Brazil and Argentina are exploring a common currency
Coinbase CEO Brian Armstrong suggested that Brazil and Argentina switch to Bitcoin (BTC) as their national currency as Brazil and Argentina began preparatory work for a potential common currency. This sparked a series of discussions about the viability of Bitcoin (BTC) as a national currency. The Argentine peso and the Brazilian real will continue to be legal tender in both countries until a common currency can be established between them. The two South American nations announced on January 22 that they are beginning to plan for the creation of a common currency.
The action could result in the formation of the world’s second largest currency block.
Armstrong immediately rushed to Twitter when the news broke to suggest that Bitcoin would be the “perfect long-term bet” and to ask whether or not the two governments would consider it.
Raoul Pal, founder and current CEO of Global Macro Investor, opposed the plan.
According to Pal, it is not optimal to have a national currency that is “down 65% during the weak part of the economic cycle and strengthens 10 times during the strong half of the cycle.”
The CEO pointed out that companies would have problems preparing and securing themselves in this case due to the current climate. There were only a few others in town who shared Pal’s opinion.
One person on Twitter claims that the only viable use of bitcoin is as a store of wealth, compared to gold.
They posted the following on their Twitter account: Meanwhile, another Twitter user addressed the poor pace of transactions on the Bitcoin network, complaining that they would take too long for daily use.
However, this was quickly refuted by another community member who claimed that Bitcoin would become the “best medium of commerce” after the completion of the Lightning Network. Armstrong’s statement may have been motivated by the fact that El Salvador, another Latin American nation, recognized bitcoin as a form of legal tender in the year 2021.
The action resulted in several positive outcomes for the nation, one of which was an increase in tourism the following year, which totaled 1.1 million visitors to the nation.
In addition, El Salvador was able to use the proceeds from its Bitcoin purchases to fund the construction of schools as well as a veterinary hospital.
Brazil and Argentina are no strangers to digital assets.
On November 29, the Chamber of Deputies in Brazil adopted a bill that makes it possible to use cryptocurrencies as a form of payment in the country.
Although the new legislation recognizes cryptocurrency as a means of payment, it does not make any particular cryptocurrency legal tender in the country.