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Bitcoin Attracts Inflation-Weary Argentinians Despite Crypto Crash | Business section

BUENOS AIRES (Reuters) — At the Crypstation cafe in downtown Buenos Aires, hip young Argentinians order their lattes and pastries surrounded by screens with real-time cryptocurrency price quotes and a huge neon Bitcoin logo. The invoice can also be paid in digital currency.

Savers in the South American nation are increasingly drawn to cryptocurrency to offset years of painful inflation, which now stands at nearly 60%, ignoring a recent stock market crash and the troubled experience of ‘El Salvador with a virtual tender.

“The local environment pushes people to protect their capital in cryptocurrencies and so we see growth accelerating,” said Mauro Liberman, 39, one of the founders of the cafe, which aims to promote the use digital tenders.

“Throughout Latin America, the potential for growth is enormous,” he said, adding that most local users buy it to accumulate their savings. “It’s an avalanche that won’t stop.”

An April report from Americas Market Intelligence showed that crypto penetration in Argentina was 12%, roughly double the level of Mexico and Brazil. Adoption in hyperinflation-ridden Venezuela is even higher, according to a recent report by Chainalysis.

“I lose less”

The draw is a lack of confidence in the local currency, the peso, which has depreciated 14% this year against the dollar. Capital controls limiting exchange to $200 per month are also driving crypto adoption.

Annual inflation rose to 58% in April and could reach 70% this year, a rate that makes crypto attractive, despite the recent crash that saw stablecoins like TerraUSD and Tether slide, and bitcoin drop to an all-time low. of 16 months.

Victor Levrero, 44, an IT specialist in the province of Buenos Aires, invests his extra savings each month in stablecoins and bitcoins after using his $200 quota to convert pesos into dollars. He doesn’t bother with savings in fixed-term pesos.

“Basically it’s because I lose less,” he said. “With Argentina inflation at 60-70% and fixed terms paying 30-35%, it just doesn’t work.”

Local crypto platforms such as Lemon Cash and Buenbit told Reuters their user base had exploded over the past year.

The central bank has repeatedly warned of the risk of investing in volatile digital currencies, and some adopters are taking it with a grain of salt.

Marcelo Vila, 37, a freelance IT technician, said so far he only has a small amount invested in bitcoin and Ether.

“The idea is to increase the proportion of funds invested in crypto,” he said. “But until I know the crypto market, I can’t invest a lot of money in it.”

Sebastian Carsorio, 23, from a poor neighborhood in Escobar outside the capital, has little to lose. He seeks to lift himself out of poverty using a homemade cryptocurrency mine he assembled with recycled computer parts from his job.

“I fixed things up and put them together in a computer,” he told Reuters at his home, where he had screens showing how the mining was going. He started with Ethereum and then Bitcoin – which allowed him to buy land and go back to school.

“I’m going to keep mining because it’s a good way to save,” Carsorio said, explaining that he gets a better exchange rate for pesos than he would on the street. “When money was tight, mining saved me many times.”