Bitcoin in Argentina: Inflation, Currency Restrictions, And The Rise Of Cryptocurrency
This paper will discuss why Bitcoin, a groundbreaking and experimental cryptocurrency protocol, has flourished in Argentina’s modern economic climate. Argentina has long been plagued by high inflation rates. Argentina has historically used the strength of the US dollar to stabilize its fiat currency, the Argentine peso, in times of inflation. Most recently, former President Cristina Fernández de Kirchner attempted to stabilize inflation by setting the exchange rate between the peso and the dollar, and then strictly limiting access to dollars within Argentina to avoid depleting the country’s reserves of US dollars, the Central Bank’s most stable asset. These currency controls made it almost impossible for Argentines to obtain US dollars outside of the black market. Because Argentines had been reliant on the US dollar to keep their wealth secure in the face of high inflation, there was a need for some type of stable currency in which to place wealth. Additionally, Argentina had trouble printing enough cash and coins to serve its population. For many Argentines, Bitcoin represented a solution to both these problems. And while the new President Mauricio Macri has since relaxed these currency controls, Bitcoin’s advocates are certain that there is still a future for this cryptocurrency both within Argentina and worldwide. Bitcoin is not a trend, but rather an innovation that will only increase in relevance for the global economy.