By CCN: If you thought bitcoin’s recovery to $8,000 was impressive, take a look at these charts below. While most traders are focused on bitcoin’s price in dollars, the recent surge has propelled bitcoin to all-time highs in Argentina and Sudan’s local currencies. Even if…
By CCN: If you thought bitcoin’s recovery to $8,000 was impressive, take a look at these charts below. While most traders are focused on bitcoin’s price in dollars, the recent surge has propelled bitcoin to all-time highs in Argentina and Sudan’s local currencies.
Even if you bought the top of 2017’s bitcoin bubble in Argentine pesos, you’d be in profit right now. As for the Sudanese pound, if you bought the crypto top, you’d have doubled your money today.
As fiat currencies in developing nations succumb to rapid inflation and capital controls, bitcoin is proving itself as a powerful store of value and sound money alternative.
We’ve talked at length of the power of bitcoin in Venezuela where hyperinflation has ravaged the economy. But a similar story is emerging elsewhere in South America, in Argentina.
Inflation in Argentina quietly shot up 50 percent in 2018. That figure is expected to climb a further 36 percent by the end of the year. The country is propped up by a massive $50 billion loan from the IMF and the Argentine central bank has been forced to raise interest rates to 60 percent.
With the Argentine peso crumbling, bitcoin looks positively stable. As one commentator pointed out, bitcoin would have provided a better store of value than an Argentine bank over the last two years:
“If an Argentinian had bought Bitcoin at the highest point of the “biggest bubble in history”, in 2017, he would have been better off than leaving his money in his Argentinian bank account. So tell me again how Bitcoin is a horrible store of value.”
The narrative is confirmed by record bitcoin transactions volumes on the ground in Argentina. During bitcoin’s latest price run, local transaction volume in Argentina approached $14 million weekly.
Rapid inflation has also hit war-torn Sudan, peaking at 44 percent in February alone. The central bank has since triggered strict capital controls on they money supply. Some ATMs no longer give out cash and banks have stopped some balance transfers.
Priced in local currency, bitcoin hit 200,000 Sudanese pounds at crypto’s 2017 peak. At today’s price, bitcoin is worth almost double.
As the Wall Street Journal reported, many Sudanese locals have turned to bitcoin to send money to family.
Bitcoin venture capital partner Nic Carter believes this phenomenon will grow as the inflationary nature of fiat currencies inevitably kills their value.
With a fixed supply and no central point of control, bitcoin is a powerful alternative to the current money system. As Argentina, Sudan, and Venezuela prove, fiat money is at risk of spiralling inflation and capital controls which can wreck economies.
Bitcoin, on the other hand, is deflationary and isn’t beholden to a central bank or government.
The argument for bitcoin makes a lot more sense in developing nations where hyper-inflation, capital controls, and lack of banking infrastructure creates a real demand for an alternative like bitcoin.
We’re seeing that play out in bitcoin transaction volumes. According to CoinDance metrics, cryptocurrency demand is at record levels in Venezuela, Argentina, Kazakhstan, Peru, and Thailand right now.
As we all focus on crypto developments on Wall Street, the real revolution is happening elsewhere.
This article was edited by Samburaj Das.