As Brazil and Argentina began preparatory work for a possible common currency, Coinbase CEO Brian Armstrong floated the idea of the two countries moving to Bitcoin (BTC). This has given rise to various discussions about the viability of BTC as a national currency.
On January 22, the two South American countries announced their preparations to discuss a plan for a common currency that will work in parallel with the Argentine peso and the Brazilian real. The move could potentially create the second largest currency bloc in the world.
As the news broke, Armstrong took to Twitter to suggest that BTC may be the right choice for the project. Coinbase’s CEO described BTC as the “right long-term bet” and wondered if the two countries would consider it.
Founder and CEO of Global Macro Investor Raoul Pal opposed the idea According to Pal, having a national currency that “declines 65% in the down part of the business cycle and rises 10x in the up cycle” is not ideal. The executive pointed out that businesses would have difficulties in planning and coverage in this situation.
Some community members supported Pal’s sentiment and argued against Armstrong’s idea. According to a Twitter user, the only use case for BTC is a store of value like gold. They tweeted:
The ONLY real world use case #Bitcoin can have: A store of value to support currency valuation, as Gold used to.
– Milky (@MilkyGemHunter) January 23, 2023
Meanwhile, one Twitter user brought to increase the speed of transactions on the BTC network and argued that it would take too long to have BTC for everyday use. However, this was immediately countered by another community member who argued that with the Bitcoin Lightning Network, BTC becomes the “best exchange.”
Armstrong’s suggestions may be based on El Salvador, another Latin American country, recognizing BTC as legal tender in 2021. The move brought various benefits to the country such as an increase in tourism in 2022, where 1.1 million people visited the country. In addition, El Salvador was able to build schools and a veterinary hospital using profits from its Bitcoin purchases.
Related: El Salvador’s Bitcoin decision: Tracking adoption a year later
Brazil and Argentina are no strangers to digital assets. On November 29, the Brazilian Chamber of Deputies approved a law that legalizes crypto as a payment method in the country. The country’s president also signed the bill in December and is expected to enter into force in June 2023. Although the new law recognizes crypto as a payment method, it does not make any crypto legal tender within the country.
On December 16th, a province in Argentina approved legislation to issue stablecoins 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.