset, which could be the perfect combination to try to get out of the country’s economic crisis.
However, as mentioned above, the priority is to restore trust, as without it, not even Bitcoin could save the economy.
From BAG, a Blockchain technology company that offers tools designed for art and culture, CEO Martín González points out that the Bitcoin-Dollar dilemma is not very relevant.
“The traditional conception considers that money should serve as a medium of exchange, a unit of account and a store of value. The volatility of Bitcoin generates doubts and debates about compliance with these requirements,” he says.
González assures that it does not make much sense to question whether Bitcoin is money or not, “because its main attribute is that of safeguarding value and the incentives of the protocol go in that direction and not in using it in a daily transactional way.” In fact, he opines, “I think it’s much more powerful as a credit asset than it is as money.”
In the same vein, Leo Elduayén, CEO of Koibanx, a financial tokenization company using Blockchain technology, maintains that “although it can be considered as a means of exchange”, it is important to take into account the significant differences of BTC with fiat currencies.
“We bitcoiners define ourselves as ‘holders’, that is, we do not sell our bitcoins. We have a very big tendency to take refuge in this cryptocurrency and more and more people do so”, he assures.
From this conceptualization, added to the evolution of other technologies that have surpassed Bitcoin when it comes to scaling and scheduling transactions, “BTC will occupy this space of ‘Fly to quality’ in the financial world for many more years, not only crypto, but traditional. This is particularly true and useful for the Argentine market, but equally valid for the world market”, the specialist develops.
Currently, Bitcoin is trading at 15,579,695 ARS. This value, although fluctuating, has proven to be more stable than the Argentine peso in the long term. Therefore, Bitcoin could be a viable option for Argentines looking to protect their savings from inflation.
By Audy Castaneda
