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As Brazil and Argentina began preparations for a potential common currency, COINBASE CEO Brian Armstrong launched the idea of both countries moving to Bitcoin (). This has given rise to a number of discussions on the viability of the BTC as a national currency.
On Jan. 22, the two South American countries announced their preparations to discuss a plan for a common currency that will run parallel with the Argentine peso and the Brazilian real. The movement has the potential to create the world's second largest monetary block.
As the news came to light, Armstrong took on Twitter to suggest that btc may be the right choice for the project. The president of the coinbase describes btc as the "good long-term bet" and wonders if both countries would envisage it.
Global Macro Investor founder and CEO Raoul Pal opposed the idea. According to pal, having a national currency which "decreases by 65% in the lower part of the economic cycle and increases 10x in the upper cycle" is not ideal. The executive stressed that companies would find it difficult to plan and cover in this situation.
Some members of the community supported the pal feeling and advocated against Armstrong's idea. According to a twitter user, the only instance of usage for btc is a valuable store like gold. They tweeted:
Anyone who thinks #Bitcoin can ever be a fiat replacement doesn't understand what is.
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 ?>?. He's the one who says everything. https://t.co/4AvwwmfIRv
— Milky (@MilkyGemHunter) January 23, 2023
Meanwhile, one Twitter user brought up the speed of transactions in the BTC network and argued that it would take too long to have BTC for daily use. However, this was immediately countered by another community member who argued that with the Bitcoin Lightning Network, BTC becomes the “best medium of exchange.”
Armstrong's suggestions could be based on El Salvador, another country in Latin America that recognized the BTC as legal tender in 2021. The move brought various benefits to the country like a surge 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 Nov. 29, Brazil’s 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 take effect in June 2023. While the new legislation recognizes crypto as a means of payment, it does not make crypto a legal course in the country.
On Dec. 16, a province in Argentina has approved legislation to issue a stablecoin pegged to the United States dollar. The token will be offered to individuals over the age of 18 and will be fully secured by provincial property.
