Limited and decentralized cryptocurrencies help control inflation as people can easily convert them to US dollars or other physical currencies. Many people seek refuge against inflation in cryptocurrencies like Bitcoin in Argentina, Colombia, and Venezuela.
Some economic experts recently explained how to take advantage of cryptocurrencies amid the uncontrolled increase in inflation. The monetary policies to face the COVID-19 pandemic have led to an excess money supply and the depreciation of regional currencies.
Rodolfo Andragnes, the co-founder of ONG Bitcoin Argentina, stated that governments could not issue Bitcoin (BTC) according to their changing interests. He explained that it requires investing in energy and computing infrastructure, unlike the US dollar and other state currencies. Besides, he pointed out that its processing power exceeded that of Google considerably.
The Economic Outlook of Latin America Looks Uncertain
According to the United Nations Conference on Trade and Development (UNCTAD), the economic outlook in Latin America remains uncertain. They predict it will register a slowdown in its GDP, dropping from 6.6% in 2021 to 2.6% this year and only 1.1% in 2023.
In contrast to different regional currencies, limited and decentralized cryptocurrencies help keep inflation under control. One of their advantages is that they are 100% digital money, easily convertible to US dollars or other physical currencies. That is possible because they are transferable, unforgeable, divisible, fungible, and storable.
Therefore, people may use cryptocurrencies as a store of value to protect themselves against the problems affecting the region. For example, different national fiat currencies have depreciated while the prices of goods and services have increased.
Cryptocurrencies Experience a Boom Time in Latin America
Various cases in Latin American countries show the success of adopting cryptocurrencies to face the economic crisis.
Venezuelans, which have generated a peak of USD 303 million over the last few years, recently traded nearly USD110 million. The adoption of cryptocurrencies has allowed those living abroad to send money to their relatives in the country.
Argentina is the second country with the highest Consumer Price Index (CPI). While prices have risen by 56.4%, the national currency has depreciated by 25% since January. That situation has led many more people to seek refuge in cryptocurrencies like Bitcoin.
According to FinTech, there is USD 70 billion worth of cryptocurrency transactions in Colombia monthly. In addition, they have tracked more than 600 sites where people can buy and sell crypto assets.
Experts, businesspeople, and world-class analysts should work together with the main actors in the industry. They can help encourage regional economic growth by adopting and using decentralized crypto assets.
Cryptocurrencies like Bitcoin have proved relevant in the economic system worldwide, which experts know very well. That has led them to share their observations, allowing an increasing number of people to understand how those assets work.
Meanwhile, Bitcoin is trading at around USD 20,378 and has accumulated 5.6% over the last 24 hours. While its daily trading volume is above USD 47.03 billion, its market capitalization is about USD 391.06 billion, according to CoinGecko.
By Alexander Salazar
