Latin American countries with weak currencies are turning to cryptocurrencies instead.
Citizens of Venezuela and Argentina appear to be using Bitcoin to escape inflation. Cointelegraph reports that weekly Bitcoin trading volumes on the LocalBitcoins peer-to-peer trading platform in Argentina and Venezuela reached all-time highs in their respective national currencies just before the end of last year.
In mid-September, the Central Bank of Argentina had raised a floor on its benchmark interest rate in an effort to curb the country’s inflation. In November, in an attempt to slow capital outflow, it imposed a ban on buying cryptocurrencies using credit cards. The policy appears to have backfired.
CoinDance cryptocurrency data show that during the week ended December 21, over 32.6 million Argentine pesos (about $545,000) were traded on LocalBitcoins, 45% more than the record registered two weeks before. In Venezuela, over 248 billion bolivars (about $5 million at the time) were traded on LocalBitcoins during the same week in December, 18.5% more than the record volume registered during the previous week.
Ironically, the Central Bank of Venezuela is itself reportedly exploring the possibility of holding bitcoin and Ether (Eth), at least in part to avoid sanctions.