“You Need Bitcoin” – Critics Insist BTC Is Too Volatile – Featured Bitcoin News
Micheal Saylor, the founder of Microstrategy, has told people living in inflation-stricken Argentina that they now “need bitcoin”. While many bitcoiners have welcomed Saylor’s proposal, a few critics have said the top cryptoasset’s volatility makes it an unsuitable alternative for the faltering local currency.
The dollarization option
As Argentina’s currency – the peso – continued its slide that has seen it depreciate by more than 40% over the past twelve months, Micheal Saylor, the founder of Microstrategy, has weighed in by tweeting that people living in the South American country now “needs bitcoin.” In a subsequent chirpingSaylor, a bitcoin critic turned advocate, also shared news about the South American country’s inflation rate after it reached 7.58% per day.
If you live in Argentina🇦🇷 right now, you need #bitcoin.
— Michael Saylor⚡️ (@saylor) 22 April 2023
The tweets from Saylor, whose firm is one of the largest corporate owners of BTC, came as reports suggested that some Argentine politicians prefer to replace the peso with the US dollar. As reported by Bitcoin.com News, Argentine presidential aspirant Javier Milei has said that dollarization could put the brakes on inflation, which officially stood at 103.4% in March.
Milei, who is seen as a front-runner in the October 22 presidential election, said he plans to shut down the central bank before starting the dollarization process. Steve Hanke, a professor of applied economics at Johns Hopkins University, has similarly suggested that the South American country can only escape its current predicament by using the dollar.
Argentina has become an overburdened IMF deadbeat. By my measure, the Argentine peso has depreciated against the USD by 52% since January 1, 2022. The ARG needs to dump the peso and dollarize NOW. Argentina, WORLD’S GREATEST DEADBEAT. pic.twitter.com/4HyFei1WzO
— Steve Hanke (@steve_hanke) 25 April 2023
Still, despite the seemingly widespread support for dollarization in Argentina, critics of the US dollar, including Saylor’s followers on Twitter, have voiced their support for his call for citizens to opt for bitcoin instead.
Politics: Argentina’s fiscal imbalances will not disappear after dollarization
However, some of Saylor’s followers on Twitter such as Manu Ferrari B, a self-proclaimed “liberty maximalist,” so BTC is too volatile and thus cannot be a viable alternative to the falling peso just yet. The user suggested that while it is possible for a bitcoin-backed stablecoin to become the solution, more still needs to be done. He added:
But the whole technology is not ready yet. Most Bitcoiners who do not live in Argentina, Líbano, Venezuela will not understand this. Most bitcoiners talking about Argentina don’t know what they are talking about. Fully centralized stablecoins running on fiat legacy rails are not a solution either.
In addition to being a costly undertaking, dollarization of the Argentine economy will result in the country’s central bank being subordinated to the policy of the US central bank. Dollarization would also cause the country’s central bank to lose seigniorage – the profit earned by printing currency.
A policy brief published by the Policy Center for the New South on 28 April 2022 described the calls for dollarization of the economy as “the revival of a zombie idea”. It condemns the Argentine Congress’ proposal to keep the dollar as the country’s primary currency, warning that the country’s “governmental imbalances will not be eliminated by dollarization.” The brief also said dollarization would require “a selective default on domestic currency debt, a brutal devaluation and/or a unilateral conversion of public deposits.”
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