The renowned Argentine economist Nicolás Litvinoff, dDirector of Student.nethe said in an exclusive interview DailyBitcoin Your opinions about the future of cryptocurrencies in a pandemic and post-pandemic scenario.
Litvinoff, known for his columns in the middle The nationand for his financial books he is also an enthusiast of Bitcoin. Perhaps one of the first Argentinian economists to speak publicly about cryptocurrencies, Litvinoff had his first encounter with Bitcoin 2013. His enthusiasm for digital finance and his passion for his personal project platform E-learning, Is your moneyIn his opinion, these were the factors that motivated his keen interest in this digital asset.
At the time when the cryptocurrency was worth nearly $ 90, Nicolás Litvinoff was thinking about it Bitcoin As an asset against inflation, they may have been ahead of their time. While inflation has been the topic of the day in Argentina so far, it wasn’t even the shadow of what the economy has to offer today. At that time, a scenario of a pandemic crisis that would shake the global economy was also unlikely.
Since that first encounter with the cryptocurrency Litvinoff had the vision that Bitcoin would be an alternative to “responsible for the financial collapse of the past decades: central banks and financial institutions“”
I think it’s kind of digital gold. What was gold for past generations, I believe it will be Bitcoin for future generations.
Interview with Nicolás Litvinoff
– What role do digital assets like Bitcoin play in the midst of the pandemic crisis?
– When I met BitcoinThe issue of digital payments here in Argentina was very little developed. So capital was a big novelty. Then the explosion of Fintech Digital payments – I mean QR, digital transfers – have been spread.
With that in mind, when we think Bitcoin I do not see great potential as a transaction method for daily payments, since there are already many other alternatives. MercadoPago, for example. But yes I see great value in cross-border payments without so many restrictions and so high costs. It also serves as an asset for capital preservation in the crisis.
I think the great attraction of Bitcoin in times of the pandemic, it has to do with that it serves to counter the negative economic effects of the crisis. Countries have to spend more and more money and take out loans. We know that Bitcoin, According to its protocol, it does the opposite. It is deflationary and this attractiveness is becoming increasingly important given this panorama of indebted nations and devalued currencies.
– During the quarantine, teleworking, online trading and all forms of digital life and coexistence were reassessed. Do you think this is an opportunity for the mass adoption of crypto adoption?
– Something very strange is happening during the pandemic. People are forced to live a digital life. They need to conduct virtual meetings, telework, and use technology tools that they haven’t used before. We still don’t know how this will work in the long run, but I think it will be in conflict with the analog life we had. When this pandemic is over – hopefully soon – we’ll see that many of these new customs will stay here.
In this sense, BitcoinAs I said, it is an attraction as a store of value and investment. But there are other crypto assets like ether, Zcash, or the character from Binancewho could certainly use this to generate a larger mass of users.
Adoption is very difficult to see how close or how far it is. The adoption of Bitcoin It has to happen at some point, but there is no way of knowing if that time in history will be now. Like I said, Bitcoin There are already competitors in the formal economy, for example in electronic payments.
In any case, it seems to me that the economic crisis, which is very likely to come, means that with the increasing use of gold as a preservation of value, the attractiveness of Bitcoin for this purpose, which can lead to an increase in demand.
– Various countries around the world have introduced liquidity injection guidelines to deal with the current crisis. How do you rate this measure? What is the impact on Bitcoin and cryptocurrencies?
– The countries are clearly injecting money to advance something that has long been said: universal wages.
For other reasons related to process automation, robotization, and changes at the technological level, it had been anticipated for some time that a large number of workers would be unemployed in a few years. Therefore, a state must provide a minimum wage for those people who have to reintegrate into employment so that they can meet their basic needs.
For example, in the US, they give every citizen “universal salaryAlmost USD 1,300. And the same thing happens in Argentina and other countries. These measures are associated with a high tax expense, which will have a negative impact. A change that had gradually taken place had to be brought forward and suddenly applied in an unorganized way. On time, as I said, this will result in financial markets suffering and many companies going bankrupt. AND This will increase the attractiveness of assets that do not have these characteristics, such as Bitcoin.
In this context it seems to me that the Fintech They are of great value because they eliminate unnecessary intermediaries. This is an example of how agencies that do not add value tend to disappear. And in that sense Bitcoin It has great powers. The person who owns digital assets does not have to pay the cost of a bank account and has access to their money at all times. But mainly he really owns his assets: because it is not attachable, it cannot be confiscated, it cannot be taken away by anyone or organization that does not have its private key. This now seems to me to be even more attractive.
