The use of Bitcoin is growing as a tool to fight the typical inflation of fiat money.
Everyone has witnessed Bitcoin’s price struggle since the beginning of the year. It dropped from USD 9,000 to USD 4,000 when the World’s Health Organization decreed the COVID-19 outbreak a pandemic. A few days later, the price of the main cryptocurrency began its rebound to settle in the fight to reach USD 10,000.
All this is well known, given that it appears in many news headlines in the world. However, there is little information about the use of Bitcoin as a tool to fight the typical inflation caused by fiat money and the different regulations that prevent the vast majority of the world’s population from becoming part of the international financial system.
Many people in different countries in economic difficulties around the world, such as Venezuela, Turkey, Iran, Hong Kong, and Argentina, among others, use Bitcoin.
Inflation and Devaluation vs. Bitcoin
Argentine inflation continues its upward trend, and it is already estimated that it will close at 40% annually in 2020, according to figures from the Central Bank itself. This means that, by the end of the year, each Argentine Peso in citizens’ pockets or their bank accounts will be worth almost half its current value. In other words, all Argentines will be 40% poorer.
To make things even worse, the regulations of the current government have made the US dollar a scarce good in Argentina for all people who seek to safeguard the value of their work and their savings. People can only have access to USD 200 per month.
This has led the black market, better known as the “blue dollar”, to emerge again. This market is already close to 125 pesos per US dollar and is increasing faster than those affected by the coronavirus in the country.
These two great enemies, common regarding fiat money due to their centralized nature, and the uncontrolled issuance of fiat money, are currently undermining the economic freedom of Argentines.
This is precisely where Bitcoin comes into play since Argentines are increasingly turning towards the world of cryptocurrencies.
Reasons to Choose Bitcoin
Among all cryptocurrencies, Bitcoin has been the favorite of the inhabitants of Patagonia. The reason for this is that it allows them to take refuge from the negative impacts of inflation, the exchange rate, and regulations on access to foreign currencies and the international market.
Bitcoin is scarce and has a limited supply of only 21 million BTC, with an inflation of only 2% per year, which decreases over time. The rate at which the world’s first cryptocurrency is created is reduced by half (halving) every 4 years. In contrast, the Argentine peso (ARS) has an inflation rate of 40%, which is increasing.
On the other hand, BTC is completely decentralized and can therefore not be censored. This is why it is one of the best ways for Argentines to escape the ever-increasing regulations and censorship by the governments in power.
As time passes, conditions deteriorate in Argentina. Bitcoin becomes the light at the end of the tunnel for all those who enjoy the freedom that cryptocurrencies can provide.
By Alexander Salazar