Bitcoin still appeals to inflation-weary Argentines despite cryptocurrency crash

BUENOS AIRES, May 30 (Reuters) – Trendy young Argentines order their lattes and pastries at the Crypstation café in downtown Buenos Aires, surrounded by screens Live cryptocurrency quotes and giant neon bitcoin sign. Bills can also be paid in digital currency.

Savers in the South American country are increasingly attracted to cryptocurrencies to offset years of painful inflation, now at nearly 60% — shrugging off the recent market meltdown and El Salvador’s virtual bidding experiment.read more

“The local environment is pushing people to protect their capital in cryptocurrencies, so we’re seeing an acceleration in growth,” said Mauro Liberman, 39, one of the founders of a cafe that promotes the use of digital currencies.

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“Across Latin America, the growth potential is huge,” he said, adding that most local users bought it to stock up on savings. “It’s an avalanche that won’t stop.”

An April report by Americas Market Intelligence showed that Argentina has a cryptocurrency penetration rate of 12 percent, roughly double the levels of Mexico and Brazil. According to a recent Chainalysis report, adoption rates are even higher in hyperinflation-plagued Venezuela.read more

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“I lost less”

The draw was a lack of confidence in the local peso, which has lost 14% of its value against the dollar this year. Capital controls limiting foreign exchange to $200 per month have also spurred cryptocurrency adoption.

Annual inflation rose to 58% in April and could be as high as 70% this year, a rate that makes cryptocurrencies attractive even though the recent crash has seen stablecoins like TerraUSD and Tether slide and Bitcoin tumbles to a 16-month low .

Victor Levrero, 44, an IT specialist in the province of Buenos Aires, put his extra savings into stablecoins and bitcoin each month after using up his $200 quota to convert pesos into dollars. He doesn’t bother with regular pesos savings.

“Basically, it was because I lost less,” he said. “Inflation in Argentina is between 60-70% and fixed term payments of 30-35%, it just doesn’t work.”

Local cryptocurrency platforms such as Lemon Cash and Buenbit told Reuters their user bases had exploded in the last year.

The central bank has repeatedly warned about the risks of investing in volatile digital currencies, and some adopters are taking it cautiously.

Marcelo Vila, 37, a self-employed computer technician, said he currently has only small investments in bitcoin and ether.

“The idea is to expand the proportion of money invested in cryptocurrencies,” he said. “But until I understand the crypto market, I can’t put a lot of money into it.”

Sebastian Carsorio, 23, from a poor Escobar community on the outskirts of the capital, has little to lose. He is seeking to escape poverty using a homemade cryptocurrency mine, which he assembled from computer parts recycled from his work.

“I fix these things and put them in the computer,” he told Reuters from his home, showing the mining progress on his screen. He started with Ethereum, then Bitcoin – which allowed him to buy some land and go back to school.

“I’ll keep mining because it’s a good way to save,” Casorio said, explaining that he’s better than the peso exchange rate he gets on the street. “Mining saved me many times when money was tight.”

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Reporting by Hernan Nessi and Agustin Geist; Additional reporting by Horacio Soria; Editing by Adam Jourdan and Rosalba O’Brien

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