Argentina, the next “Bitcoin Country”?

2023/11/21 15:25
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Argentina, with a population of 46 million, has become a new fertile ground for the growth of Bitcoin.

Author: Zhou Zhou, Foresight News

Cover: Photo by Gustavo Sánchez on Unsplash

Header image: Getty images

Will Javier Milei, like the president of El Salvador, build Argentina into the next “Bitcoin Country”?

On November 20, 2023, Javier Milei, a well-known Bitcoin supporter, was successfully elected as the President of Argentina. Milei has promoted the benefits of Bitcoin and cryptocurrencies in multiple public appearances, and has gained support from many Argentinians who have been deeply affected by the sharp depreciation of their currency.

"Bitcoin is a response to central bank scams by returning money to its original creators - private individuals and private companies," Milei said. "We can propose closing the central bank."

Javier Milei (second from left in picture)

Milei believes that cryptocurrencies are a safer alternative to gold and silver transactions. He favors shutting down the central bank. Rather than letting the Argentine peso be spam, it is better for the people to choose a more stable currency.

Even today, as more and more heads of state express support for cryptocurrency (including Japanese Prime Minister Fumio Kishida, British Prime Minister Rishi Sunak, South Korean President Yoon Seok-yue, former US President Trump, etc.), Milei is still the most popular among them. One of the most radical presidents.

When a country's economy faces collapse, Bitcoin will take the opportunity to become popular among the people, as is the case in Ukraine, Turkey, and Argentina. And Milei was successfully elected as the President of Argentina under such circumstances.

Argentina, the next “Bitcoin country”

El Salvador is known as the "Bitcoin Country". Its President Bukele strongly supports Bitcoin. Not only does it regard Bitcoin as the country's legal tender, but the smallest country in the Americas purchases one Bitcoin every day.

However, in fact, compared to El Salvador, the “Bitcoin Country”, Argentinian people have a higher Bitcoin adoption rate.

A report sent to investors in August 2023 by Ark Invest research associate David Puell showed that Argentina’s Bitcoin adoption rate exceeded that of El Salvador. An exception is tourist destinations. Bitcoin Beach in El Salvador attracts many cryptocurrency practitioners. Here, people widely use Bitcoin and other cryptocurrencies for payment.

According to Americas Market Intelligence data , Argentina's cryptocurrency adoption rate is growing at a rapid rate. At the end of 2021, only 12% of Argentine smartphone users purchased cryptocurrency, but by April 2022, this number had grown to 51%. In addition Up to 27% of Argentinian consumers claim to be purchasing cryptocurrencies regularly.

And this is only the data for 2022. In 2023, Argentine people may be more accepting of cryptocurrency.

Argentina's inflation rate soared to 121% in October 2023, and such inflation has continued for many years. According to data from the Central Bank of Argentina, Argentina’s annual inflation rate is 113.4%, which means that the same item for Argentines is more than twice as expensive as a year ago. In contrast, China's inflation rate has averaged around 2.2% in the past ten years; while the United States will release a large amount of water to stimulate the economy in 2022, which will lead to the most serious inflation, it will only be around 9%. It can be seen from this that Argentina’s domestic currency and economy are on the verge of collapse, and the domestic people’s property has rapidly shrunk and depreciated.

In order to protect their property from depreciation, many Argentines have chosen USD stablecoins (cryptocurrencies that can maintain relatively stable prices, usually pegged to the U.S. dollar), Bitcoin and Ethereum. And since it is illegal to "buy U.S. dollars in pesos" in Argentina, this has further increased Argentinians' enthusiasm for buying Bitcoin or U.S. dollar stablecoins.

The special situation in Argentina also provides fertile ground for the development of cryptocurrency.

For example, Worldcoin, the cryptocurrency company founded by Sam Altman, once became the number one downloaded application in the Argentine App Store. Worldcoin once set a new record in Argentina with 9,500 users completing World ID verification in a single day, which means that one person in Argentina successfully passes verification every 9 seconds.

In addition, various global cryptocurrency exchanges are also "ready to move" on the Argentine market. In August 2023, Binance was approved to become the "first fully licensed" cryptocurrency exchange in El Salvador. Exchanges such as Bybit, Gate, and Kucoin have also deployed here.

