Argentina has been fighting inflation since 2016. The devaluation of the Argentine peso is caused by a variety of factors, such as a lack of trust in the central bank, or excessive spending by the government, which negatively affects the purchasing power of citizens.
This leaves 37.3% of the population below the poverty line and wipes out the savings of many others. Against this backdrop, many Argentines are turning to bitcoin and cryptocurrencies as a way to hedge against 60% inflation despite months of losses and the country’s central bank banning financial institutions from dealing in digital assets.
A report by Americas Market Intelligence cited by Reuters found that Argentina’s “cryptocurrency penetration rate” reached 12 percent, double that of Peru, Mexico and other countries in the region.
Due to inflation, Argentines seem to be adopting cryptocurrencies at a faster rate. Charts made via Canva.
In addition to Bitcoin, Argentines are also increasingly turning to stablecoins as a means of storing value in dollars, especially as Argentina imposes strict capital controls on foreign exchange services.
When Ethereum founder Vitalik Buterin visited Argentina in December last year, he said that the adoption of cryptocurrencies in the country was on the rise, and the adoption of stablecoins was also growing significantly. He warned that could change if the dollar starts to have serious problems.
More broadly, Argentina appears to be taking a cautious approach to digital asset regulation. In a Youtube interview in 2021, Argentine President Alberto Fernandez said, "The discussion on cryptocurrencies is very heated, it is a global debate, and I must admit that it is a matter of caution."
Reassuringly, he also said that "cryptocurrency has an advantage" because "it helps to contain inflation" and "it is, in a sense, a stable asset."
Cointelegraph Chinese is a blockchain news information platform, and the information provided only represents the author's personal opinion, has nothing to do with the position of the Cointelegraph Chinese platform, and does not constitute any investment and financial advice. Readers are requested to establish correct currency concepts and investment concepts, and earnestly raise risk awareness.
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