– In Latin America, countries such as Argentina and Venezuela have already had significant inflation. How does this pandemic crisis affect them in the face of these vulnerable economies? What role do cryptocurrencies play in these scenarios?
– Argentina and Venezuela had very strong inflation processes, which could deteriorate due to the fiscal policy that is being adopted to combat the corona virus.
I wrote about it in the first note BitcoinI talked about its possibility as a value against inflation. Since then, the asset has not only served to secure value, but also as an important source of wealth.
However, the high volatility means that it may not yet be the first alternative for a conservative investor who turns to dollars or another hard currency, for example. However, I think that Stable coins those with the value of “hard coins“- What doesn’t have to be dollars can be euros, pounds or others – could be alternatives for Argentina and Venezuela.
Although I believe that these assets are still in the development phase, they need to be accelerated to become real alternatives.
– Some residents of these countries have already found a “relief” in cryptocurrencies. What is the main benefit of these assets for you?
– For me the main virtue of use Bitcoin today it’s more speculative. I see it more as an asset whose performance can be seen in the medium and long term. I don’t see it as a transaction good. As a preservation of value: Yes, no doubt in the long run.
It is also worth noting that both Argentina and Venezuela not only have significant inflationary processes, but also have financial regulations that restrict access to foreign currencies. In these countries, buying dollars is restricted to people, which can help protect them from the devaluation of the local currency. In Argentina, each person can currently only buy $ 200 a month.
Do you think cryptocurrencies will be used more in these regions after the pandemic?
– Perhaps indirectly, the pandemic can accelerate the deployment of Bitcoin in these countries. And that has to do with what I was talking about before. The new digital life is familiarizing people with digital finance. Platforms for those who have not used it Home bankingor even the population without banks who saw the need to use these systems.
In this sense, Bitcoin It can also be an alternative for those who don’t have a bank Smartphone. It seems to me that the new digital life in which we mostly live in these moments could benefit indirectly Bitcoin.
I think it causes many to lose fear of online money management systems. In Argentina, for example, there are still many people who are afraid to mix technology or the Internet with money. Even if it’s as simple as a bank’s web portal.
– In a post-pandemic scenario, what role do you think these assets will play on a global scale?
I still find it difficult to imagine a post-pandemic scenario. I think we are still in the early stages. I think the most interesting thing is this connection between digital and analog life, and I think crypto assets have a lot to gain in this area.
Maybe that can be added The coronavirus problem has also made countries more nationalisticto close borders and become more restrictive. AND The more restrictions, the more attractive assets are Bitcoin, that they don’t need an organism to exist and that they are not objectionable. In this context, cryptocurrencies could play an important role in a post-pandemic world
– Bitcoin has recently seen its third halving, an event that has raised a lot of expectations in the ecosystem. How do you judge the event? Will it strengthen the currency or is it pure speculation?
-The halving It is a phenomenon to which I have devoted a lot. It seems very positive for the ecosystem of Bitcoin. In terms of the basics, halving They have many special features.
During his previous two cuts, Bitcoin had a repeated technical pattern: a price increase that started a year earlier halving and it ends a year later. So far this year it is clear that there is one rally bullish prehalving. The post-halving We will see, but if the pattern repeats, the price is expected to rise again.
On the other hand, reducing the profit margins for miners – which is almost 50% – can cause many miners to leave the company, which can affect network security.
At this moment, halving occurs in a scenario where the world goes the other way. Countries increase spending money while Bitcoin through protocol it reduces. This undoubtedly distinguishes it from the state needs that countries can have at certain times, which is positive in terms of value.
It is even more important halving the money supply of Bitcoin falls below 2% per year for the first time. The average annual inflation rate used by central banks in different countries for calculations and forecasts is 2%. So for the first time Bitcoin It has an annual growth rate that is lower than the main powers’ inflation rate.
This is also very important as it is the first deflationary currency to show some reasons why the price should continue to rise. The next Halving –That will happen in about four years – will even make the value index based on the scarcity (known as stock-to-flow) from Bitcoin be less than physical gold.
Hannah Estefanía Pérez Interview / DailyBitcoin
Image courtesy of Litvinoff