RIO DE JANEIRO, BRAZIL – If a winner of the pandemic had to be nominated, cryptocurrencies would undoubtedly be among the finalists. In the face of the monetary expansion of the governments to deal with the coronacrisis, virtual currencies were seen as the most efficient method of safeguarding value and their adoption grew by almost 900% according to Chainalisys.
In addition, these assets achieved two milestones: a large number of companies added them to their balance sheets (MicroStrategy, Tesla, and Mercado Libre) and El Salvador incorporated Bitcoin as legal tender, a measure that Panama and other nations could imitate.
Read also: Check out our coverage on Argentina
Argentina was also part of this boom. In the face of exchange market controls and inflation that shows no signs of slowing down, local savers have already opened more than two million accounts. The possibility of investing and paying with these instruments is growing day by day.
Not only that: as if there were no parallel exchange rates, the so-called “bitcoin dollar”, which arises from dividing the local price by the international quotation and is usually very close -sometimes above- the blue one, is gaining more and more strength as a reference.
The financial expert and local libertarian leader Carlos Maslaton, highlights how “cheap” it is to dine in Argentina with a photo of the ticket and its conversion to satoshis: minimum unit of the cryptocurrency, which is divided into 100,000,000 parts.
iProUP surveyed a series of prices measured in this digital currency in several countries (according to the quote in local currency) to establish how cheap the country is compared to the rest of the world.
HOW MUCH DOES IT COST TO EAT?
Argentina is one of the main food producers in the world, so it is not surprising that in the Bitcoin Index it is the nation with the cheapest prices to buy groceries.
In fact, a dinner for two people is around 3,000 pesos, which is equivalent to 0.00034 bitcoins. That is, almost 70% less than in Brazil, half that in Mexico or four times cheaper than in the US, Spain or the UK.
A similar scenario occurs with the BigMac, the McDonald’s standard hamburger used by The Economist to measure how much a currency is valued or depreciated.
In the case of the Bitcoin Index, this dish (in combo with soda and fries) costs about 600 pesos, which is equivalent to 0.000074 units of the leading cryptocurrency. The Argentine version is also among the cheapest in the table: 18% compared to the U.S. and 42% compared to Uruguay, if they were to be paid with Bitcoins.
Although consumers in Argentina are noticing how they are filling up their grocery bags less and less, Argentina also leads in two basic supermarket products: oil and meat.
Taking the “ojo de bife” cut as a sample, a kilo costs ARS1,500 (0.00018 BTC). The curious thing is that, measured in cryptocurrency, the country – sixth larger global producer – also has the best prices compared to other beef heavyweights: Brazil (58% more expensive), U.S. (1177%) and Australia (115%). In Europe, prices show at least a 113% gap.
In the case of oil, the differences are even greater. A bottle of one and a half liters costs around ARS237 (0.0000291 bitcoins). That is, between two and three times cheaper than in the U.S. and Uruguay.
“The problem is not that food is worth less, but that the peso is super devalued. There is a terrible loss of value,” Damián Di Pace, director of Focus Market, told iProUP.
On the other hand, Martín Kalos, chief economist of EPYCA, points out to iProUP that “this phenomenon is explained by the lower costs in local currency. We are one of the major food producers and other countries that are not have to add freight and other issues”.
Coca Cola, whose price has an imported component, shows a smaller gap with respect to other markets: a 340-milliliter can costs ARS71 (0.0000087 bitcoins in Argentina). Thus, it costs less than half that in Spain, Chile, United Kingdom, Mexico and Uruguay.
HOW MUCH DOES IT COST TO GET DRESSED?
The textile industry was undoubtedly one of the hardest hit by the pandemic, impacted by the closure of “non-essential” activities during the first stage of the quarantine.
But it is also one of the most “protected” in terms of tariffs and one of those with the highest tax burden throughout its value chain, which would suggest that it is one of the most expensive items in the country. At least, this is what was indicated, until before the coronavirus, by the trips made by Argentines to the malls of Miami to “fill” their suitcases with clothes at bargain prices.
