It is no secret that Argentina is a struggling economy, as it has been for quite some time now. Inflationary currency is not helping matters for Argentinians and neither is the government’s tight control on transferring funds in and out of the country. Plus, with the majority of people unbanked, there are hardly any options of obtaining funds other than the Argentine peso.
Businesses Embracing Bitcoin As A Viable Option To Cash
Argentina’s financial ecosystem is creating a lot of headaches for businesses and individuals alike. Not only is it hard to move funds in and out of the country via bank transfer, but most consumers don’t even have access to a bank account or credit card. Exchanging the Argentine peso to a foreign currency, is possible, even though it is far from profitable to do so according to the government’s exchange rate.
Strict capital controls are a good way to alienate citizens from their government, and Argentina is one of the frontrunners of embracing that ideology. That being said, the door is wide open for alternate payment methods, such as Bitcoin, to have a major impact in a country with a cumbersome economy.
As you would come to expect, most Argentinians have been skeptical of Bitcoin since day one, as it is not controlled by a government nor backed by any “real” assets. Industry experts will argue that the Argentine peso, which is backed by “real” assets and issued by the government, is not working out so well. This just goes to show that government-issued currency is not always the best option.
Bitcoin creates a lot of financial opportunities, but it also helps a plagued country in terms of job creation. Several Argentines are now accepting foreign credit card payments in exchange for Bitcoin, as Bitcoins can be sold on the country’s unofficial market for 50% more than the official exchange rate.
Additionally, tons of small businesses are flocking to Bitcoin as they see a viable alternative in the digital currency compared to the country’s own government-issued currency. Bitcoin usage in Argentina has more than doubled compared to 2013, making it the fastest growing Bitcoin economy in all of Latin America.
Presidential Elections To Bring A Wind of Change to Argentina?
October will be an important month for Argentina, as there will be new presidential elections. Local financial experts hope to see a new administration with a more open and market-friendly attitude to untangle capital controls. However, it is important to keep in mind that removing tight capital controls is a far more difficult and delicate process compared to putting these regulations in place.
In the meantime, Bitcoin adoption keeps on thriving in Argentina and other Latin American countries. Government control is not the answer to fixing a country’s economic problems and those issues have started to become visible in the Western world as well. It is only a matter of time until people see the benefits of a decentralized currency with a fixed supply, rather than printing more money to fill a financial hole while creating another one.
At the time of publication, there are between 6,000 and 8,000 Bitcoin users in Argentina, but those numbers are expected to increase by the end of 2015 to over 10,000. Bitcoin is a perfect opportunity for individuals and small businesses, as most Latin Americans do not entrust their money to the formal banking system.
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