Bitcoin capitalization: Why the crypto-currency no 1 save the economy of Argentina may

the The well-known Bitcoin Investor Tim Draper met recently with the President of Argentina Mauricio Macri and campaigned for it to replace the national currency Peso by Bitcoin. Why the proposal is anything other than a bad joke and, in particular, Argentina, of a currency changeover would benefit.

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Tim Draper proposed to the President of Argentina, the national currency by Bitcoin. Draper would suggest to replace the Euro, US Dollar or Japanese Yen, Bitcoin, then the idea would be rightly considered absurd, and economically only of limited use to classify it. In his proposal, however, specifically to the bitcoin capitalization of the country Argentina. In terms of monetary stability and repayment morale of state bond debt of Argentina, is globally discredited for years completely. The country is in a chronic currency crisis and have been for decades. The confidence in the government's money monopoly is only minimally higher than the Bolivar in Venezuela. The Problem of the two currencies: the high rate of inflation. So why not on a less volatile currency to Dodge and confidence through Outsourcing of the money monopoly?

The crisis as a permanent state and a breeding ground for experiments

wish, of Course, no state will give up control of the money monopoly. In most States, it is also not necessary. But what about the States that fail again and again? Just then, if institutions prove to be weak or inefficient, can Outsourcing benefit by the privatization of money is more good than harm.

in the last year Alone, the inflation rate of Argentine Pesos to the US Dollar amounted to just under 50 percent. For the full year, 2019, the government expects an Inflation rate of around 23 percent. To avoid worse socio-economic fault lines, said the International monetary Fund (IMF), Argentina financial assistance in the amount of 56 billion US dollars.

For over 60 years, Argentina has become the plaything of economic experiments. No other country in the world has experienced in the last decades many economic and political changes of direction, such as Argentina. As hard as it may sound: The height of Argentina is very high. The need for basic economic structures behind issues, on the other hand is as urgent as already long not more.

get A history of failure

the high currency fluctuations in the handle, has Argentina already coupled and in 1991 the Argentine Peso to the US Dollar. The US Dollar pairing, however, was of only limited success. The result is an Overvaluation of the Peso was, so it came already in the middle of the 1990s and beginning of 2000, problems in the repayment of state debt. In order to solve the currency from the strong US Dollar and devalue, coupled to the 2001 Argentine Peso short-hand in addition to the then weak Euro.

The consequence of the arbitrary monetary policy a loss of confidence that led to a flight of capital wave in November 2001. As a last resort, the government decided to tough capital controls and Withdrawal and transaction limits. Such monetary maneuvers and crises are still part of everyday life in Argentina. The previous Attempts to stabilize the Peso are all failed more or less. The solution for this Problem could be found through Bitcoin.

Why is Bitcoin an Alternative to Fiat-pairing

Suppose Argentina would put aside his Pride and state inherent need for Control and on Bitcoin. In the first step, Argentina will have to abandon, as Draper has proposed, entirely on its Fiat currency. The financial cushion economic dislocations and problems that a currency changeover, that could be introduced to the Bitcoin parallel to the Peso. This would mean that Bitcoin as a means of payment, would receive full legal recognition. Salaries and taxes could be paid in Bitcoin, as well as the use of Bus and train.

The result of a competition between Bitcoin and the Peso would be. It would be the freedom to use the currency, the medium of his choice. The risks would be manageable, since you can at any time switch to the bad functioning of the Peso. Vice-versa, but the benefits can be enormous. Finally, a competition between Fiat currency and Bitcoin. The pressure on the Argentine Central Bank to conduct a stable monetary policy, would rise and of a decentralised System is going out.

Abused trust with Bitcoin new

Especially in external trade, could benefit Argentina by a less volatile currency, which is politically neutral, strong. revive In particular, the lack of trust in the institutions could be compensated by the national independent solution called Bitcoin. The Problem of not being able to import Goods, because the domestic currency has been devalued within a short time, could be contained.

Draper even goes a step further and calls for a complete abolition of the Peso in favor of the Bitcoin. As he expressed in his Argentina-visit self-aware:

We talk of Bitcoin and the devaluation of the Peso, and because I propose a bet: If the Peso is worth more than the Bitcoin, and I double my investment in the country. The Bitcoin should be worth more than the Peso, then it must be the national currency explained. This would be the perfect solution, because there is no confidence in the (current) currency.

A line of reasoning that is obvious. People's fear of capital controls and queues in front of the ATMs can be reduced. This new security may cause in the population and in the case of the company to a higher willingness to invest. The lending could benefit by Bitcoin. Finally, the high Inflation leads to high interest rates, which in turn complicates the credit business for both sides. In short: The climate in Argentina investment is hostile. The chances of a bitcoin capitalization should be for Argentina to be greater than the risks associated with it.

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