Argentina is experiencing extremely high levels of inflation with the value of its money down by 50%.
Bitcoin’s price in pesos brings to life this reality, with peer to peer data showing Argentinians are paying more and more money for the asset, while not quite getting more of the asset.
Some 70 million pesos was spent on bitcoin last week, but they got less coins than when they spent 40 million pesos and just in April.Peso peer to peer bitcoin volumes, June 2020 Bitcoin purchased peer to peer in Argentina, June 2020
At the time bitcoin’s price was about 25% lower at $7,000 to the current $9,400, but the value of pesos seemingly has fallen 75% further or even more.
Those 67 bitcoins bought in April are worth half a million dollars at the $7,000 price. The 59 bitcoins bought last week are worth $550,000 dollars at current price, making it a 10% cost increase in dollars, but a circa 50% increase in pesos.Argentina’s crazy central bank interest rates, June 2020
The above is corroborated by official data showing Argentina’s inflation is running at about 50% to 40% a month year on year.
The GDP there has been contracting for now two years in every quarter, while borrowing money in pesos is not just expensive, but very punishing with it at 80% a year just last month.
Many Argentinians therefore may be escaping to bitcoin, with the above peer to peer volumes being only indicative as Argentina has many convenient instant trading exchange and quite a few bitcoin ATMs.
“A volatile cryptocurrency can go up or down. A currency with a 2000% annual inflation can only go down,” an Argentinian says regarding suggestions you wouldn’t escape to bitcoin because it is volatile.
Bitcoin’s volatility depends on supply and demand, with the unit itself being unchangeable.
While where Argentinian fiat money is concerned, they can increase the supply of money by 40% or halve it, and all within weeks.