Why Argentina is embracing cryptocurrency

Image source, Jerónimo Ferrer

There are traces of distrust and trauma in Argentina.

The financial crisis of Argentina at the end of 1990 was a formative memory for Jerónimo.

He is not alone. One engineering student keeps his savings in US dollars because he fears that the banks will devalue his holdings overnight.

Many experts on the state of the economy in Argentina are needed, but Mr. Ferrer has gone further than most.

He runs a walking tour called "Our local crazy economy", where he explains to tourists the level of restrictions Argentines face, such as limits on foreign currency transactions or bans on payments in installments.

He gives a primer on cryptocurrencies and explains why he thinks it's a good alternative to the Argentine peso.

When you have restrictions, you need tools for freedom.

Decentralized and digital currency is mostly about ideology or profit. It fills more basic needs for many Argentines.

I trust mathematics and software more than politicians.

Image source, Christine Ro

There are other ways that the strong government intervention in the economy has helped. It is relatively cheap to run an energy-guzzling mining operation because the cost of electricity is low.

There is a process that creates new digital currency. It involves computers. If you solve the problem, you will be awarded the virtual currency. It requires a lot of electricity to run and cool the computer systems.

According to the University of Cambridge Centre for Alternative Finance, the electricity used in Bitcoin mining is 137 Tera watt hours per year. It is the same as the annual use of some countries.

Producing electricity will contribute to global carbon dioxide emissions, but it is difficult to estimate how much.

Financial concerns are more important than environmental issues in Argentina.

Even a relatively young and unpredictable currency is preferable to the extremely changeable peso for some early users of cryptocurrencies in Argentina.

Since there is a finite amount of currency that can be created, there may be a buffer against high inflation.

Argentina is concerned about inflation, which measures how the cost of living changes over time. The year-on-year rate of inflation is over 50%.

In the Pandemic, people noticed this situation and to protect their money they chose to look for an asset that was limited.

A lawyer and a member of the executive committee of the organization, Ms. Etchegoyen is a specialist in intellectual property. She helped start the community to get more people interested in cryptocurrencies.

The government of Argentina has taken a relaxed attitude to the digital currency.

The Central Bank has been issuing warnings.

It has acknowledged that the level of use isn't high yet, but it is growing rapidly and merits concern.

Image source, Martín Xavier Alonso

There is a concern about the access to cryptocurrencies.

It is mostly a young, male, tech-savvy, and relatively affluent population. Tech workers are being paid in the virtual currency.

Lucia Lizardo acknowledges that it is not a technology that everyone can access.

Financial products that offer a stepping stone between traditional and cryptocurrencies are being used to expand the reach of the coin.

Three start-ups in Argentina now offer debit cards. 40% of shops in a town in the south of Argentina accept the virtual currency.

Stable coins, which are pegged to the US dollar and are less prone to fluctuations in value, are being used by some people in Argentina.

Image source, Christine Ro

Argentina's economic problems will not be solved by a one-stop solution. Currency speculation, fraud, and its environmental impact are some of the problems it brings.

Ms Lizardo thinks this is a revolution for young people.

This is our money, and it is the only one that politicians can destroy, says Mr. Ferrer.