Bitcoins Soar In Value In Argentina Due To Capital Control Laws, Bitcoin MeetUp Held In Nation’s Capital

Argentina is a nation which goes from financial disaster to financial catastrophe, with governments helping themselves to funds along the way. Bitcoin values are now soaring in Argentina following the country's strict rulings on capital controls.

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The difference between freedom and absence thereof can be measured in many ways, and none less than in Argentina’s current situation whereby public confidence is being eroded yet again by the latest in a series of overtly strict and potentially disastrous monetary policies set in place in the troubled South American country.

This week, Forex Magnates reported on the introduction by President Cristina Kirchner of the nation’s pseudo-currency, the Cedin, however there has been also a shift of interest toward Bitcoin as the net closes in on holders of US Dollars, a practice now illegal in Argentina.

Buenos Aires Bitcoin MeetUp,
Buenos Aires, Argentina, July 5.

On Friday last week, a Bitcoin MeetUp was held in Buenos Aires, the nation’s capital, which attracted 180 delegates, among which were organizations including BTC Global.

With the Peso undergoing yet another period of severe inflation at a rate of 20%, and now President Kirchner’s attempt to lure citizens back into the banking system over which they have absolutely no trust, by attempting to repatriate the US dollars held overseas or in hidden accounts by citizens in exchange for the domestic Cedin, the demand for Bitcoins has rocketed.

Bitcoin Value Soaring In Argentina

Compared to Argentina’s much more freedom-orientated neighbor Uruguay, values of Bitcoins in Buenos Aires are between 30% and 40% higher than just 75 kilometers away in Colonia del Sacramento, Uruguay according to Argentinian Bitcoin expert Mauro Betschart.

The nation exercises capital controls, preventing citizens from exporting their funds to Uruquay for exchange into Dollars, creating even higher demand for crypto-currencies that circumvent the domestic rulings.

Bitcoin In Everyday Use

Foundacion Bitcoin Argentina hosted this particular MeetUp, during which the discussions among participants displayed the overall view that Bitcoin is a very practical currency in Argentina, is demonstrating itself to be more stable than the Peso, and in the event that President Kirchner may succeed to relieve citizens of their safe US Dollars in place of a very unproven Cedin, a means of securing themselves against losing their money.

As a result of this gain in popularity and subsequent high value, many businesses and individuals in Argentina are accepting Bitcoins as payment options and terminating their relationships with credit card companies.

Last year, The central government’s tax agency slapped a 15% levy on credit card purchases abroad in another bid to keep dollars in the country. The 15% surcharge was also applied to debit card transactions overseas and internet purchases made in foreign currencies.

Buying dollars and other foreign currency even for the purposes of travel abroad is virtually banned. Argentinian citizens travelling abroad must request government approval to purchase dollars at the official rate, which is usually extremely unfavorable to the traveler, but extremely favorable to the government.

Travelers are usually sold 70-100 dollars for every day they will spend abroad, however it is at the government’s discretion.

Default Currency For Argentina?

If Argentinians eschew the nation’s banking system, and avoid handing their dollars over in favor of the dubious Cedin, instead adopting Bitcoins, they could go some way toward ending 70 years of successive presidents lining their pockets with the savings of their own people.

Freedom, it seems, is in the ether.

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  1. Jon

    i remember running into an Argentenian in bangkok who insisted on not using an argentenian bank for even the smallest deposit.

    cars actually appreciate in that country as "real" / hard practical assets hold more value.

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  2. Tate

    I feel sorry for the people of Argentina. I really hope that crypto-currencies can improve our lives beyond what we can now imagine.

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  3. Jeff

    Indeed, it is unfortunate that bitcoin was perceived (for good reason) as a threat ultimately to the world’s reserve currency. It’s not enough that the oldest of currencies have been corralled and rendered irrelevant in the eyes of the mainstream…but the bitcoin project was shot out of the sky way before it got started.

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  4. Andrew Saks McLeod

    Yes – that makes sense to me. The internal monetary system has no credibility. Cars are an interesting benchmark. If an Argentinian wants to buy a car, and does so with US Dollars, then in three years time he sells the car, he will have to accept pesos for it. Before 2011 he could have sold it in Dollars. The trouble is that once you buy something, it immediately means the US dollar has been internalized into the Argentine system and a holder of dollars will eventually end up converting them all to pesos by living his every day life – that is if the government doesnt start prosecuting people for holding dollars or forcing them to hand them in in exchange for the Cedin. Bitcoin avoids this completely. I totally understand the Argentine demand for it, as it stops them being restricted in their purchase power, and it prevents them unwillingly exchanging their dollars for a worthless fiat currency that they will ultimately be stuck with.

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