As Brazil and Argentina began preparations for a possible common currency, Coinbase CEO Brian Armstrong floated the idea of the two countries switching to Bitcoin (BTC), sparking various discussions about the viability of BTC as a national currency.
On January 22, the two south american countries announced that they were beginning to prepare to create a common currency that would run parallel to the Argentine peso and the Brazilian real. This move could create the second largest currency bloc in the world.
Upon breaking the news, Armstrong took to Twitter to suggest that BTC would be the “right long-term bet” and wonder if the two countries would consider it.
The founder and CEO of Global Macro Investor, Raoul Pal, opposed to the idea According to Pal, having a national currency that “declines 65% in the low part of the business cycle and rises 10 times in the up cycle” is not ideal. The executive said that companies would have difficulties to plan and cover themselves in this situation.
Some community members supported Pal’s opinion. According to a Twitter user, the only use case for BTC is as a store of value, like gold. They tweeted:
Anyone who thinks #Bitcoin can ever be a fiat replacement doesn’t understand what $BTC es.
The ONLY real world use case #Bitcoin can have: A store of value to back currency valuation, like Gold used to be.
And this guy is the CEO of @coinbase ♂️. Says everything really. https://t.co/4AvwwmfIRv
— Milky (@MilkyGemHunter) January 23, 2023
Anyone who thinks that Bitcoin can be a fiat replacement does not understand what $BTC is.
The ONLY real world use case #Bitcoin can have: a store of value to support the currency’s valuation, the way gold used to be.
And this guy is the CEO of @coinbase ♂️. He says everything really.
In the meantime, another twitter user brought up the slowness of transactions on the Bitcoin network and argued that they would take too long for daily use. However, this was quickly countered by another community member who argument that with the Lightning Network, BTC becomes the “best medium of exchange”.
Armstrong’s suggestion may be based on the fact that El Salvador, another Latin American country, recognized BTC as legal tender back in 2021.. The measure brought several benefits to the country, such as an increase in tourism in 2022, with 1.1 million people visiting the country. Additionally, El Salvador was able to build schools and a veterinary hospital with the profits from their Bitcoin purchases.
Brazil and Argentina are no strangers to digital assets. On November 29, The Brazilian Chamber of Deputies approved a law that legalizes cryptocurrencies as a means of payment in the country. The Brazilian president signed the bill in December, and it is expected to come into force in June 2023. Although the new law recognizes cryptocurrencies as a means of payment, it does not make them legal tender in the country.
On December 16, a province in Argentina passed a law to issue a stablecoin pegged to the US dollar. The token will be available to people over 18 years of age and will be 100% guaranteed by the assets of the province.
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