Could cryptocurrencies solve Argentina`s economic problems?

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Argentina Economic Problem

The Argentine peso depreciated almost 25 percent against the dollar overnight, which shows the incremental damage that is being done to an economy already in crisis. Economists around the world have different opinions on how Argentina can cope with this crisis. According to analyst  Alex Kruger  , Argentine residents go to the USD in an attempt to store value and protect against inflation; something that Bitcoin does even better.

Key points to inflate the coin

Argentina never fully recovered from the recession of 1998-2001. The devaluation of the Brazilian real, a strong dollar and the deflation of agricultural commodity prices are some of the key reasons for the Argentine recession.

The current economic climate is fragile throughout the world; The United States, China and most other countries face an imminent recession and central banks are pulling the economic machine to try to prolong the economic cycle further. In 2018, just when Argentina’s inflation began to decline, the USD gained a massive boost and the Argentine Central Bank had run out of foreign exchange reserves; The  current inflation rate  in the country is 55.8 percent.

In an attempt to protect themselves in a mechanism identical to that of their counterparts in Venezuela, Argentine residents began to accumulate USD and store all their wealth in it. The total loss of faith in your government and economic system is one of the main reasons why Bitcoin is believed to help these people gain stability.

Monumental volatility in Bitcoin makes it a weak candidate, but it serves its purpose as the Argentine peso decreases. Some believe that DAI is the best option, as it offers the stability of the USD backed by a decentralized protocol. In general, the common thesis seems to be changing from an authorized fiat currency that is rapidly losing value to a decentralized currency where the economic framework cannot be manipulated at will.

Value store and safe haven

All said and done, Bitcoin cannot be called a safe haven until it really works well during a recession or a massive economic slowdown. The 2015 manufacturing slowdown was not serious enough to be a valid data point, so the only option is to wait for the recession and observe how the public and institutions react to Bitcoin.

There is no doubt that cryptocurrency can help Argentine residents affected by the disaster, but that requires people on the ground to spread to their customers that Bitcoin, DAI or any other decentralized currency will help them protect against inflation. while reducing the risk of authorities confiscating your money, since this is something they can do with cash.

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