Are Argentinians Buying Bitcoin With Their Life Savings?
Earlier this week, the Argentinian economy collapsed within a day’s time. Responding to the news that the incumbent President Mauricio Macri has lost to his political rival, the nation’s investors panicked, as did the rest of the world.
Within a single trading session, the Argentinian Peso shed 20% of its value against the U.S. Dollar and the nation’s stock index fell by 50%. In short, it was absolute chaos.
When this happened, crypto investors all over the industry came out of the woodwork to push the “buy Bitcoin” narrative. According to an Argentinian that is also a prominent cryptocurrency commentator, believing in this narrative is entirely non-sensical.
Buy Dollars, Not Bitcoin?
The crypto community has long flocked to bouts of currency devaluation and stock market tumult. Often, Bitcoin investors see this as a perfect time to laud the cryptocurrency they love so dearly.
From an outside-looking-in perspective, it makes a lot of sense. Bitcoin was birthed by Satoshi Nakamoto as an alternative asset, one not subject to devaluation and hyperinflation.
But according to a Twitter thread by Argentinian-American crypto-friendly economist Alex Krüger, his peers back at home aren’t buying Bitcoin.
In fact, he claimed that the attempts by Bitcoiners to push the cryptocurrency on Argentines are misconstrued, as purchasing U.S. Dollars is a better way to protect their wealth than Bitcoin and its ilk. Krüger continues: “However, I don’t think it is right to use a national tragedy to fabricate uninformed narratives.”
Before bitcoiners start using Argentina (my country) as excuse to yell "Buy Bitcoin" and generate clicks and sell newsletters.
Argentines want to protect themselves against the peso losing value versus the dollar. And for that, they buy dollars.
— Alex Krüger (@krugermacro) August 12, 2019
In a separate thread — he posted at least three on the matter of Argentina’s political upheaval, which he says will result in a new socialist corrupt regime — he argued that Bitcoin awareness in the South American nation is “extremely low”.
And thus, the idea that Argentines are rushing to scoop up Bitcoin with their life savings doesn’t make much sense.
To back this point, he looked to the state of the Bitcoin market for the Argentinian Peso, which he claims is “highly illiquid”, sporting less than 50 trades with an aggregate volume of less than $28,000 on Tuesday. Buenbit wasn’t much better, processing 19 BTC in trades on Tuesday.
Even LocalBitcoins, a peer-to-peer trading platform that is popular in nations with limited crypto infrastructure South America especially), has seen declining volume over recent weeks.
Need for Bitcoin is Growing
While Argentines may not be springing for Bitcoin, it is clear that the inherent need for the cryptocurrency is growing. This latest debacle in Argentina only accentuates this.
And while Krüger believes it isn’t right to make this latest shift in Argentina a Bitcoin thing, previous events of similar caliber in the nation have resulted in the creation of Bitcoiners.
Wences Casares is a perfect case in point. Dubbed the “Patient Zero” of the Bitcoin bug, as the entrepreneur was one of the first to spread the good word of the cryptocurrency, Casares’ eyes were opened to the need for a new form of money when he saw Argentina’s economy collapse multiple times during his come up. In a recent essay he published to Ikigai’s Kana and Katana blog, he wrote:
“I grew up in Patagonia, Argentina, where my parents are sheep ranchers. Growing up I saw my family lose their entire savings three times: the first time because of an enormous devaluation, the second time because of hyperinflation and the last time because the government confiscated all bank deposits. It seemed like every time we were recovering, a new and different economic storm would wipe us out again.”
These events, as dastardly and unfortunate as they are, can all be prevented through the use of Bitcoin. The cryptocurrency cannot be hyperinflated, devalued by a central authority, or by a central bank trying to satisfy their debtors.
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Nick Chong, Khareem Sudlow