However, the survey of a Levi’s garment, sold in the official store, shows that Argentina offers one of the cheapest prices in the world measured in Bitcoins. A pair of jeans in Argentina costs around ARS8,600 (0.0010 bitcoins), an offer only surpassed by the U.S., where it costs 0.0091. In the rest of the countries surveyed it is sold more expensively: United Kingdom (+186%), Spain (160%) and Chile (+19%).
Another of the most sought-after labels by those who travel abroad is GAP: the traditional hooded sweatshirt is highly demanded by those who visit the big stores in La Florida. In Argentina it is available for 0.000049 bitcoins (ARS4,100), half that in the U.S., Australia or Brazil, or three times that in Mexico. In other countries surveyed there is a difference of more than 120%.
A similar trend can be observed in the sports footwear sector: a pair of Adidas Superstar sneakers can be purchased for ARS16,000 (0.00196 bitcoins) on the German brand’s local site. A cheaper price -measured in cryptocurrencies- than in the official ecommerce of first world countries, similar price to Uruguay and more expensive (17%) than Brazil.
Argentina, in addition, has a rare record. A dress from Zara, a brand known for its affordable prices, costs more in Argentina than in the rest of the countries surveyed. One more page for the local paradoxes manual.
PROPERTY, TECH AND MORE
In the case of durable goods, a two-room apartment of 45 square meters in a residential area, Argentina is cheaper in terms of cryptocurrencies compared to the region, although not compared to markets in other continents.
A property of these characteristics in Palermo is around US$140,000 (3.23 bitcoins). This places it 35% above a similar property in the best area of Sao Paulo (Brazil) and 27% less than in Montevideo, cheaper than in Mexico City (38%) or Santiago (67%). In relation to the rest of the world, an apartment in listed areas of New York or London can be five times these values.
Di Pace indicates that in Argentina properties “lost about 35% of their value”. The amounts at which they are sold are lower than those published by real estate agencies “since the offer does not validate it”.
“There is no demand and there is a lot of supply, because the owners generate in dollars the lowest historical net income: about 1% of the value of the property, when on average it reached 2% and a peak of 6%. Besides, the Rent Law is an additional disincentive to rent them”, he adds.
For automobiles, the Toyota Corolla 1.8 hybrid was taken as a base, since more “popular” cars are not sold in all the markets that make up the index.
The vehicle is removed from a local dealership by paying ARS3 million (0.38 bitcoins), almost half of the BTC (0.69) that an agency in Brazil would demand. The gap stretches in the UK (+127%) and is smaller in Australia (+25%) and the US. (+36%).
According to Di Pace, with the most economical car models, the situation would not be the same, since Argentina “has the second-highest costs for purchase and maintenance”.
The iPhone is another product that every Argentine tourist expects to get at a lower price when traveling to the U.S. Measured in cryptocurrencies, it is available at ARS209,000 (0.0257). That is, cheaper than in Uruguay (23%) and Brazil (26%), but more expensive than in the US. (-30%) or Chile (-15%), two destinations that usually have better prices.
The case of the MacBook is different: it can be bought in a store in Argentina for BTC 0.026 (ARS210,000), barely more expensive than in the USA (0.022) and more expensive than in Chile (0.022). (0.022) and cheaper than in Brazil (+105%), Uruguay (+38%) or Chile (+9%). This competitive price, unlike the iPhone, is due to the fact that Argentina has lower tariffs for the entry of notebooks than for cell phones.
Another service in which Argentina shows good prices is Netflix: the lowest subscription in the world measured in bitcoins, with 699 pesos or BTC 0.0000082. It is three times lower than in Brazil and up to five times lower than in the UK, the US or Spain.
Why is Argentina so cheap? According to Kalos, “companies have no margin to raise prices because purchasing power has eroded so much. With low salaries and very deteriorated employment, there is no purchasing power to validate increases. Companies are adjusting quality, quantity and other items. This, in the short term, puts a cap on increases,” he concludes.
In addition, he states that this price mismatch is also based on the multiple exchange rates: importers bring their products at the import dollar, which is at ARS103, well below the solidarity dollar (ARS172), the cash with liquidation (ARS174) and blue (ARS186).
“Argentina has its own endogenous capacity to distort prices in the domestic market and in comparative terms worldwide. It is difficult for that effect to be reduced if those three variables are not balanced,” Di Pace concludes.