could you elaborate? I'm ignorant. From my perspective it seems like the value of bitcoin changes too much, having risen sharply in value recently, to spend as currency, but I'm also assuming that there are other more stable options. What kind of things do you buy, and how often? What sort of things do you do considering that the value might sky-rocket or dive overnight?
To add to what xtracto said, I live in Argentina and our currency has an annual inflation rate of 50% (it's actually higher, but I'll stick to official numbers).
Banks here have a bad history of keeping your foreign currency deposits when things go south and then converting your balance at a government mandated exchange rate, which was a fraction of the real value (think 1/10 of the real value).
Now, the government can always make cryptos illegal, but news like OP show that globally we moving towards regulation instead of prohibition, so for now cryptos are were we can still take refuge.
So here you can either keep your savings in a currency that evaporates, buy real state at insanely high price because that's where big money is stored, illegaly purchase foreign currency and physically hide it somewhere like a criminal, our you can legally purchase crypto and keep it safe outside the reaches of our governments and banks.
do you use crypto for daily purchases, like going to a corner store or buying groceries, or is it more informal and a way to transfer money between friends? Or is it a store of value and you liquidate some periodically for purchases? Also thank you for educating me, this makes much more sense than anything from my perspective.
Not op. But I do buy groceries with crypto. Amazon is kinda irrelevant around here (Switzerland) and the biggest local competitor accepts crypto for several years now. Some places even accept it for taxes.
I rarely used to for P2P transfers, but I find crypto super useful for online shopping.
it's literally easier to move your money overseas to an international broker than to try to operate here, which is what people with enough money do.
we tried to invest some backup cash we had in a company here a couple a years ago and it was a nightmare. the only way to operate was through phone calls.
EDIT: I read a bit to the check the current state of affairs and it's still complicated, and apparently there is a currency conversion process that is hit by a very heavy fee. Something similar happens with credit cards, when we pay for a service or product in a foreign currency we get charged a 65% tax that puts the official USD exchange rate in line with the real one.
> I'm ignorant. From my perspective it seems like the value of bitcoin changes too much,
The value of Bitcoin fluctuates UP and DOWN too much *when compared to the US Dollar*.
But compared say, to the Mexican Peso or say (more extremely) Venezuelan Peso, it has gone steadily up. So for us who don't live in a place with a sufficiently stable central bank and a trustful government, Cryptocurrencies are one avenue to safeguard the value of our income.
If what you are saying is true, then there is a huge arbitrage opportunity there, unless there are sufficient transaction costs or legal deterrents involved.
If the value of bitcoin relative to MXN is steadily going up (meaning that MXN is losing value relative to USD), then it automatically mean that the value of MXN is also steadily losing value relative to USD. So at the end, from a "value" point of view, nothing will change for you because both currencies are "pegged" to USD. If parity doesn't hold, there is an arbitrage opportunity there; suppose
1 USD = 2 BTC
1 USD = 4 MXN
The implied exchange rate MXNUSD would be BTC = 2 MXN. But imagine as you say that for some reason, this doesn't hold, and actually 1 BTC = 5 MXN in Mexico. I have then an incentive to buy 1 BTC at 0.5 USD, use that 1 BTC to buy 5 MXN, and sell all that MXN at the original rate of 0.25 USD, earning 1.25 USD.
I can understand that it may be easier to physically hold BTC as opposed to fiat USD in that situation, but I don't get the value store proposition. Anyone saying that they see Bitcoin as a store value, are implying they believe that in the future, some people will want to pay for 1 Bitcoin the same amount (or higher than) it's currently worth. It's a perfectly valid claim to make, but what is this belief based on?
The value of MXN is going down relative to BTC and to USD at the same time. There is no arbitrage opportunity, beyond the obvious slow drip of money moving between the two and maintaining this balance.
You know, this is one of those things that would go away with the snap of a finger if the leaders cared about their country. Okay it's harder than that because the IMF is completely backwards but let's assume that the Venezuelan government was willing to listen and the IMF actually understood economics. It wouldn't take a year to fix the problem. Shortages may last longer because the real world is slow.
