Argentines Turn to Bitcoin To Escape Inflation, Currency Controls
Need to escape state incompetence and restrictions
Banned from buying dollars and confronted by the fastest inflation in the Western Hemisphere, some Argentine savers are seeking refuge in bitcoin as a store of value even after the virtual currency's collapse.
TradeHill Inc., the San Francisco-based bitcoin exchange, plans to open its first Latin American office in Argentina after demand surged the most in the region, founder Jered Kenna said in an interview on April 12. Rodolfo Andragnes, an agent for bitcoin buyers and sellers who organizes bi-monthly meetings for enthusiasts in Buenos Aires, says while local trading of the unregulated currency still equals less than 0.1 percent of the almost $1 billion of the nation's foreign-exchange transactions on a weekly basis, it has more than doubled since February.
Argentines are trying to preserve the value of their savings in everything from bitcoins to real estate to skirt President Cristina Fernandez de Kirchner's restrictions on buying dollars, with the peso forecast to weaken the most of any currency in the world this year and local-currency bonds suffering the worst returns in Latin America. While the price of bitcoins plunged to $79 from a high of $234 in the past week and caused Mt. Gox exchange to halt trading on April 11, the sixfold increase this year is enticing Argentines whose savings have been decimated by inflation rising at 25 percent annually.