Argentina is currently facing cataclysmic levels of inflation and absurdly high interest rates. Bitcoin’s price in Argentinian Pesos has reached record highs as hyperinflation proves its worth.
What’s Happening In Argentina?
Argentina’s annual inflation is currently at 110%, having reached the worst levels since 1991.
Interest rates are at a staggering 97% after several hikes in quick succession, though this has seemingly done nothing to curb the country’s hyperinflation disaster.
The Argentinian government is currently on its third economic minister since July 2022, as it struggles to bring the crisis under control.
This problem isn’t entirely new. The South American country has spent more time in recession than any other nation in the world since the 1950s.
Roughly 40% of Argentinians live in poverty, and in 2021, more than 50% were unbanked.
How Is Bitcoin Helping?
Bitcoin has been suggested as a potential lifeline for Argentinians because of its properties as a hedge against inflation.
Its status as a store of value makes it far more useful than fiat currency for keeping savings, and Argentinians have been buying it up for this very purpose.
The fact that the Bitcoin network is available to anyone with an internet connection also means it has the potential to bank the 50% of Argentinians that are currently unbanked.
Bitcoin has seen increased adoption in Argentina, as well as other South American countries struggling with high inflation, for this very reason.
When priced in Argentinian Pesos, bitcoin’s price is currently at an all-time high.
Bitcoin is especially useful for international remittances. Citizens of Argentina, as well as Columbia and Venezuela, have been making use of this functionality to bypass currency controls from the central governments.
The Argentinian Government Has Reacted
The Central Bank of Argentina has recently barred payment service providers from facilitating transactions involving bitcoin and other digital currencies.
They excuse this authoritarian reaction by arguing that it is to protect citizens from the risks associated with dealing in digital assets.
Worryingly, this is a trend that has been seen elsewhere in the world, with the UK Treasury Committee recently arguing that bitcoin poses similar risks to gambling.
Since digital currencies are completely unregulated in Argentina, they all fall under the ban, including bitcoin.
Could Bitcoin survive the ban?
Fintech companies have opposed the ban, and many Argentinians are likely to find ways around it.
After all, the Bitcoin network doesn’t need third-party operators to work.
If bitcoin can solve the problems that Argentinians are facing, which it seems to be doing to some degree, it will survive.
If it turns out to be the lifeline some hope it is for the citizens of the South American country, it could be a signal to the rest of the world that bitcoin really is the future of the global financial system.
