The central bank of Argentina formally forbade consumers on November 1 to buy bitcoin (BTC) and other cryptocurrency with credit cards. What followed was the exact opposite of what the Argentine government had expected.
Demand for bitcoin is only increasing
You can see that on the graph below. This was created based on data from the peer-to-peer platform LocalBitcoins, collected by Coin.Dance. At LocalBitcoins anyone can buy or sell bitcoin directly to another person, without the intervention of a trade show. In countries where the economy is poor and bitcoin is wanted to retain value, a premium is often placed on top of the global trade price.
Peso must be stimulated at all costs
One of the most important factors in the high acceptance of crypto in Argentina is the high volatility of the Argentine Peso. Over the past five years, the value of the peso against the US dollar has fallen by more than 85%. The inhabitants of the country traditionally have little faith in their currencies. Many prefer the relatively stable dollar instead of their own currency.
And that is of course not good for the Argentine Peso. On 1 September, the Central Bank of Argentina imposed restrictions to breathe new life into the peso. Citizens can buy up to $ 10,000 a month and need special permissions to exceed that limit. For most citizens, ten thousand dollars is an immense amount, and it is. That is why the Central Bank has taken even more measures. Until the end of this year, Argentines can buy up to $ 200 through their own bank account and up to $ 100 with cash.
The following measure by the Central Bank of Argentina to stimulate the peso took effect on October 31. This time it concerned cryptocurrencys. Citizens were forbidden to buy cryptocurrencys with credit cards. Rumors are that many citizens are exchanging their pesos for cryptocurrencys, and then selling them for dollars. And that often happened offshore, but also at home.
Trade volume rises more often after prohibition
That the trade volume of bitcoin in Argentina is rising after a ban is in line with a trend. You also saw this in India and China, where volumes increased after a ban. That is what the COO of Shapeshift Jon says:
“Capital controls seem to have a direct correlation with increased interest of people in bitcoin because it is something the government has no control over. The population of the country sees that these capital controls have been introduced and then they look for another way. And that is the power of bitcoin and cryptocurrencys. They offer a good way to store and transfer value. This is what citizens need when dealing with this type of uncertainty. “
Argentina can serve as an example (or warning) for the rest of the world. In any case, it is a textbook example of how bitcoin and other cryptos can be used as value storage in economically vulnerable countries. If the government wants to be less dependent on the US dollar, then it is better to embrace and understand the crypto industry. The people will find their way.