There are countries where the official currency has major competitors. Argentina with Euro Blue or Venezuela with Blue Dollar are two currencies obtainable on the black market and although they are neither authorized nor regulated they move a lot as they allow you to stay away from devaluation or possible fluctuations. local in the economy.

Illegal exchange rates. Cryptocurrencies such as Bitcoin should be distinguished from these unofficial currencies. The former may not have official support as in El Salvador, but their sales are not prosecuted. On the other hand, Euros or Blue Dollars are illegal and you have to go directly to the black market to get them.

It is a situation where the price is quite different, although it is a European euro. It depends on the day, but currently this currency is trading for over 2 Euros. It doubles its current value in the European Union. The same is true for the Blue Dollar, which is 75% more expensive on the black market.

I am looking for a refuge value. In many markets, cryptocurrencies are used partly for their speculative value. But really one of Bitcoin’s main arguments is that it competes with gold as a safe value over time. Despite its volatility, analysts like Goldman Sachs advocate this idea.

The same idea is what drives many investors to bet on illegal currencies or unrecognized exchange rates. Despite the risks and problems of operating on the black market, they prefer to buy these euros or dollars at an unofficial exchange rate rather than depreciation of local currencies.

They can accumulate wealth in their local currency, but they risk losing value quickly. By turning to the black market, they hope that this capital will be better protected over time.

Emerging economies took notice. The growth of these unofficial currencies has come in parallel with the cryptocurrency boom in emerging economies. There are more and more ways to transact in currencies that differ from those of each country’s bank, causing changes in dynamics.

We see an example of this in Africa, where Bitcoin has increased by more than 1,000%. They’re still a small market in absolute terms, but the idea of ​​avoiding bank fees and being able to participate in a more global economy is appealing.

If you can’t beat them, join them. This growth did not go unnoticed, and there are countries like the Central African Republic that have decided to turn Bitcoin into a legal tender. If the public has chosen to store their wealth in a currency that is not in your control, perhaps the most reasonable course is to allow that capital to return to the country. By allowing Bitcoin to operate, what these governments are doing is trying to hold onto wealth and spend it in the country.

The playground doesn’t look good. Restricting cash withdrawals from banks has unforeseen consequences. The term comes from Argentina, but we have seen similar situations in other countries. A recent example is Nigeria. At the end of 2022, the Central Bank of Nigeria decided to set a maximum limit of 100,000 naira, about 200 euros. The aim was to stop inflation and money laundering. But this limitation has allowed alternatives like Bitcoin to grow strongly.

Bitcoin was the solution, but suffers from the same problems it promised to fix. Bitcoin picks up on the promises of Euro Blue, but without going to the black market. That’s why they started buying Bitcoin in bulk from Nigeria. What happened? In practice, although we are facing a global cryptocurrency, Bitcoin in Nigeria has not managed to escape from local problems.

Although Bitcoin is listed as around 21,000 Euros, in Nigeria Bitcoin is paid at around 35,000 Euros. 60% more. This is an extra fee known as the “Bitcoin premium”, which is charged by local exchanges and eventually becomes known to residents.

Bitcoin is a global mechanism trying to evade banks. However, as we move through different exchanges, we see that local effects outweigh. That is the importance of the reporter. It is better to have a well-known exchange platform rather than black market sellers.

Image | ilzidesigns