Why are more and more Argentines choosing digital currencies to pay and save?



iPrUP | Innovation | In first person

It is estimated that there are currently more than 100 million people in the world who are using cryptocurrencies to buy products or hire services, to rent, acquire a property or a vehicle, and it is even beginning to be imposed as a means of payment in the art world.

Although cryptocurrencies have not yet become widespread, it cannot be denied that they are becoming increasingly popular: today their users are equivalent to more than two populations in Argentina.

In the N5 Insight section of the YouTube channel of N5 Now, a company specialized in the financial sector and recently recognized by Microsoft as Latin America’s Startup of the Year, the popularity of these digital assets is analyzed and what we need to know in order not to miss out on be part of this global trend.

“The growth of cryptocurrencies in recent years was sustained. In 2018 there were 35 million users and today there are more than 100 million. Likewise, in the region there are more and more companies that accept these digital assets as a form of payment, as can be seen in Brazil, Argentina and Venezuela “, explains Julián Colombo, CEO of N5.

Until March of this year, in Argentina there were 508 companies that agreed to operate with Bitcoin and its variations, Ethereum and Cardano. A good example of what is happening is Mercado Libre, which opened a section on its platform for the purchase and sale of real estate through cryptocurrencies, which represent high transactions in those digital assets.

“In many Latin American economies, cryptocurrency became an alternative to the dollar to protect assets,” explains the economist who has more than 20 years of experience in the sector.

The use of these currencies can be seen to a greater extent in countries of the region such as Peru, Argentina, Chile or Mexico, as well as in Switzerland, Spain, the United States, Germany, Canada and Japan.

The B-side of cryptomania

Faced with this scenario, Colombo warns of the advantages and disadvantages of the use and production of this virtual money.

A favorable point that the manager highlights is that digital currencies have a predefined limit, known to all and invariable, for example, that of bitcoin is 21 million, of which 18.8 have already been mined.

These three characteristics make them attractive to the general public because having a ceiling avoids indiscriminate issuance and devaluation, as is often the case with traditional currencies.

Likewise, cryptocurrencies promoted a “philosophically” positive technology that is blockchain, which is presented as the solution to various problems such as dependence on servers or computer attacks and, therefore, makes possible the decentralization of authority, democratization of trust, reduction of bureaucracy, and transparency of information.

At the same time, the CEO of N5 highlights that many Central Banks are re-evaluating their position on cryptocurrencies, as was reflected with the issuance of the Sand Dollar, by the State of Bahamas.

“The change of view of the Central Banks on cryptocurrencies is due to the conviction that, if they become more representative, they could imply a limitation to the ability to control the money supply and interest rates,” adds Colombo .

On the other hand, the economist emphasizes that speculation in these currencies is one of their great disadvantages: “one could say that, if a good or service rises and falls, people gain and lose accordingly. And that speculation is not something neither good nor bad, but neutral.

“But in real life, access to information is not the same for everyone, so it happens that asymmetries deepen, with a tendency for the rich who entered first to win, with a lot of money and the poor who entered late and with little to lose, but perhaps that is all they have,¨  he explains.

Another point to keep in mind is that most cryptocurrencies are an abstract, human-to-human agreement with no real value “that depends on the convention being upheld.” “It is something that does not have a significant real value at the same time that its exchange value has enormous risks of fluctuating from one minute to the next.”

An example of the sudden changes in the price of the asset is what happened in April of this year when Bitcoin reached its maximum value and, following the statements of Elon Musk, CEO of Tesla, its amount plummeted by half.

In the same way, it points out that the increase in the mining of these assets has tangible and very negative impacts in ecological terms. “It is worrying that we use large amounts of finite real resources, such as dirty energies, to create imaginary conventions like a bitcoin.” In addition to the enormous net damage to the world, it could lead to the incorrect allocation of economic resources in a country.

Faced with this growth scenario, the economist gives a possible alternative that States could consider if they want to generate a finite, defined and digital supply: stricter commitments on the supply of their own currencies, which could be digital, without the need for mining or energy consumption.

Editorial: IproUp

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