Brazil and Argentina are looking at creating a common currency. Bitcoin enthusiasts, however, believe that Bitcoin (BTC) should be used instead.
The Financial Times reported last weekend that ministers said the new currencies would “initially move alongside the Brazilian real and the Argentine peso.”
They claim that the Shul “can increase regional commerce and decrease dependence on US dollars.” Articles by Luiz Inacio Lula da Silva and Alberto Fernandez, Presidents of Brazil & Argentina, confirmed this plan.
What is Bitcoin BTC
Bitcoin is a digital currency that is based on the principles of blockchain technology. Satoshi Nakamoto introduced it in 2010. Blockchain is a technology that allows you to track transactions made by a person over the internet. Blockchain records Bitcoin transactions. Bitcoin miners keep these records. After all, records have been successfully stored on the Blockchain, transactions can only be made Blockchain is distributed and does not have one authority.
However, the blockchain has a problem. It is not scalable. This means that it becomes problematic if a large number of people start using Bitcoin for online transactions. It takes a lot of computing power to do this and to make things worse. The Bitcoin blockchain will eventually have a limited capacity.
Bitcoin solves this problem. They use a decentralized database known as “ledger” which is connected to a cryptocurrency called Bitcoin. This ledger allows the creation and storage of bitcoins without the need to mine them.
Why does Bitcoiners suggest adopting Bitcoin as a currency in Brazil and Argentina?
One of the biggest and fastest-growing economies in the world is Brazil. The country has a GDP of $2.27 trillion (which is equivalent to 6.7% of the world’s GDP). And is also one of the world’s largest exporters. Despite the country’s economic growth and large middle class, People are reluctant to use Bitcoin, and the country’s financial regulators are still not open to Bitcoin. Bitcoin users and supporters across Brazil are trying to get the attention of these regulators by encouraging them to create a digital currency.
The digital currency that they are trying to get adoption is called “Bitcoin”.
Bitcoin has been the brainchild of Andrey Kurennykh who is an entrepreneur with a background in computer science. He has recently started talking to regulators and banks about creating a digital currency for Brazil.
Kurennykh stated that “with the current economic condition and the current economic conditions in Brazil, there is a high need for digital currencies.”
Kurennykh has already started talks with the central bank of Brazil, the Bank of Brazil. As well as the Financial Services Agency of Brazil, which regulates banks. The aim is to convince them to create a digital currency using blockchain technology. Which will eventually help digital payments become faster and cheaper.
“It is already working. We had a first trial in April and the results were really good. Blockchain enabled us to send money to Brazil from the UK. We were able to receive payments faster than with a bank. It saved us at least two days. So we are moving really fast, but we want to make sure that we deliver,” said Kurennykh.
How BTC could provide a better solution to inflation-hit LATAM Fiats?
Inflation in the region of 4% or higher has had the effect of increasing the cost of local Fiat currencies. While this has led to lower demand, it has created an environment where there’s less pressure for local currencies to compete with the US Dollar. This makes Latam Fiat a currency not really seen as much of a threat by most crypto-currency proponents.
The problem however is that when fiat currencies start to hit inflationary pressure The need to move the currency quickly increases to provide for a strong store of value. This is the case with the Argentina Peso or Peso ARB. Where this situation has led to many people turning to Bitcoin and Bitcoin Cash as an alternative.
There are now many reports that the Argentine Peso ARB is moving into the mainstream and showing its viability as a store of value Making it much stronger as a crypto-currency option.
In the case of the Peso ARB, Bitcoin, or any cryptocurrency for that matter Offer an advantage over Fiat because of the blockchain technology that exists within cryptocurrencies. They are still an asset for value creation And the value of the Peso ARB is just as likely to go up or down in value as the US Dollar.
This in turn gives Bitcoin BTC and Cryptocurrencies a better chance of being accepted by consumers As people are used to the US Dollar but less used to Pesos, which have little value and are a good option for value preservation.
The problem though is that while cryptocurrencies may be the answer in Latin America. Both systems have very different economic systems, which must be understood. Investors looking to gain exposure to cryptocurrency asset classes often overlook this.
The Argentinian Peso example is certainly an interesting example And although cryptocurrencies are not always suitable to solve the issues associated with Fiat currencies.