Argentina's economic downturn fuelling cryptocurrency crazewritten by Bella Palmer
There are now an estimated two million crypto trading accounts in the country of 45 million people
Argentina's economic downturn, with high inflation, a deflating currency and a shortage of US dollars to invest in, has in fact proved a shot in the arm for cryptocurrency in the country.
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 ten in Argentina since 2020, said Maximiliano Hinz, Latin American director of cryptocurrency exchange Binance, the world's largest by trade volume.
There are now an estimated two million crypto trading accounts in the country of 45 million people.
Argentina has been in recession since 2018, with inflation averaging 45 percent over the last three years, and a GDP contraction of 9.9 percent in 2020.
For those wishing to put money aside for a rainy day, cryptocurrencies offer relief from low interest rates and a government-imposed limit on greenback purchases of $200 per month in a population accustomed to dollarizing savings.
One Bitcoin is now worth about $60,000, or 5.6 million pesos.
It is no coincidence that Argentina and Venezuela, countries with high inflation, are the main crypto poles in South America, said Marcos Zocaro, a specialist in digital assets.
Where previously cryptocurrency may 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, said Zocaro.
In Argentina, it is becoming increasingly common to buy and sell everything from cars or second-hand clothes to English lessons on sites operating in virtual currency.
E-commerce giant Mercado Libre announced last week it would make it possible for people to buy Argentinian real estate -- a commodity traded exclusively in US dollars -- using Bitcoins.
Two Bitcoins can buy an apartment in central Buenos Aires.
In Argentina, crypto-investors tend to be people who are risk averse, said Emiliano Limia, a spokesperson for Buen Bit.
For this reason, many seek to avoid the Bitcoin price roller-coaster by opting for lesser-known currencies, particularly those linked to a basket of assets that include the dollar, to minimize volatility exposure.
There are global reasons too, for the new-found interest in cryptocurrencies, said Limia. Since the start of the pandemic, stimulus packages in all countries have devalued currencies against scarce goods such as Bitcoin, whose limited issuance turns it into digital gold.
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.