While the recent capital controls in Greece have led to an influx of bitcoin transactions, the cryptocurrency is just starting to gain appeal in Argentina, which has had capital controls since 2011. The South American nation has been restricted access to foreign currency while double-digit inflation and an undervalued currency has led to weaker business activity.
Because of that, small businesses are starting to recognize the appeal of bitcoin in the international sphere and how it can potentially save their profits. For one, online merchants can be able to gain profits in bitcoin instead of converting to their local currency, which continues to depreciate.
Bitcoin Use in Argentina
For instance, budget hotel owners are able to take in more bookings from foreign travellers who use bitcoin. They can also accept credit card payments and convert these to cryptocurrency online instead of losing value by converting to the depreciating Argentinian peso.
According to data from bitcoin exchanges, these complicated economic conditions in the country are probably the reason why bitcoin transactions doubled in the South American region in the past year. These financial conditions aren’t expected to change anytime soon, although the upcoming elections in October could bring in some adjustments.
However, economic experts have cautioned that it is easier to put capital controls in place compared to eliminating them so the odds favor further declines in investment and currency value for the foreseeable future. Political analysts say that any removal of capital controls should also be accompanied by a technically solid economic plan to make sure that another downturn doesn’t take place.
If so, bitcoin could continue to gain a stronghold in the country, as with Greece and other nations facing financial challenges. “A recurring inflation crisis, capital controls, and overall financial repression make life very difficult in Argentina. More and more people here are looking for ways to get around these problems, and bitcoin is the perfect solution,” says Franco Daniel Amati, co-founder of Bitcoin Argentina.