Bitcoin in Troubled Economies: The Potential of Cryptocurrencies in Argentina and Venezuela

Abstract

The rise of cryptocurrencies in Argentina and Venezuela in recent years shows how a highly distressed economy could become fertile ground for decentralized digital currency. This article analyzes similar traits between these two nations and examines why a collateral result of high inflation, tangled monetary regulation, and political instability could be the rapid growth of cryptocurrencies that are not linked to a central bank. Mistrust in central government authorities and national currency volatility that surpasses that of traded cryptocurrencies open a window for intangible ways of storing the falling value of local fiat currency. This article sets a general framework in order to have a better understanding of the growth of decentralized digital currencies in developing economies and continues to explain the rise of such technology in recent times in Argentina and Venezuela.