Coinbase CEO proposes Bitcoin as a common currency for Brazil and Argentina

The head of the cryptocurrency exchange Coinbase, Brian Armstrong, called Bitcoin ‘the right long-term bet’ for Brazil and Argentina, which have been weighing the idea of creating a common currency.

Wonder if they would consider moving to Bitcoin — that would probably be the right long term bet https://t.co/6EKJdwcSnO

— Brian Armstrong (@brian_armstrong) January 23, 2023

According to the Financial Times, Brazil and Argentina intend to create a single currency to reduce dependence on the US dollar and to stimulate regional trade.

Argentinian Economy Minister Sergio Massa spoke of plans to invite participation in the bloc from other Latin American countries. By FT’s estimates, the new union would cover about 5% of global GDP and would become the second-largest in the world after the EU (14%).

“I wonder if they would consider moving to Bitcoin. That would probably be the right long-term bet,” Armstrong wrote.

The former Goldman Sachs executive and macro investor Raoul Pal criticised the idea because of Bitcoin’s volatility.

Currently no one can have a national currency with 100% volatility that declines 65% in the down part of the business cycle and rises 10x in the up cycle. Businesses struggle to plan or hedge that.

— Raoul Pal (@RaoulGMI) January 23, 2023

At the moment, no one can afford a national currency with 100% volatility that falls 65% and then rises tenfold. Businesses struggle to plan and hedge against that,

— he wrote.

The MilkyGemHunter user noted that the first cryptocurrency cannot become a full fiat replacement.

Anyone who thinks #Bitcoin can ever be a fiat replacement doesn’t understand what $BTC 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 🤦‍♂️. Says everything really. https://t.co/4AvwwmfIRv

— Milky (@MilkyGemHunter) January 23, 2023

“Anyone who thinks Bitcoin can ever replace fiat doesn’t understand the essence of Bitcoin. The only real use case it can have is as a store of value to back currency valuation, like gold,” he explained.

As previously noted, in September 2021 the authorities of El Salvador recognized Bitcoin as legal tender. In April 2022 the Central African Republic legalized the first cryptocurrency.

In December 2022, Brazilian President Jair Bolsonaro signed a document establishing Bitcoin’s status as a means of payment and an investment asset. The law will take effect in June 2023.

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