Bitcoin Dreams Endure to Savers Crushed by CPIBy Camila Russo
Apr. 17, 2013
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Banned from buying dollars and confronted by the fastest inflation in the Western Hemisphere, some Argentine savers are seeking refuge in bitcoin as a store of value even after the virtual currency's collapse.
TradeHill Inc., the San Francisco-based bitcoin exchange, plans to open its first Latin American office in Argentina after demand surged the most in the region, founder Jered Kenna said in an interview on April 12. Rodolfo Andragnes, an agent for bitcoin buyers and sellers who organizes bi-monthly meetings for enthusiasts in Buenos Aires, says while local trading of the unregulated currency still equals less than 0.1 percent of the almost $1 billion of the nation’s foreign-exchange transactions on a weekly basis, it has more than doubled since February.
Argentines are trying to preserve their savings in everything from bitcoins to cars to skirt President Cristina Fernandez de Kirchner’s restrictions on buying dollars, with the peso forecast to weaken the most of any currency in the world this year and local-currency bonds suffering the worst returns in Latin America. While the price of bitcoins plunged to $79 from a high of $234 in the past week and caused Mt. Gox exchange to halt trading on April 11, the sixfold increase this year is enticing Argentines whose savings have been decimated by inflation rising at 25 percent annually.
“Some Argentines are willing to take very risky investments and bet on this thing which feels almost like a Ponzi scheme because they feel their options locally are even more dangerous,” Claudio Loser, a former director at the International Monetary Fund, who now heads the Centennial Group Latin America research company, said in a telephone interview from Washington. “They don’t see an easier way to save money.”