Argentina’s economic downturn, with high inflation, a deflating currency and a shortage of US dollars to invest in, has proved a shot in the arm for one sector: cryptocurrency.
As they seek safe havens for their dwindling nest eggs, Argentines — used to buffering against economic crises — have been putting their money into bitcoin, tether, etherium or dai.
“The number of user accounts for investing in ‘cryptos’ has multiplied by 10 in Argentina since 2020,” said Maximiliano Hinz, Latin American director of cryptocurrency exchange Binance, the world’s largest by trade volume.
There are an estimated 2 million cryptotrading accounts in the country of 45 million people.
Argentina has been in recession since 2018, with inflation averaging 45 percent over the past three years, and a GDP contraction of 9.9 percent last year.
Poverty haunts two in five people, and unemployment is at 11 percent.
For those wishing to put money aside for a rainy day, cryptocurrencies offer relief from low interest rates and a government-imposed limit on US currency purchases of US$200 per month in a population accustomed to dollarizing savings.
One bitcoin is worth about US$60,000, or 5.6 million pesos.
“It is no coincidence that Argentina and Venezuela, countries with high inflation, are the main cryptopoles in South America,” digital assets specialist Marcos Zocaro said.
Where previously cryptocurrency might have been the reserve of tech wizards, trading platforms “have evolved to create bridges to a public without financial education,” said Sebastian Valdecantos, an economist and founder of Moneda PAR, an online Argentine credit system.
On some platforms it requires just two clicks to make a purchase or sale.
Also no longer limited to the rich, Argentines from all backgrounds and age groups are getting on board, with investments possible from a single peso.
“I have older clients who used to be afraid of making a fixed deposit with a bank, but are buying cryptocurrency without fear of risk,” Zocaro said.
In Argentina, it is becoming common to buy and sell everything from vehicles or secondhand clothes to English lessons on sites operating in virtual currency.
E-commerce giant Mercado Libre last week said that it would make it possible for people to buy Argentinian real estate — a commodity traded exclusively in US dollars — using bitcoins.
In Argentina, cryptocurrency investors tend to be people who are risk averse, Emiliano Limia said.
For this reason, many seek to avoid the bitcoin price rollercoaster by opting for lesser-known currencies, particularly those linked to a basket of assets that include the dollar, to minimize volatility exposure.
There are also global reasons for the new interest, Limia said.
“Since the start of the COVID-19 pandemic, stimulus packages in all countries have devalued currencies against scarce goods such as bitcoin, whose limited issuance turns it into digital gold,” Limia said.
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