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If the Argentine Republic had bought bitcoins in 2009, could it pay its foreign debt now?

August 6, 2020

Given how much the price of Bitcoin has risen since its inception and given Argentina’s complicated economic history Some wonder if purchasing this cryptocurrency could have been an alternative that made it possible to pay off the country’s foreign debt today. Cointelegraph en Español consulted economist Nicolás Litvinoff, director of Estudinero.org, to see if this would have been feasible.

Litvinoff’s answer was: “”Yeah yeah If Argentina had bought bitcoins in 2009 with all of its reserves, it could now safely pay all of its foreign debt and much more”.

However, Litvinoff made an important clarification: “But it seems to me that this is not a calculation that makes much sense of reality. Because Bitcoin is still today, when it is practically 11 years old, a volatile, risky investment, which makes it practically impossible for the central banks to invest in it, since it is only little regulated by the financial system – this crypto asset ”.

If the Argentine Republic had bought bitcoins in 2009, could it pay its foreign debt now?If the Argentine Republic had bought bitcoins in 2009, could it pay its foreign debt now?

Furthermore, he argued that even assuming that a central bank could invest in bitcoins with its reserves today, there are bureaucratic questions about what can be invested. “”Even if it were possible, no central bank would invest a percentage that I estimate would be more than 2 or 3 percent of total reserves.”He remarked.

Then it was powerful: “To believe that a central bank could invest all of its reserves in one asset, but particularly in Bitcoin, seems very far from reality to me.”.

Comparison with personal finances

Litvinoff compared this situation to personal finances. For example, he explained that someone could say, “If you sold the house three or four years ago and bought bitcoin, you could buy five houses today.”

“But these are calculations like the ones we did by the central bank that were done with the newspaper on Monday (after the facts were known),” he said. “The most important thing is to know how much Bitcoin will be in nine or ten years, and not as much as it was before,” he said. And he emphasized a warning: “Under no circumstances is it recommended that you sell your assets and invest all of your assets in an asset as volatile as Bitcoin”.

Conclusion

In conclusion, Litvinoff concluded the idea as follows: “If the central bank had bought a significant percentage of its reserves in 2009, it could now pay off various foreign debts, but it is neither an out-of-the-box operation nor a common sense operation.”

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