New academic research has found that the price of bitcoin is higher in countries with lower degrees of economic freedom.
In his paper, Robert Viglione, a PhD student at Darla Moore School of Business in South Carolina, notes that investors in repressed countries have bigger incentives to invest in the digital currency.
Bitcoin, he says, is a low-cost option which allows citizens of these nations to bypass their domestic financial system.
He told CoinDesk:
“Countries with less freedom (eg capital controls and foreign exchange controls, like Argentina) have significantly higher bitcoin prices. It goes to the whole story about bitcoin having its highest values in repressive parts of the world. I think we’re seeing a similar argument for Venezuelans’ interest in bitcoin, as well.”
Viglione pointed out that Argentina’s high bitcoin price was likely due to the data picking up the differences between the official peso exchange rate – set by the government – and the effective exchange rate used by traders buying and selling the digital currency “on the street”.
A disaster asset
Bitcoin’s decentralised and open-source nature, Viglione says, affords it the ability to trade and transmit funds across borders with few barriers or transaction