Cryptocurrency has exploded in frontier markets like Argentina, where an unstable financial system and strong government intervention in the country’s economy has pushed an increasing number of Argentines toward the decentralized cryptocurrency, according to a new report from the BBC.
The Argentine peso, the country’s national currency, is already highly volatile and subject to a raft of financial controls that make buying and investing with the currency increasingly onerous for everyday citizens. Amid this uncertainty, cryptocurrency has enjoyed a stratospheric boon. According to Chainalysis, Argentines earned $1.86 billion in cryptocurrency in 2021.
“When you have restrictions, you need tools for freedom,” Jerónimo Ferrer, a crypto enthusiast in Argentina, told BBC News.
In the 1990s, Argentina’s financial system was in dire straits, with citizens finding their lifelong savings vanishing and personal bank account completely frozen. Today, the situation is still precarious, with Argentines of all income levels facing restrictions on transactions in foreign currencies.
“This is our money, and it’s the only one that politicians can’t destroy,” Ferrer told BBC.
Long-standing distrust of the government’s handling of the Argentine peso has also galvanized many Argentines to adopt Bitcoin. In one town in Patagonia, 40% of businesses are willing to conduct payments in Bitcoin. Many see it as a hedge against worsening inflation. Currently, inflation’s year-on-year rate stands at more than 50%, a startling figure where a depreciating peso continues to pinch most Argentine wallets.
Still, the adoption of cryptocurrency has been uneven in Argentina, just like elsewhere. “Today it’s not a technology that everyone can access,” blockchain consultant Lucia Lizardo told the BBC. The vast majority of crypto enthusiasts are young and male, who boast advantages like a relatively stable income and a tech worker background.
Argentina’s central bank has warned the public about a proliferation of cryptocurrency scams targeting users’ wallets. But that has not deterred most investors.
The explosion of users has also been buoyed by the fact that it’s cheaper to mine Bitcoin in the country due to low energy costs.
“I trust more mathematics and software than I trust politicians,” Ferrer told the BBC. “I think that Bitcoin for Argentinians should be a no-brainer.”