In Argentina, libertarian candidate Javier Milei of the La Libertad Avanza party made global news by unexpectedly winning the primary election. Milei is a Bitcoin advocate, saying it represents the return of money to its original creator, the private sector and calling for the abolition of the country’s central bank, which he believes is a scam, a mechanism by which politicians cheat the good people with inflationary tax. This is unsurprising given the country’s current estimated inflation rate of over 100% annualized.
When we hear that Bitcoin is too risky, it is important to remember that this statement comes from a position of substantial privilege, specifically exorbitant privilege. This term, first coined by French Finance Minister Valéry Giscard d’Estaing in the 1960s, refers to the unique benefits that the U.S. enjoys due to the widespread use of the dollar in international trade, finance, and as a global reserve currency.
So, how has the Bitcoin investment experience been for global holders outside of the U.S.? Over the past five years, most Bitcoin holders outside of the U.S. have seen greater gains in Bitcoin due to the depreciation of their local currencies relative to the dollar, in addition to the 31% return of Bitcoin relative to the dollar. Notable outliers over the period include Argentina and Turkey, whose citizens have been able to preserve their purchasing power and mostly weather the political and economic conditions within their countries by leveraging a decentralized and digital store of value.