In the last few decades Argentina has shown itself to the world as a country that frequently repeats economic formulas that have proven to be failures. The economic history of Argentina has registered, among other things, successive devaluations of the Argentine peso, a high tax burden on its residents, exchange rate restrictions on access to the US dollar and a system that is fairly closed to the world with regard to international trade. Interestingly, as can be read on social networks and crypto communities, this set of factors has evolved into “things that make Bitcoin stronger”.
It’s not new that Cryptocurrencies could be an option given the possible devaluation of some fiat currencies. This was indicated from Argentina by an article in Ámbito published on May 22nd.
The Ámbito publication stated that multilateral organizations like the International Monetary Fund, the World Bank and dozens of central banks around the world have shown that the impending economic crisis is important. “So far, the world economy is expected to decline by 3%,” the article noted.
“”The world’s governments have done everything they can to mitigate the economic impact of the pandemic, but the truth is that in some cases, the actions that states are taking to stimulate markets can subsequently trigger inflation, devaluation, and other elements. typical of an economic crisis”They later added in the above publication.
In addition, they pointed out that the most commonly used measure to date has been to inject capital into the markets, which is nothing more than an issue of money. And they made it clear that printing money without assistance to deal with the crisis is a solution that can work in the short term. In the long run, however, it is a measure that creates inflation and depreciates currencies. “The equation is simple: the more quantity there is of a good (e.g. money), the less value it will have, since the fact that there is more quantity implies that it is now easier to access” they commented Ámbito.
Broadcasting in Argentina: a recurring problem
On Tuesday, August 18, an article signed by Mariano Gorodisch in El Cronista looked closely at the problem of indiscriminate spending of fiat funds in Argentina.
“”The central bank reiterated that it will trade in all available instruments given the possible liquidity surpluses in the coming monthsas a result of monetary expansion to provide loans to families and businesses for the pandemic, “wrote Gorodisch
It should be taken into account that Argentine peso issuance has been very strong this year, with all the inflation problems that may arise and therefore the loss of purchasing power for the population who use Argentine pesos.
The stock market
The restriction on buying dollars is not new. It had been heavily implemented by the Kirchner government, and after a brief period of free exchange, Mauricio Macri’s government revived the shares in 2019 with a cap of $ 10,000. But the return of harsh Kirchnerism, this time with the government of President Alberto Fernández (and his Vice-President Cristina Kirchner), dramatically tightened the exchange rate, restricting purchases and allowing only $ 200 a month to purchase for individuals. Nowadays there is even discussion whether this amount will also be banned.
The exchange holdings have been accompanied by a series of monitoring and information requests associated with government agencies and KYCs using the platforms.
On July 13th, Cointelegraph en Español repeated this situation and issued a warning The Financial Investigations Unit (UIF) planned to gather information on agents involved in the crypto asset market in order to identify the main players and the volume of transactions carried out. This body tries to control those who buy dollars with cryptocurrencies. El Cronista reported this on July 13 in an article that was also signed by Mariano Gorodisch.
According to this publication, operations with cryptocurrencies or virtual assets would be specially monitored by the FIU.
“In accordance with the guidelines of current economic policy and the international recommendations of the FATF (International Financial Action Group) and the EGMONT Group (consisting of the world’s financial intelligence units), this controller is based on the continuous growth of the market for virtual currencies worldwide, partly derived from the exceptional situation caused by the pandemic and the possibility that these operations are in reality money laundering and terrorist financing maneuvers, “wrote Gorodisch.
“The remarkable increase in these types of operations prompted the FIU to develop a series of measures to warn that these maneuvers could be carried out by people trying to circumvent international standards and avoid the preventive system of money laundering. In this one Senses The FIU urged the regulated companies to put in place increased surveillance of these operations while, as spread in the market, they began to collect information from the main agents involved in the crypto asset market in order to identify the main actors and volume of the transactions carried out, “he later added.
On the other hand, according to this article, the latest recommendations and activities of the FATF / Egmont aim to provide tools to all FIUs around the world to deal with the challenges arising from operations with virtual assets in the digital economy, as well as the possible ones legal answers that any country can implement.
Dodge the stocks
With so many exchange restrictions The user was looking for alternatives. And here he not only found the opportunity to secure his savings with Bitcoin, but the various measures have strengthened the P2P exchange.
In addition, other interesting alternatives have emerged to exchange Bitcoin for dollars, for example the ATM that the company Athena recently installed in a supermarket in Buenos Aires.
Also deserving a separate mention is the growing interest in stablecoins, which has caught the attention of those who are not encouraged by Bitcoin’s volatility.
Disadvantages with banks and stock exchanges
In the past few months, Argentine users have encountered various anomalies including: BBVA dollar accounts blocked; Buenbit’s problems were also related to the dollar; Having trouble withdrawing your own dollars from Macro Bank; Situations where some companies’ home banking fails to buy dollars; or even situations where political and union lobbies have affected fintech companies or even Mercado Libre. All accompanied by a pandemic context and one of the longest quarantines in the world in this country with a notable decline in economic activity.
The benefits of Bitcoin
From broker ArgenBTC, this year they listed a number of strengths that Bitcoin has shown in relation to the traditional banking system. If you read it carefully, you can see that the benefits of Bitcoin are above the money too:
There are people who fear when the existence of digital money increasesthat is not on metal, paper or plastic backing. But for some time now, banks have been moving “electronic” money by simply entering amounts and destinations, using CBU for transfers, and so on.
Bitcoin doesn’t depend on banking hoursThis can vary from city to city and can be quite restrictive for the citizen who works or cannot leave his office to do personal banking. Bitcoin works around the clock all year round.
When someone wants to transfer value over the Bitcoin network, there are no time or time restrictions. There is already an example of an Argentine bank offering customers the option of using the Bitcoin network as an alternative to the SWIFT network for international transfers.
Bitcoin network’s commission for sending value is much lower than the commission charged by banks using the SWIFT network for international transfers. It can also be much lower than other types of commissions or concepts traditional banks charge for using their services.
It is correct that a transaction with Bitcoin can take around 20 minutes (estimated time as an example). But the complaint about how long it takes to make a transaction or transfer using Bitcoin seems negligible when we see this An international transfer can take days.
Exchange rate restrictions or Cepo: Argentina is a country where political and economic measures by more than one incumbent government have normalized the existence of restrictions on the purchase of any other currency in addition to the Argentine peso. What about bitcoin? Technically, nobody can limit the number of bitcoins a citizen wants to buy or sell.
No central bank, no ministry and no government can intervene in the Bitcoin network or change the rules of the game set in the system.
Bitcoin doesn’t use paper, it doesn’t use plastic for circulation, it doesn’t need money carriers, it doesn’t need large bank buildings to serve users etc.
The price of bitcoin
The price of Bitcoin has broken historic records in Argentine pesos in the various stock exchanges. The price of Bitcoin has already exceeded one and a half million Argentine pesos and appears to be on its way to two million.
It is true that Bitcoin’s volatility matters, which means you still need to be very careful. However, there are two basic points that put Bitcoin well above the Argentine peso despite this peculiarity. One is that Bitcoin is priced in dollars. And the other is that The performance of the Argentine peso has been much more problematic than the volatility of Bitcoin in Argentina when measuring long-term behavior.
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