In the first half of August, the National Consumer Price Index (INPC) recorded a 3.99% variation in the annual inflation rate in Mexico, which is just below the target set by the Bank of Mexico. reported this Monday the National Institute of Statistics and Geography (Inegi).
This is an increase of 1.24% over the immediately preceding fourteen days. Mexico thus has the highest annual inflation rate in 14 months. Can Bitcoin be the solution to all of that?
Based on Inegi statistics, that number was the highest since the first fifteen days of June last year, when it registered 4% on that occasion. Likewise, this indicator collects eight fortnight advances.
Inflation in Mexico is rising and affecting the prices of products and services
Through a releaseThe National Institute of Statistics and Geography (INEGI) reported that the products with the greatest fluctuations in price increases over those fortnight were pineapple, lemon, green tomato and tomato. As well as the rights for the water supply.
The products with the biggest price differences were oranges, bananas, avocados, eggs and chicken. As for the cities with the highest consumer price increases, it was Puebla; Tepatitlán, Jalisco; Jacona, Michoacan; Huatabampo, Sonora and Cortazar, Guanajuato.
While those that showed the lowest gains were Tuxtla Gutiérrez, Chiapas; Iguala, Guerrero; Cuernavaca, Morelos; Montlova, Coahuila and Tampico, Tamaulipas.
The base basket saw inflation rise 0.10% every two weeks
The price index of the basic basket posted a bi-weekly growth of 0.10% and an annual rate of 4.51% for the first fortnight in August 2020. In the same period in 2019, the fluctuations were 0.03% and 2.49%, respectively.
It’s important to note that Mexico began a gradual reopening of its economy in June, starting with the construction, mining and automotive sectors, after being suspended for two months in activities that were not considered material due to the COVID-19 pandemic.
Is Bitcoin the Solution?
Although Mexico is still a long way from being one of the model countries in terms of using cryptocurrencies and adapting them to life in the financial markets, the country is on the way there.
Two years ago, Mexicans weren’t very interested in Bitcoin, but in 2019 the country’s residents’ interest in cryptocurrencies rose sharply, with the term “BTC” being the most searched for this year according to published data. from Google. The states with the highest number of queries in the search engine were Yucatán, Jalisco, Mexico City, and Puebla.
Another index that shows Mexico’s interest in Bitcoin and cryptocurrencies is the number of Bitcoin ATMs in the country. Mexico is one of the highest numbered countries in the region, according to CoinATMRadar. In 2020 there will already be a total of 11 ATMs, mainly in Mexico City and Culiacan. Other places in the country with ATMs where you can make (buy and sell) Bitcoin transactions are Guadalajara, Monterrey, Querétaro, and Tijuana.
This 2020 Mexicans will have more channels for purchasing cryptocurrencies and exchanging Mexican pesos for crypto assets.
Likewise, some Mexican citizens are not very happy with the measures the government is facing regarding the economy. Because of that The use of Bitcoin is seen as a tool to combat typical fiat money inflation and the various regulations that do not allow the vast majority of the world to be part of the international financial system.
In this regard, the inclusion of non-banks backed by bitcoin and cryptocurrencies in decentralized funding has been shown to be a successful example in these times of isolation. As well as the use of non-traditional transfers in the USA-Mexico border corridor, where Ripple’s XRP tokens via the Mexican platform Bitso set important milestones this year.
Regulations in Mexico Pro-Cryptos
For his part, The central bank (Banxico) issued a statement in March 2014 to warn that virtual currencies like Bitcoin will not be recognized as an official medium of exchange or as a store of value and that regulated financial institutions cannot work with them.
The current legal framework does not recognize them as an official medium of exchange, as a store of value or any other form of investment and also points out that they are neither legal tender nor foreign currency in Mexico.
Their function as a means of payment is not guaranteed as companies and other persons are not obliged to accept them. Banxico does not regulate or monitor them. The regulated institutions of the Mexican financial system are not authorized to conduct or conduct any operations with them. There is no type of guarantee or regulation to ensure that consumers or businesses who purchase these types of assets can get their money back.
However, last year Mexico introduced two new regulations that may have indirectly fueled interest in cryptocurrencies, such as that for new technologies.
Such is the case with FinTech law, which created a foundation that powers tech companies in the country. This law was intended to create a regulatory basis that is comfortable and sufficient for blockchain and / or FinTech companies to be successful. In addition, it is proposed to ensure the functionality and commercialization of cryptocurrencies while avoiding the possibilities of fraud, money laundering and terrorist financing.
This framework emphasizes that companies have to work directly on their territory, such as B. the banking giant. Banco Santander, which reached an agreement a few months ago to use Ripple’s payment technology in its offices in Mexico.
The truth is that in order to gain adoption, you need to rely on new technology that is reliable and consistent, complete a financial education plan, and learn new methods. Only in this way can society demand the use of blockchain technology in more sectors from the government.
Bitcoin as an alternative to inflation
Bitcoin is used in various countries in economic trouble around the world such as Venezuela, Argentina, Turkey, and Iran, to name a few. Among all the cryptocurrencies, Bitcoin was the favorite among these countries. All to protect yourself from the negative effects of inflation, the exchange rate, regulations on access to foreign currencies and access to the international market, and more.
On the other hand, BTC is completely decentralized and cannot be censored in any way. This makes it one of the best ways for many residents of inflationary countries to escape the ever increasing regulations and censorship of the governments of the day.
Bitcoin is gaining ground
Analysts predict that Mexico’s economy, the second largest in Latin America, could fall as much as 10% in 2020 due to the decline in GDPunder the current circumstances.
In Mexico, the situation due to COVID-19 is putting a strain on the country’s labor market, which is at a critical moment and has lost more than 90,000 jobs. That number could multiply before the end of 2020.
In this context, Bitcoin’s growth is based on the same global prospect driven by the spread of COVID-19, economic recessions, low commodity prices and widespread quarantines. In other words, whatever affects the economies and their national currencies, Bitcoin is also facing in its first major crisis, but with more favorable results.
Bitcoin’s rise shows that in recession or health crisis situations like the current one, it can be an alternative to protect value, despite the volatility experienced by the cryptocurrency market and traditional markets for stocks, commodities or currencies.
It must be emphasized that the Mexican national currency, the Mexican Peso (MXN), is currently valued at an approximate value of 0.00000401 BTC per peso. One dollar is equal to 21.93 MXN, and at the time of this writing, the price of Bitcoin is over $ 11,000. Taking these numbers into account, we would have that 1 BTC is roughly equivalent to MXN 249,520.
Although Mexico is not yet at an inflationary level like Venezuela or Argentina, the fact of its political similarities with these governments and the economic consequences of these models, as effectively verified in these countries of the region, to name a few concrete examples, are It is worrying that the geographically most important nation in Latin America happens to have consecutive negative numbers, which we have already observed perfectly, and I insist on its neighbor to the south.
For these reasons, over time and with the unfortunately deteriorating conditions in these countries, Bitcoin will undoubtedly become the light at the end of the tunnel For everyone who enjoys the full freedom that only crypto currencies can offer, as the Venezuelans have shown several times, for example.
The views and opinions expressed here are solely those of author and do not necessarily reflect the views of Cointelegraph. You should do your own research when making a decision.