Bitcoin a Refuge For Argentines Tired of Government's Currency Despotism


Credit: jmalievi/flickr

Bitcoin's popularity in the U.S. is gradually rising as it branches out from tech-savvy and libertarian circles into the mainstream financial world. But who may benefit most from the technology are residents in countries like Argentina, where independent observers estimate inflation at 25 percent and the government imposes strict capital controls.

The price of Bitcoins in Buenos Aires are about 30 to 40 percent higher than those in neighboring Uruguay, and last week, a Bitcoin Meetup brought 150 Argentines to the nation's capital to discuss the advance of the technology in the country.

From Forex Magnates:

With the Peso undergoing yet another period of severe inflation at a rate of 20%, and now President Kirchner's attempt to lure citizens back into the banking system over which they have absolutely no trust, by attempting to repatriate the US dollars held overseas or in hidden accounts by citizens in exchange for the domestic Cedin, the demand for Bitcoins has rocketed…

The nation exercises capital controls, preventing citizens from exporting their funds to Uruquay for exchange into Dollars, creating even higher demand for crypto-currencies that circumvent the domestic rulings.

The rise of Bitcoin in Argentina reflects the citizens' growing desire to subvert the government's repressive monetary controls and soaring inflation. A short documentary about the digital currency was released earlier this year highlighting the practical uses of Bitcoin in the once-prosperous country. Supporters, like Daniel Alós of the Meetup group, who appear cautious about revealing their motivations, say on their event page they hope it will be soon become an everyday payment method.

I think Bitcoin will gain more momentum and confidence of the public to the extent that it will start to be accepted by most shops and businesses. I just was in touch with a site that delivers organic vegetables with payment in Bitcoin. I was struck by how nice and friendly the user interface of the site was.

Alós wrote that he intended to purchase vegetables for his restaurant from the site using Bitcoins.

The meetup was organized by an advocacy group called the Foundación Bitcoin Argentina. They don't detail its virtues of relative certainty and privacy on their website, but that is understandable—Bitcoin advocates receive threats even in America. But inherent in the cryto-currency camp's message is that more Bitcoin users in the country would benefit Argentines. And with a stateless alternative currency, more transactional privacy would be possible, as Reason's J.D. Tuccille wrote in May.

Why all this effort—and legal risk—to keep communications private? Because much of the world's population lives under the thumbs of nosy rulers, whether overtly malevolent or just overly officious…

It's not clear that Bitcoin can live up to its promise. It's the first serious crypto currency, unanchored to a government or to a physical presence, and it's just now being tested. What's obvious, though, is that people want what Bitcoin is supposed to be, and that desire will certainly be fulfilled either by it or by a successor technology that can live up to the billing.

Residents in countries like Argentina who are advised to avoid banks and pay cash because the government can't be trusted would certainly be served by Bitcoin or whatever alternative arises in the free market, if only for the peace of mind.

Why Bitcoin is here to stay: