Introduction: Argentina’s Economic Crisis
According to an article by Reuters published on 14 September 2023, Argentina is currently grappling with an unprecedented economic crisis. The annual inflation rate reached 124.4% in August 2023, the highest since 1991 (and the fourth-highest inflation rate in the world). This hyperinflation has led to a daily struggle for consumers, as they scramble to find affordable options in a rapidly inflating market. The monthly inflation rate for August alone was 12.4%, pushing the poverty rate past 40% and fueling widespread discontent. Amid this economic turmoil, Argentina is heading towards presidential elections, with libertarian Javier Milei emerging as a surprising front-runner. This sets the stage for a complex interplay between politics and cryptocurrency in the country.
Decrypt’s Perspective (Published on 17 Aug 2023, Author: Mat Di Salvo)
Mat Di Salvo of Decrypt reports that Javier Milei, a 52-year-old economist with libertarian leanings, recently made headlines by winning Argentina’s presidential primaries. His victory had an immediate impact on the country’s financial landscape. While traditional assets and the Argentine peso (ARS) declined in value, Bitcoin soared to an all-time high, trading at 10.2 million ARS before slightly dropping to 10.1 million ARS. This uptick in Bitcoin’s value is particularly noteworthy given Argentina’s high inflation rates and the peso’s rapid depreciation.
Milei, who has a flair for rock music and leather jackets, has been vocal about his disdain for central banks, which he has termed “a scam.” He has also praised Bitcoin for its finite supply, stating that it is the “natural reaction against the scam that are central banks.” Milei’s social media prowess and his plans to dollarize the Argentine economy have raised questions about whether his potential win could make Argentina a Bitcoin-friendly nation.
Di Salvo finishes his article by asking the following question:
“If he wins, will he make Argentina into a Bitcoin-friendly economy, too?”
Rest of World’s Perspective (Published on 13 Sep 2023, Author: Alex González Ormerod)
Alex González Ormerod, the Latin America Editor at Rest of World, offers a more nuanced view of Milei’s candidacy. While Milei has expressed a favorable view of cryptocurrencies, Ormerod suggests that Milei’s primary focus is not on cryptocurrency but on dollarization, which could have implications for Argentina’s crypto-friendly environment.
Ormerod says the government has imposed stringent controls on the inflow of U.S. dollars, leading to a burgeoning black market. These monetary challenges, he claims, have not only affected the daily lives of Argentinians but have also influenced their adoption of technology, including cryptocurrency. He mentions that approximately one-third of Argentina’s population uses cryptocurrency daily, primarily as a store of value due to the country’s economic instability.
Ormerod points out that Milei’s approach to cryptocurrency differs from that of Nayib Bukele, the President of El Salvador. While Bukele has focused on Bitcoin and encouraged its storage in a government-linked wallet, according to Ormerod, Milei is more inclined toward allowing people the freedom to choose any cryptocurrency. However, Ormerod warns that if Milei were to implement dollarization, it could potentially reduce the need for cryptocurrency as a store of value in Argentina.
In summary, while both Decrypt and Rest of World acknowledge Milei’s impact on the crypto landscape, they offer differing perspectives on what his presidency could mean for Argentina’s future in this space.
Featured Image via Unsplash