Argentina, with a population of 46 million, has become a new fertile ground for the growth of Bitcoin.
By Zhou Zhou, Foresight News
Image caption: Getty images
Will Javier Milei, like the president of El Salvador, turn Argentina into the next "Bitcoin country"?
On November 20, 2023, the well-known Bitcoin supporter, Javier Milei, was successfully elected as the President of Argentina. Milei has promoted the benefits of Bitcoin and cryptocurrencies on multiple public occasions, gaining the support of many Argentine people who have been greatly affected by the devaluation of the national currency.
"Bitcoin is a response to the central bank's scam, it returns money to its original creators - individuals and private enterprises," Milei said. "We can propose to shut down the central bank."
Javier Milei (second from the left in the picture)
Milei believes that cryptocurrencies are a safer alternative to trading than gold and silver, and he advocates for shutting down the central bank. Instead of allowing the Argentine peso to be over-issued, he prefers to let the people choose a more stable currency.
Even as more and more national leaders express support for cryptocurrencies (including Japanese Prime Minister Fumio Kishida, UK Prime Minister Rishi Sunak, South Korean President Yoon Suk-yeol, former US President Donald Trump, and others), Milei is one of the most radical presidents among them.
When a country's economy is on the verge of collapse, Bitcoin will take the opportunity to become popular among the public, as seen in Ukraine, Turkey, and Argentina. Milei was elected as the President of Argentina under such circumstances.
Argentina, the next "Bitcoin country"
El Salvador is known as the "Bitcoin country," with its President Bukele strongly supporting Bitcoin. Not only has El Salvador adopted Bitcoin as its legal tender, but this smallest country in the Americas also purchases one Bitcoin every day.
However, in reality, compared to the "Bitcoin country" El Salvador, the adoption rate of Bitcoin among the Argentine people is even higher.
A report sent to investors by Ark Invest research assistant David Puell in August 2023 showed that Argentina's Bitcoin adoption rate exceeded that of El Salvador. The exception is in tourist destinations, where El Salvador's Bitcoin Beach has attracted many cryptocurrency enthusiasts who widely use Bitcoin and other cryptocurrencies for payments.
According to Americas Market Intelligence data, Argentina's cryptocurrency adoption rate is growing at a fast pace. At the end of 2021, only 12% of Argentine smartphone users purchased cryptocurrencies, but by April 2022, this number had increased to 51%. Additionally, as many as 27% of Argentine consumers claim to be regularly purchasing cryptocurrencies.
And this is only the data from 2022; the acceptance of cryptocurrencies among the Argentine people may be even higher in 2023.
In October 2023, Argentina's inflation rate soared to 121%, which has been ongoing for many years. According to data from the Central Bank of Argentina, the country's annual inflation rate is 113.4%, meaning that the same item purchased by an Argentine person is now more than twice as expensive as it was a year ago. In contrast, China's average inflation rate over the past decade has been around 2.2%, and even during the most severe inflation in 2022, the United States was only around 9%. This indicates that Argentina's national currency and economy are on the brink of collapse, causing rapid devaluation of the domestic population's assets.
To protect their assets from devaluation, many Argentines have chosen stablecoin in US dollars (a type of cryptocurrency that maintains a relatively stable price, usually pegged to the US dollar), Bitcoin, and Ethereum. Since it is illegal in Argentina to "buy dollars with pesos," this has further increased the enthusiasm of the Argentine people to buy Bitcoin or stablecoin in US dollars.
The unique situation in Argentina has provided fertile ground for the development of cryptocurrencies.
For example, the cryptocurrency company Worldcoin, founded by Sam Altman, once became the top downloaded app in the Argentine App Store. Worldcoin set a new record in Argentina by having 9,500 users complete World ID verification in a single day, which means that one person in Argentina successfully passed the verification every 9 seconds.
In addition, various global cryptocurrency exchanges are also making moves in the Argentine market. In August 2023, Binance was approved to become the "first fully licensed" cryptocurrency exchange in El Salvador. Exchanges such as Bybit, Gate, and Kucoin have also made their presence felt in the country.
