The smallest cent of Argentine Peso and Satoshi units have reached parity – means one Satoshi is now equal to one Argentine cent. The economy of Argentina is in shambles, and its currency is in free fall. However, no economic expert would have predicted that it would touch crypto levels.
Satoshi, or Sats, is the smallest unit for Bitcoin and is named after the famed creator Satoshi Nakamoto. One hundred million Satoshi make one Bitcoin. On the other hand, one Argentine Peso is made up of 100 cents, just like any other fiat currency. Now, for the first time, both the units have become equal.
Argentine Peso and Satoshi parity is a landmark event
Argentina is a beautiful country – an authentic South American gem. Over the years, the Argentine economy has declined significantly. Its currency now reflects the damage and has plunged to an all-time low. As cents of Argentine Peso and Satoshi reach parity, crypto investors are looking at the bright side where Argentinians would make the switch to Bitcoins.
Officially, one Satoshi unit is now equivalent to 1.2 cents in Argentine Pesos. Additionally, Bitcoin Sats now need to climb one hundred times in order to touch Argentine Peso parity. Unfortunately, if the Argentine economy declines further, such a scenario can become a reality soon.
In the unofficial marketplaces, Bitcoin is selling for 1.2 million Pesos in Argentina. Even the country’s central bank is selling Bitcoin at 700,000. So, the impact of Argentine Peso and Satoshi parity is visible on the ground as well.
Is this parity event a taste of things to come
The high base interest, around 40%, imposed by the central bank, is further damaging the Argentine economy. This makes borrowing a horrendous experience for the average citizen. As a consequence, excess money printing becomes a necessity, which further fuels high inflation rates. The vicious cycle of interest rate and inflation means that the government is in deep debt.
The role of commercial banks in fuelling inflation cannot be ruled out. They buy bonds from the central banks only to sell them in the open market or back to the central bank. This vicious cycle puts pressure on the central government, and commercial banks are making huge money.
The usury grade interest rates charged by the central bank forces many Argentinians to look for alternate monetary solutions. No wonder that crypto is gaining ground fast here. The lack of transparency in the banking system further destroys its credibility in the eyes of the average citizen.
Too much lending by the banks can one day cause complete fallout of the system. Though unfortunate, this situation is something crypto investors have studied well. Thus, the Argentine Peso and Satoshi parity event can give a glimpse into the fiat’s future.