Global political shifts set off a “new Bitcoin wave”

Counter-intuitively, Bitcoin, as a means and tool to combat the over-issuance of national currencies, has led to more and more heads of state supporting Bitcoin.

In the past two years, more and more presidents, prime ministers or presidential candidates of a country have publicly supported Bitcoin and cryptocurrency, including: Trump, Robert F. Kennedy Jr., Ron DeSantis and other 5 participants. Candidates for the 2024 US presidential election, as well as Lee Jae-myung (South Korean presidential candidate), Javier Mire (Argentine president), Asiwaju Bola Tinubu (Nigerian presidential candidate), etc. In addition, Nayib Bukele (President of El Salvador), Fumio Kishida (Prime Minister of Japan), Rishi Sunak (Prime Minister of the United Kingdom), Yoon Seok-yue (President of South Korea) and other national leaders who have come to power have expressed support for cryptocurrency Or a favored attitude.

Economy is the basis of politics, and politics is the concentrated expression of economy. People use their own economic interests to vote for the currency choice and future of the country. In essence, whether a country adopts Bitcoin still depends on whether the benefits that Bitcoin can bring to the country outweigh the risks it needs to bear. As time goes by, some countries have found that adopting Bitcoin based on their own national conditions has more advantages than disadvantages.

El Salvador chose Bitcoin because, as the smallest country in the Americas, it is not suitable for developing concentrated industries such as manufacturing, but is more suitable as a financial free port or a tourist city. By adopting Bitcoin as legal tender in El Salvador and being the first to introduce this free port business card to the world, it will naturally gain attention and support from the crypto world and have a better promotion effect on the local economy. This is also the reason why financial center cities and tourist cities such as Hong Kong, Singapore, and Dubai will not give up on Bitcoin and cryptocurrency.

For countries such as Turkey and Argentina whose economies are facing collapse and central banks are unable to save their economies, or for war-torn countries such as Ukraine, people's assets have shrunk repeatedly due to currency depreciation, with assets halved again and again. In countries where the U.S. dollar is banned, Under such circumstances, people will naturally choose Bitcoin, an electronic currency that can be used to transfer money as long as they have a computer or mobile phone, or the U.S. dollar stable currency, which is more stable than Bitcoin.

For countries that have neither experienced war nor economic collapse, and whose domestic economic industries are very complex, Bitcoin and its derivative cryptocurrencies and Web3 have become an industry for economic development. This is the case in the UK and Japan. In the Internet era, only the United States and China have seized this once-in-a-lifetime industrial opportunity to push their economies to a higher level, while countries such as Japan and the United Kingdom have missed such industrial opportunities. Cryptocurrencies and Web3 derived from Bitcoin have been realized by many people and may bring major changes to the future financial and Internet industries. This is why they allow Bitcoin transactions, allow the establishment of compliant cryptocurrency exchanges in the country, and actively Reasons for developing the Web3 industry.

The industrial opportunities brought by Bitcoin are expanding, and more people's interests are bound to it. This is also the reason why global politics has turned on the Bitcoin issue.

Take the United States as an example. The United States will elect a new president in 2024, and the new president is expected to be a supporter of Bitcoin and the cryptocurrency industry.

According to statistics from Foresight News , among the 12 candidates participating in the 2024 US presidential election, as many as 5 presidential candidates have publicly expressed support for Bitcoin and cryptocurrencies, namely: Donald Trump, Ron DeSantis Ron DeSantis, Francis Suarez, Vivek Ramaswamy and Robert F. Kennedy Jr., the first four are Republicans and the latter is a Democrat. The election of any of them is expected to change the current unfriendly Bitcoin and cryptocurrency environment in the United States under the Biden administration.

Robert Kennedy, the nephew of former U.S. President John F. Kennedy and a candidate for the 2024 U.S. presidential election, emphasized that Bitcoin is an anti-inflation currency, which gives retail investors the freedom instead of holding stocks that are dominated by the system. legal tender. He hopes to exempt Bitcoin from capital gains taxes and pledges to the public to gradually use Bitcoin as a reserve of U.S. dollars. He explained that this is a step-by-step process, and the plan will start on a very small scale, maybe only 1% of the national debt will be backed by hard currency, gold, silver, platinum or Bitcoin.

The global political stance has shifted regarding Bitcoin, which will have a profound impact on the cryptocurrency industry.

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