Microstrategy founder Michael Saylor told Argentines, already suffering from inflation, that they “need bitcoin” now. While many bitcoin users welcome Saylor’s proposal, some critics argue that bitcoin’s volatility makes it an unsuitable replacement for depreciating local currencies.
If you currently live in Argentina 🇦🇷, you need #bitcoin.
– Michael Saylor ⚡️ (@saylor) April 22, 2023
As the Argentine peso continues to slide, causing it to lose more than 40% of its value in the past 12 months, Saylor tweeted that people living in the South American country are desperate for bitcoin right now. In a follow-up tweet, Thaler also shared news that the South American country’s inflation rate peaked at 7.58% per day.
Seiler also reported that some Argentine politicians are in favor of replacing the peso with the dollar. In it, Argentina’s presidential candidate Javier Milei said dollarization would curb inflation, which was officially at 103.4% in March.
Miray, the frontrunner in the Oct. 22 presidential election, said he plans to shut down the central bank before starting the dollarization process. Steve Hanke, a professor of applied economics at Johns Hopkins University, also believes that only through dollarization can South American countries get out of their current predicament.
However, despite Argentina’s general support for dollarization, critics of the dollar, including Saylor’s followers on Twitter, have voiced support for calls to opt for bitcoin.
Even so, some Saylor followers on Twitter, such as Manu Ferrari B, a self-proclaimed “maximum libertarian,” said BTC was too volatile to change where the peso’s drop might be. Users suggest that while a bitcoin-backed stablecoin could be the solution, there is still work to be done.
“But the whole technology is not ready yet. Most bitcoiners who don’t live in Argentina, Lisbon, and Venezuela won’t understand this. Most bitcoiners who talk about Argentina don’t know what they’re talking about. Centralized stablecoins also Not a solution.”
Dollarization of the Argentine economy, besides being a costly undertaking, would result in the country’s central bank becoming dependent on the policies of the Federal Reserve. Dollarization also causes the country’s central bank to lose seigniorage, the profit it makes from printing money.
A recent Southern Policy Center policy brief, dated April 28, 2022, described calls for the dollarization of the economy as “the revival of the zombie idea.” The abstract rejected a proposal by Argentina’s National Assembly to keep the U.S. dollar as the country’s main currency, warning that “the country’s fiscal imbalances will not be eliminated by dollarization.” The summary also said dollarization would continue to require “selective defaults on local currency debt, severe devaluations and/or unilateral conversion of public deposits.”
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