In recent months, the national fiat currencies of Argentina and Brazil have lost value. Bitcoin presents itself as a practical solution for safeguarding value.

In December 2017, Bitcoin was at its highest price of USD 20,089. If an Argentine or a Brazilian had bought Bitcoin (BTC) with their local fiat currency at that time, they would now make a profit in nominal terms. The Argentine would receive 169% more pesos (ARS) and the Brazilian 5% more reais (BRL).

Currently, Bitcoin celebrates its all-time high in both South American countries. Bitcoin traded at ARS 1,582,899 on August 1st, while it had a price of BRL 65,730 on August 10th. Both the increase in the price of Bitcoin and the devaluation of the aforementioned fiat currencies led to this situation.

Bitcoin as a Solution

Several causes lead the Argentine peso and the Brazilian real to lose value every day. These include the high monetary issuance, the mistrust in government policies, and the context of the global crisis due to the COVID-19 pandemic.

Even the US dollar, which people most often seen as a safe haven, is not exempt from loss on value. Although it does not do it so as quickly as many Latin American currencies do, the US currency also experiences depreciation. Since 1913, this fiat currency has lost more than 90% of its value.

With a predetermined issuance of 21 million units, Bitcoin presents itself as a practical solution for safeguarding value. In addition to this characteristic, the cryptocurrency has a “monetary policy set in stone” and a “consequent deflationary trend in the long term.”

Bitcoin’s Appreciation in 2020

Concerning the Argentine peso, Bitcoin had an increase of 104% so far in 2020. In this period, it has risen from ARS 775,000 to current values close to its all-time high.

Concerning the Brazilian real, the price of Bitcoin has increased by 64% since January, when it was trading at BRL 39,921.

When measuring the increase in the price of Bitcoin against a more stable currency such as the US dollar (USD), it has been “just” 26% since the beginning of 2020. It has gone from USD 9,367 to around USD 11,860 at the time of writing this article.

The difference with the Price on Google

It is possible to observe that the Google search engine yields considerably lower values than those mentioned above, concerning the Argentine fiat currency.

The same does not happen with the price of Bitcoin in reais, since it does coincide with what this article reports.

This is because the free market price of Bitcoin in Argentina is not in line with the official price of the US dollar (equivalent to ARS 72), which the State artificially determines. On the contrary, its price is closer to the real value of the US currency in the market (equivalent to around ARS 126).

Google does not reflect these data, which is the cause of a lot of confusion, even among many Argentines.

However, even considering the value of Bitcoin at the official US dollar price, the cryptocurrency recently reached an all-time high. Its price has grown by 100% since January 1st when it was at ARS 430,000 according to Google.

By Willmen Blanco


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