Bitcoin As It Was Intended?
A small but growing group of Argentinian merchants are requesting bitcoins as payment. By taking the virtual currency, they are able to avoid some capital controls, government exchange rates, and other restrictions imposed by Kirchner’s regime. Views vary about what role bitcoin might serve in the future, but a non-government alternative to state-issued fiat currencies can help limit the damage to ordinary citizens of poor fiscal or monetary choices by issuing governments.
“I was suspicious at first,” says the 29-year-old owner of a budget hostel in Buenos Aires. “But I took the risk, and it was well worth it,” she adds, explaining that she takes credit-card payments from foreign tourists in return for the digital currency. At the moment, she can sell her bitcoins on Argentina’s unofficial currency market for 50 per cent more than she would get at the official exchange rate.
The prolonged use of capital controls in Argentina since 2011 has wreaked havoc for businesses operating in South America’s second-largest economy — not only restricting access to foreign currency and leading to a heavily overvalued official exchange rate, but also exacerbating economic stagnation and double-digit inflation. Under the leftist government of President Cristina Fernández, no immediate change is expected in Argentina’s complicated economic conditions, which have seen the use of bitcoin more than double over the past year, mainly among small businesses. This represents much faster growth than elsewhere in Latin America, according to bitex.la, a regional bitcoin exchange.