The presence of bitcoin continues to accelerate in Argentina, a country that has been severely affected by government-sanctioned anti-free market policies. Citizens of Argentina have long utilized the U.S. dollar as a means to transact outside of the traditional system, yet bitcoin has been gaining traction in the country over the last few years. Recently, the Latin American director of digital exchange Binance told AFP News, “The number of user accounts for investing in ‘cryptos’ has multiplied by ten in Argentina since 2020,” detailing a staggering increase in the number of users.
The Economic History Of Argentina
Argentina entered the 20th century as one of the wealthiest countries throughout the entire world. Prior to World War I, Argentina was richer than the traditional European superpowers of France, Germany and their Spanish colonizers. The country continued to grow throughout the first half of the 20th century, albeit at a slower pace than the rest of the world but still maintaining a positive growth rate.
Yet, in 1975, the economic scenario in the country quickly changed; from 1975 to 1990, the country experienced economic stagnation and dramatic inflation. Starting in 1975, the government enacted the Rodrigazo, a series of centrally planned government policies that aimed to centralize economic decision-making. As a result, inflation averaged over 300% per year from 1975 to 1990, reaching severe hyperinflation rates of 2,600% in 1989 and 1990. These bouts of government-induced hyperinflation destroyed the savings of citizens preserving their wealth in the Argentintian peso and set the country into a devastating downward spiral.
Throughout the 1990s, Argentina had a law of convertibility that fixed the peso’s exchange rate at par with the U.S. dollar, meaning every peso had to be backed by a 1:1 U.S. dollar reserve ratio. This temporarily stalled inflation for about a decade,…