A little over 20 years ago, the Country of Argentina was collapsing. 2001 brought protests, looting, and the confiscation of bank deposits. The Country was experiencing its worst political and economical crisis. Those old enough at the time can remember vividly the largest default in history at $100 billion USD. Tension and distrust in the government ran high, where many Argentinians simply stopped believing their government could, or would, ever turn things around.
It's been a roller coaster to say the least, and while things have improved since 2001, some would argue it's still much of the same. Beginning in 2018, Argentina spent three straight years in a recession, with poverty reaching 2 in 5 people and unemployment in the double digits. Defaulting on a $57 billion loan from the IMF to private creditors certainly didn't help things. With high inflation and a deflating currency, locals began looking for answers. Retirement accounts lost value by the day to make matters worse.
In 2019, individual USD purchases were limited to $200 per month. With non-existent savings interest rates and inflation over 50%, many people looked to cryptocurrency which was less volatile and had no governmental control. With the realization that they didn't need a bank to store any extra money they might have, Bitcoin could become their de facto savings account, a store of value they could trust and believe in.
Bitcoin, Ethereum, Tether and Dai became the places Argentinians began putting aside any extra pesos they had. Not only did people start putting in a small amount of funds, "The number of user accounts for investing in 'cryptos' has multiplied by ten in Argentina since 2020," said Maximiliano Hinz, Binance Latin American director.
In 2021 Mercado Libre, the largest e-commerce site in Latin America, launched 75 homes for sale in Bitcoin. The listings include houses, condos, vacant lots, land and commercial real estate located in Buenos Aires, Santa Fe, and Cordoba.
Juan Manuel Carretero, Commercial Manager of Vehicles, Real Estate and Services stated, "We are always attentive to the changes that occur in the market. Bitcoin offers multiple advantages for real estate transactions, both for the buyer and for the seller. Today we launch the crypto section within Mercado Libre Inmuebles and in a few hours there are already 75 properties available. We expect many more as the days go by, because far from being a fad, we see that it is a trend that will be consolidated over time".
The Country has continued to immerse itself more in crypto. According to a recent Bloomberg article, the number of companies paying wages in digital money is up 340%. Chainalysis placed Argentina in the top 10 for global crypto adoption by nation. Another Chainalysis report (via The Street), showed that Argentinians earned over $1.86 billion last year in crypto. Advertisements for cryptocurrencies are plastered across Buenos Aires.
"I trust more mathematics and software than I trust politicians, I think that Bitcoin for Argentinians should be a no-brainer" says Jerónimo Ferrer. Mr. Ferrer remembers 1990 all too well, having first hand experience watching as bank accounts were frozen by his government. He currently runs a walking tour called "Our local crazy economy & Bitcoin tour of Buenos Aires", where he explains the many financial restrictions he and other locals face, and why many embraced Bitcoin.
Argentinian crypto exchange Lemon partnered with VISA late last year to offer a 2% cashback in BTC for each purchase made, accepted at any merchant that takes VISA. The cards convert the necessary amount of the crypto from the user’s account into pesos to make the necessary payments. Lemon Cash also opened operations in Brazil this year, and raised $16.3 million in a Series A funding round to expand its operations in Latin America in countries including Chile, Colombia, Ecuador, Peru and Uruguay. “We want people to save in bitcoin,” Marcelo Cavazzoli (CEO) told Bloomberg Línea. “We have hacked traditional finance by inserting crypto into the day-to-day. We are going to be the bridge between the traditional system and cryptocurrencies.”
The province of Córdoba will be getting 27,000 Bitcoin mining rigs installed by Q4 year through Bitfarms, a Canadian-based company who is developing the project. They'll be using Whatsminer M30S equipment, with the goal to reach approximately 1% of the entire Bitcoin hashrate (206 EH/s) worldwide. Argentina is expected to become one of the countries with the highest Bitcoin mining capacity by the end of the year.
While Senators approved a $45 billion bailout deal with the International Monetary Fund (IMF) to help the Argentina avoid a default, a clause was put in “to discourage the use of cryptocurrencies with a view to preventing money laundering, informality, and disintermediation” in order to “to further safeguard financial stability.” A non-profit Bitcoin Argentina, has already pushed back, citing data showing that in 2021 only 0.15% of the operations carried out with digital assets in Argentina “were associated with some illicit activity, such as fraud or money laundering. These percentages are much lower than those presented in transactions made with fiat money.”
Additionally, the Central Bank of Argentina (BCRA) has now told financial institutions to stop offering crypto trading literally a few days after two of Argentina's biggest banks (Banco Galicia and Burbank SAU, the two largest private banks by market value), expressed interest in digital assets. This is likely due to pressure felt from recent $45 billion loan from the IMF being approved.
We're in the "then they fight you" phase of Bitcoin right now. But we know how this ends.— Tyler Winklevoss (@tyler) May 7, 2022
Argentina will be an exciting Country to watch going forward. The population has been battle tested with economic volatility for far too long, and is embracing cryptocurrency as a true safety net, and a way to control their own destinies.
Disclaimer: Nothing in this article should be considered investment advice. Readers should do their own research (DYOR).