Crypto is tumbling. But to Argentines, it still beats pesos.
By Ana Lankes
Romina Sejas’ entry into the world of cryptocurrency — in a country where digital currencies have soared in popularity despite their volatility — started with pizza.
She was helping prepare pizza dough at a friend’s house a few years ago outside Mendoza, a midsize city in western Argentina. The friend suggested leavening the dough in his mine. “I was so confused,” Sejas said. “I thought mines involved men with helmets and picks.”
Instead, he opened a door into a room where shelves were stacked with whirring computers. Known as miners in tech jargon, the computers work nonstop, verifying cryptocurrency transactions and rewarding their owners in digital currency. They consume so much energy that the room was a functional oven.
Sejas’ friend — who mines ether, one of the world’s most popular cryptocurrencies — explained that getting into cryptocurrency had raised his monthly salary by nearly 40%, from $800 doing odd jobs to $1,100.
Sejas soon became a cryptocurrency convert, joining a wave of Argentines turning to digital currencies as a way to earn more, increase their savings and even conduct everyday business.
Even though the cryptocurrency market has cratered in recent months, many Argentines see it as a safe haven in a country where surging inflation and a grinding economic crisis have battered the national currency, the peso, and people’s bank accounts.
“Money here is like ice cream,” said Marcos Buscaglia, an economist in Buenos Aires, the capital. “If you keep a peso for too long, it melts in terms of how much you can buy with it.”
Because so few Argentines trust the peso, they prefer to save in other currencies, including dollars.
About one-third of Argentines believed that savings kept in pesos in a local bank would hold onto their value over two years, the lowest percentage among respondents in 15 countries surveyed in June by Morning Consult, a data firm based in Washington, D.C.
Nearly 60% of Argentines believed that bitcoin, one of the most popular cryptocurrencies, would retain the value of their savings over that same period, the survey said.
With inflation expected to reach 90% by December, the peso’s worth keeps tumbling, pushing up prices of everyday products, from toilet paper to tuna fish, and making it virtually impossible to save.
The ongoing global supply-chain challenges and the war in Ukraine have contributed to rising prices, but many economists blame Argentina’s woes on years of excessive government spending. Since the government does not collect enough revenue to make up the shortfall, the central bank prints pesos — pushing inflation even higher.
Now, many Argentines are turning to cryptocurrencies as one way to escape the peso. About one-third of Argentines said they bought or sold cryptocurrencies at least once a month, double the percentage of people in the United States, according to a separate survey by Morning Consult.
But cryptocurrency, given its instability, also brings risks.
Vicente Cappelletti, 26, said he had lost around $1,000, about 10% of his savings, when TerraUSD, a so-called stablecoin — a type of cryptocurrency that can be pegged to government currencies such as the dollar — collapsed in May.
Cappelletti, an industrial engineer, said it was easy to lose money “if you are not on top of this all the time and don’t have a lot of information.” He sold all the savings he had held in cryptocurrencies for pesos and put them in a traditional investment fund.
Pablo Sabbatella, who runs an organization in Buenos Aires that offers cryptocurrency classes, said hundreds of people had contacted him in the days after TerraUSD imploded, desperate to recover their money.
“Most people don’t understand what they are doing,” he said.
Bitcoin’s value has dropped from $65,000 in November to about $24,000 today, nearly double the fall in value of the peso. But many Argentines believe cryptocurrencies will rebound — unlike the peso.
Still, for some, cryptocurrency has brought welcome financial benefits.
Sejas, who worked as a server and in telemarketing, earns a living as a cryptocurrency consultant and by teaching workshops about digital currencies. She runs an online marketplace with 7,000 members who can use cryptocurrency to buy almost anything — from hiking boots to a house.
Sejas grew up in a working-class family without access to the internet. Her parents did not finish middle school or have bank accounts. “My family used to measure the length of toilet paper rolls we had, because we had very little,’’ she said.
The money she has made from cryptocurrency has transformed her life. “I’m studying law at a private university,” she said. “I’ve done all the health checks I never did growing up.”
Across the world, people in low-income and emerging countries have become the biggest users of cryptocurrencies, according to various reports, overtaking the United States and Europe.
Digital coins are prized in countries where the local money is volatile and where governments have made it harder for citizens to buy foreign currencies.
Two poor countries, El Salvador and the Central African Republic, have even adopted bitcoin as another official national currency — although the bet has not paid off in El Salvador, and it’s too early to tell whether it will do so in the Central African Republic.
Argentina provides some clues about the appeal of cryptocurrencies.
Argentines have long looked to the dollar as a safe haven. Saving in dollars “is tattooed into our DNA,” said Daniel Convertini, 34, who works in communications for a ride-hailing company. “I learned to do it from my dad and my grandfather, not because I read it in some financial newspaper.”
Argentines are thought to hold more dollars in cash or in foreign financial institutions than almost any other population — other than Americans, said Gian Maria Milesi-Ferretti, an economist at the Brookings Institution.
But three years ago, the Argentine government made it more difficult to buy U.S. currency. Argentines can legally purchase only $200 a month and have to pay hefty taxes on every transaction.
More workers in Argentina than any other country, including many freelancers in jobs such as software developers and translators, choose to receive part of their pay in cryptocurrencies, according to Deel, a payroll company used by more than 100,000 workers in 150 nations.
“I prefer to expose myself to the risks of crypto,” said Convertini, the ride-hailing employee, “than the risks of the Argentine government.”