Global political shift sparks a "new Bitcoin wave"
Contrary to intuition, Bitcoin, as a means and tool to counter the over-issuance of national currencies, has led to more and more national leaders supporting Bitcoin.
In the past two years, an increasing number of presidents, prime ministers, or presidential candidates have publicly expressed support for Bitcoin and cryptocurrencies, including 5 candidates participating in the 2024 US presidential election such as Donald Trump, Ron DeSantis, Francis Suarez, Vivek Ramaswamy, and Robert Kennedy Jr., as well as Lee Jae-myung (presidential candidate of South Korea), Javier Milei (President of Argentina), and Asiwaju Bola Tinubu (presidential candidate of Nigeria). In addition, leaders who have already taken office, such as Nayib Bukele (President of El Salvador), Fumio Kishida (Prime Minister of Japan), Rishi Sunak (Prime Minister of the UK), and Yoon Suk-yeol (President of South Korea), have expressed support or favor for cryptocurrencies.
Economics is the foundation of politics, and politics is the concentrated expression of economics. People vote for their country's currency and future based on their own economic interests. Essentially, whether a country adopts Bitcoin still depends on whether the benefits it brings to the country outweigh the risks it needs to bear. Over time, some countries have found that, based on their own national conditions, adopting Bitcoin actually brings more benefits than drawbacks.
El Salvador chose Bitcoin because, as the smallest country in the Americas, it is not suitable for developing centralized industries such as manufacturing, but is more suitable as a free financial port or a tourist city. By making Bitcoin its legal tender and being the first to promote this free port to the world, it naturally attracts attention and support from the crypto world and has a better driving effect on the local economy. This is also why financial center cities and tourist cities such as Hong Kong, Singapore, and Dubai will not give up Bitcoin and cryptocurrencies.
For countries facing economic collapse like Turkey and Argentina, where the central bank is unable to rescue the domestic economy, or for war-torn countries like Ukraine, where people's assets have been repeatedly devalued due to currency devaluation, in the absence of the US dollar, people naturally choose electronic currencies such as Bitcoin, which can be transferred with just a computer or a mobile phone, or stablecoins pegged to the US dollar.
For countries that have neither experienced war nor economic collapse and have complex domestic economic industries, Bitcoin and its derivatives, as well as Web3, have become an industry for economic development. This is the case for the UK and Japan. In the internet age, only the United States and China have seized this rare industrial opportunity to push the economy to a higher level, while countries like Japan and the UK have missed out on this industrial opportunity. Many people have realized that cryptocurrencies derived from Bitcoin and Web3 may bring about significant changes to the future of the finance and internet industries, which is why they allow Bitcoin trading, allow the establishment of compliant cryptocurrency exchanges in their countries, and actively develop the Web3 industry.
The industrial opportunities brought by Bitcoin are expanding, and more people's interests are tied to it, which is also the reason for the global political shift on the issue of Bitcoin.
Taking the United States as an example, the new president to be elected in 2024 is expected to be a supporter of the Bitcoin and cryptocurrency industry.
According to Foresight News statistics, among the 12 candidates participating in the 2024 US presidential election, as many as 5 presidential candidates have publicly expressed support for Bitcoin and cryptocurrencies, including Donald Trump, Ron DeSantis, Francis Suarez, Vivek Ramaswamy, and Robert Kennedy Jr., the first four are Republicans, and the latter is a Democrat. If any one of them is elected, they are expected to change the current unfriendly environment for Bitcoin and cryptocurrencies under the Biden administration.
Robert Kennedy Jr., the nephew of former US President John F. Kennedy, is a candidate in the 2024 US presidential election. He emphasizes that Bitcoin is a currency against inflation, giving retail investors freedom, rather than holding a legal tender currency controlled by the system. He hopes to exempt Bitcoin from capital gains tax and promises to gradually use Bitcoin as a reserve for the US dollar. He explains that this is a gradual process, and plans to start with a very small scale, perhaps only 1% of national debt will be supported by hard currency, gold, silver, platinum, or Bitcoin.
The global political stance on Bitcoin has already shifted, which will have a profound impact on the cryptocurrency industry.
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