Inflation has caused the Argentine peso to depreciate by ten million over time, preventing people from living decently. Citizens increasingly use Bitcoin as an alternative to the national fiat currency, as it allows them to send and receive value across borders.
Since Argentines face financial collapses daily, Bitcoin has emerged as an alternative solution to their weakening fiat currency and corrupt financial system.
The South American country has no access to international capital and owes more than USD 40 billion to the IMF. While the prices of goods and services skyrocket, almost 50% of the citizens has fallen into poverty.
Over the last century, successive governments have burdened the nation with unmanageable debts, leading Argentina to go bankrupt nine times. They have printed banknotes to deliver social services, seen how inflation has skyrocketed while political unrest has arisen, and instituted monetary reform.
Because of Argentine inflation, the national fiat currency, the peso, has depreciated by ten million. Amid political pressure, politicians embrace monetary reform, which includes mixing raising policy rates and controlling currency exchange rates.
Various Factors Cause the Value of the Argentine Peso to Drop
Marcos Buscaglia, an Argentine economist, recently said the peso loses value over time, preventing people from living decently.
The current Argentine economic crisis started over the last ten years with the administration of former president Cristina Kirschner. She spent foreign loans massively on subsidies and social programs, causing public debt to soar while inflation and interest rates skyrocketed.
Although President Mauricio Macri promised to recover the economic system, the peso dropped further against the US dollar. Due to the imposition of capital controls, Argentines felt forced to hoard black market US dollars under their beds.
In 2018, Marci secured a USD 57 billion credit line from the IMF, the largest in its history. The money came with the warning that he had to implement anti-inflation policies, for which he sought shortcuts. Although he sold many high-interest short-term bills to absorb liquidity, poverty rose and made citizens impatient.
Later, the COVID-19 pandemic, the Russia-Ukraine war, decreasing food supplies, and tighter energy markets affected economies globally. Shortly after the shutdown, Argentina defaulted on sovereign debt, leading inflation to reach 70 percent.
Bitcoin Offers Many Advantages to Citizens amid Economic Problems
Argentines increasingly use Bitcoin as an alternative to the peso, being able to send and receive value across borders. Besides resistance to debasement and seizure, people can securely store it on a USB stick or in their head, remembering a seed phrase.
Even though Bitcoin is not perfect, it remains a superior alternative to the peso. According to The New York Times, nearly 60% of Argentines believed that the pioneering cryptocurrency would retain the value of their savings over time.
About one-third of Argentines said they traded cryptocurrencies at least once a month, doubling the percentage of people in the United States. Bitcoin will not solve all economic problems but is super valuable, as politicians cannot destroy it.
By Alexander Salazar
