Commenting on Sur, a possible virtual currency being created and used between Brazil and Argentina, Brian Armstrong suggested that both countries adopt Bitcoin as their currency.
Obviously, the Coinbase CEO’s comment divided opinions. While some believe this will eventually happen in the future, others have criticized his thinking.
According to critics, Bitcoin’s volatility remains the biggest drawback. Since January 1st, for example, Bitcoin has actually gone up 38.7%, which isn’t a huge deal. However, its price faced sharp declines before that.
Brian Armstrong recommends that Brazil and Argentina adopt bitcoin
Although Sur has no intention of getting rid of the Brazilian real and the Argentine peso, experts do not think that creating them is a good idea, especially given the financial instability in both countries.
Meanwhile, Brian Armstrong, CEO of the US exchange Coinbase, proposed a more radical idea, which is to adopt Bitcoin as a currency.
“I wonder if they would consider switching to Bitcoin — that would probably be the right bet for the long term.”
I wonder if they would consider moving to Bitcoin – it’s probably the right bet for the long term https://t.co/6EKJdwcSnO
– Brian Armstrong (@brian_armstrong) January 23, 2023
In the comments, some of his followers supported the idea. “it will happen eventually”said one, while others criticized the executive branch’s approach.
One of them was Raoul Pal, founder of Real Vision. According to the former Goldman Sachs, Bitcoin’s volatility is what is stopping more countries from adopting BTC as a currency.
“Currently, no one can own a national currency with 100% volatility that drops 65% in the low part of the business cycle and rises 10 times in the high cycle.”Consider Raoul Pal. “Companies are struggling to plan for or hedge against this.”
Perhaps the greatest example of this difficulty is the bitcoin miners themselves. Although the runaway expansion has been the main cause of many bankruptcies in the sector, BTC’s volatility certainly contributed to this. Finally, some also balance their money by betting on the dollar.
This does not mean that fiat currencies are perfect
According to 2021 data, the Brazilian real has already lost 85% of its purchasing power since its creation in 1994. The slow erosion may not be as noticeable as the depreciation of Bitcoin, but it is there.
On the other hand, the Argentine peso recorded 94.8% inflation last year, doubling the price of goods and services. It is therefore not surprising that our brethren seek refuge in bitcoins and dollar-backed stablecoins.
As for the long-term view mentioned by the CEO of Coinbase, it is plausible that countries will adopt Bitcoin as digital gold. Now, as a currency, its volatility is probably the biggest barrier to this happening. Otherwise, it is difficult to imagine that central banks and governments would want to lose their power over the people.