Argentina is facing runaway inflation and the plummeting purchasing power of the peso has forced many of its citizens to consider bitcoin as an alternative currency that promises, "no inflation, no restrictions and financial freedom".
Now, two of the nation's largest private banks, Banco Galicia and Brubank, are taking advantage of Argentina's demand for crypto by allowing customers to purchase bitcoin (BTC-USD), ether (ETH-USD) and the stablecoin, USDC (USDC-USD).
Banco Galicia, one of the largest financial institutions in Argentina, has conducted a survey that found 60% of respondents wanted to invest in cryptocurrencies.
Read more: Crypto live prices
Nicolás de Giovanni, senior product manager of Banco Galicia, spoke to Bitcoin.com to explain how the bank "conducted a survey of our clients and more than 60% want to incorporate these assets into their investment portfolio, with the youngest public being the one that demands them most".
Rising inflation rates are stalking economies across the globe, causing central banks to implement interest rate hikes to tame the rising tide.
The inflation rate in the UK is up 6.2% in the year to date, and in the US it is up 8.5%. People are already feeling the effects of this decrease in the purchasing power of the dollar and pound.
However, these inflation rates pale in comparison to the situation in Argentina, where inflation has risen to 55% annually. Argentina is staring into a grim future if the peso continues its rapid depreciation.
Speaking to Yahoo Finance financial analyst Marcus Sotiriou from GlobalBlock said, "Argentina’s consumer price index climbed 6.7% month-over-month in March, which is the highest level since Argentina was in one of its worst economic crises in 2002".
He added: "Year-over-year inflation has reached 55.1% and this is the highest since June 2019 and the highest annual level of inflation for President Alberto Fernandez’s presidency.
"Many economists are forecasting inflation to be more than 60% annually this year and this would be the biggest devaluation of the Argentinian Peso since the country tamed hyperinflation in the early 1990s."
The financial analyst added that it is now no surprise that in an Argentinian poll 60% of respondents asked for more access to crypto.
He continued: "Argentina has the 6th largest crypto adoption rate in the world, according to data and survey firm Statista, who estimates that 21% of Argentines used or owned crypto by 2021. It is clear that Argentinians demand assets where they are able to preserve wealth without being impacted by the failings of their nation-state. Cryptocurrencies can provide a beneficial alternative where the adoption of blockchain networks can determine token values, as opposed to the dramatic loss in purchasing power of the Peso."
As Changpeng Zhao CEO of Binance tweeted, "there are 2 types of people, those who know they need bitcoin, and those who don't know it yet".
Seeing the demand for digital assets in Argentina, it would seem that Argentinians know they need bitcoin.
Bitcoin adoption in Argentina has not been led by government legislation, such as is the case with the legal tender bill in El Salvador, but instead it has been driven by necessity, with ordinary citizens grasping for a 'sound' long-term store of value.
In the Argentine town of San Martin de Los Andes, more than 40% of businesses now accept bitcoin.
Also, the Lightning Network bitcoin payment platform called Strike has announced that it is now expanding its reach into Argentina.
Jack Mallers, the CEO of Strike tweeted: "With Strike, the Argentinian people can now hold a stable cash balance that can be spent both instantly and with no fees.
"Cheap, instant, cash final, global payments of any size, for anyone, to anywhere, even over Twitter, no inflation, no restrictions, financial freedom.”
Also, a recent study by Galaxy Digital Research found that bitcoin transaction fees on the main blockchain are at an all-time low.
This is not because of a lack of usage on the network, but because of efficient use of block space, which highlights bitcoin’s relative success at scaling today.
At the annual shareholder meeting of Berkshire Hathaway on Saturday, legendary investor Warren Buffet proposed that developing skills that are "in demand" is one of the best protections against the rising rate of inflation.
Regardless of the worth of the currency in your pocket or in your bank account, Buffet claimed that "whatever abilities you have can’t be taken away from you, and they can’t actually be inflated away from you. The best thing you can do is to be exceptionally good at something, as people are going to give you some of what they produce in exchange for what you deliver.”
Excluding a return to the barter system, if the people of Argentina have skills that are in demand they may wish to be paid in bitcoin as opposed to the peso, which is a currency they can't store value in the long-term.
In April, Argentine minister of economy Martín Guzmán warned the nation's currency could soon begin depreciating by 6% per month.
Watch: Steve Hanke: 'Cryptocurrencies are fiat money on steroids'