According to published data on changes in the consumer price index (CPI) of Latin American countries, at the end of the first quarter of this year, Venezuela and Argentina have the highest inflation levels in the region. A scenario that has led the population to resort to the use of cryptocurrencies, including bitcoin, as an option to safeguard against devaluation.
With cumulative inflation, up to April 2018, 9.7% in Argentina and 897% in Venezuela (according to calculations by the Venezuelan National Assembly), the two countries are facing economic problems that have led to inflationary crises that have sharpened so far this year. However, inflation is not the only feature they have in common, as both nations have also experienced a boom in the adoption of Bitcoin.
The adoption potential of Bitcoin in the two South American countries has been highlighted since 2016, when a study conducted by academic Garrick Hileman, of the University of Cambridge School and the London School of Economics, determined that both nations had a higher score in the Bitcoin Market Potential Index (BMPI) indicator, used to measure the potential of some 178 countries to take on the new technology.
In the case of Venezuela, the increase in the flow of its Bitcoin purchase and sale volumes (BTC) stands out, a phenomenon that has been increasing since last year and which qualifies this nation as the territory with the highest number of cryptocurrency transactions. in Latin America.
According to data of coin.dance, at the end of the last week of June, the Caribbean country registered a volume that exceeded 10 billion bolivares (521 BTC) in the exchange platform of Localbitcoins; This figure represents around 45% more than the volume registered at the beginning of the same month, when transactions were in the order of 6.9 trillion bolivars.
Venezuela, which has been subject to strict exchange controls for more than a decade, has seen a brutal collapse of its native currency this year, due to the outbreak of the phenomenon of hyperinflation. This situation has led the population to seek new methods of payment, investment and savings, among which the use of cryptocurrencies grows as a viable and safe alternative, considering that currently there is no local regulation to regulate or prohibit this type of exchange.
This is despite the fact that last April the government created a government body to oversee the sector, while some government spokesmen announced follow-up measures to national bank accounts that deal with cryptoactives.
Even so, given the impossibility of acquiring foreign currency, the Venezuelan public even opts to use the cryptocurrency exchange platforms to mark the exchange rate of the US dollar with respect to the bolivar.
In parallel, more merchants adopt cryptocurrencies by facilitating the purchase of varied products, such as spare parts for vehicles, clothing, jewelry, restaurant services, medical consultations, among others. In this regard, the website Criptolugares has registered 184 stores throughout Venezuela that receive BTC, ETH, LTC and DASH as payment.
In Argentina, despite the cessation of currency control in 2015, citizens continue to observe how their income and savings are devalued to the same extent that the Argentine peso has been doing so. Inflation has led to an increase in the demand for dollars, which in turn has generated low availability of the currency. This fact has opened the way to the use of cryptocurrencies as a reserve of value, which has helped some of the population to recover purchasing power and value of their savings without government intervention.
Argentina maintains commercial volumes in Localbitcoins more or less constant, which have been oscillating between three and four million Argentine pesos, in the weeks elapsed from May to June 2018, according to the figures of coin.dance (about 24 BTC in the last week of June).
The southern country was one of the pioneers in the use of Bitcoin in Latin America, given the currency restrictions experienced for several years. In this way, Argentina has become a reference center for the development of the cryptocurrency and blockchain technology markets. There are some 200 Bitcoin ATMs in the country and Buenos Aires, the capital, has 145 companies, organizations and independent professionals that accept bitcoins for their products and services. In addition, the government is receptive to the possibilities of cryptographic currencies are part of the national economy and is open to discuss their use.