Bitcoins gain traction in Argentina
Apr 16, 2013 9:25pm by Jude Webber
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Argentines would love to save in dollars rather than a peso ravaged by inflation and whose value is on the skids, but the government won’t let them.
Demand for gold – another traditional safe haven – has surged. Banco de la Ciudad, the only bank to sell to individuals, says it can hardly keep up.
So … Enter the bitcoin? The virtual currency is emerging as the latest inflation refuge – and Bloomberg reports that TradeHill, a US-based bitcoin exchange, is now planning to open an office in Argentina where demand is fastest in the region.
Bitcoins are absolutely not words on everybody’s lips here and many people have no clue about how to use them. But a quick squint at the website of MercadoLibre – a kind of ebay – reveals that you can buy plenty of things, from motorbikes to apartments to an anti-slip spray for bathtubs, and pay with bitcoins.
Argentina’s two centuries’ history of currency turbulence, has wired a need for financial smarts into the national DNA.
After convertibility in the 1990s, when their peso was wedded to the dollar at par (a fantasy romance, which ended, predictably, in divorce), and the quasi-currencies that emerged after convertibility collapsed in 2001, Argentines are used to taking their financial management into their own hands.
Part of the rise in bitcoin demand must be for saving, economists say, since Argentines lack instruments that can keep pace with inflation.
But it’s a rocky road – such instruments (and some see bitcoin use as a kind of pyramid scheme) tend to lend themselves to bubbles and bubbles have a nasty habit of popping.
Bloomberg quoted Claudio Loser, a former IMF Western Hemisphere director and now head of Centennial Group Latin America, a research group, as saying:
Some Argentines are willing to take very risky investments and bet on this thing which feels almost like a Ponzi scheme because they feel their options locally are even more dangerous … They don’t see an easier way to save money.
A sad indictment of Argentina’s economic reality.
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