DIGIVESTASI - Cryptocurrencies are proving to be a solution in the midst of crisis situations. When a country experiences an abnormal rise in inflation rate and its exchange rate deteriorates. The situation in Argentina is a clear example of this phenomenon. According to a report by Lemon Cash, a cryptocurrency exchange based in Argentina, the number of cryptocurrency users in Latin America is expected to reach 40 million by 2023, of which four out of 10 are Argentines.

Alfonso Martell Seward, Lemon Cash's Head of Compliance, explains that cryptocurrencies in general are a way for people to escape the continued devaluation of the Argentine peso. "We are experiencing very high inflation and a lot of restrictions on buying foreign currency, especially for ordinary people. This makes cryptocurrencies the most suitable option for savings," he said on Saturday while providing information in a Chainalysis Institute report quoted in (March 23, 2024). 

In fact, Martell says that while few people in other countries monitor exchange rate movements, almost everyone in Argentina knows and monitors the movement of the country's peso against the US dollar. It is therefore surprising that around 80% of all cryptocurrency users in Argentina prefer to own stablecoins (also known as stablecoins), while the rest invest in Bitcoin and other altcoins. 

Stablecoins are cryptocurrencies whose value is pegged to real-world currencies or commodities. For example, Tether Limited's USDT and Central Consortium's USDC (USD Coin) have a constant value of just about $1, but there are slight differences. "With the increasing adoption of cryptocurrencies, many people here deposit into USDT or USDC as soon as they receive their salary," he added. This phenomenon is also seen as an opportunity for Lemon Cash to launch a cryptocurrency account-linked debit card service.

This will allow Lemon Cash users who have no savings other than virtual currency to continue shopping at supermarkets and restaurants that accept debit card payments. Lemon Cash currently claims to have a user base of up to 2 million people for its products in Argentina who actively use Lemon Cash debit cards for everyday transactions.

Can cryptocurrency become a currency for digital transactions?

The entry of cryptocurrencies in a country cannot be separated from the relevant policies and regulations in that country. In the case of Argentina, the increase in revenue was caused by force majeure due to the economic crisis and extreme spikes in inflation. Argentine President Javier Millei who takes office in December 2023 is also likely to take a progressive approach by using alternative exchange rates, including virtual currencies, in everyday life.

In fact, Millay wants to shut down his country's central bank and completely reduce the use of the Argentine peso, especially against the US dollar. For example, one of the insights from the rise of progressive politics in Argentina is the legality of Bitcoin or cryptocurrencies as the basis of payment agreements for rental of real estate, apartments, and guesthouses. Pintu Academy explains that there is a fundamental difference between saving in US dollars and, like Argentinians, saving in USDT or USDC. The habit of buying cryptocurrencies is actually a result of the digital age in financial transactions.

However, the emergence of Bitcoin has added a new dimension to the world of finance by providing a decentralized alternative to traditional digital money. The difference is that digital money is a digital representation of fiat currencies such as the Indonesian rupiah or Argentine peso. Of course, in a booming country like Indonesia, digital rupiah money is a mainstay in online transactions. Digital money allows users to make transactions quickly and easily within the country and is now available in neighboring countries such as Malaysia, Thailand and Singapore.

"However, this system has limitations including high transaction fees, transaction limits set by service providers, and transaction settlement times that can take up to several business days," explained the Pintu Academy team. Trust in third parties is also at the core of centralized digital currency systems, where user funds are managed and controlled by service providers, thus highlighting the dependence on central authorities to manage transactions.

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