In Argentina where inflation is progressing, the number of locals who protect their own pesos with virtual currency digital wallets is increasing



Argentina is suffering from high inflation, with annual inflation

surpassing 88% as of October 2022. Some citizens are trying to protect their assets by using the investment fund and payment service `` Mercado Pago '', but the economic media Rest of World points out that this service has risks. .

Risky digital wallets help Argentina fight inflation - Rest of World
https://restofworld.org/2022/mercado-pago-app-argentina-inflation-scam/

Inflation continues to rise and is projected to exceed 100% in the coming months. Argentinians have taken a wide range of measures to preserve the value of their money, with the wealthy buying dollars on the black market and dabbling in cryptocurrencies, while the middle and working classes They say they can't afford dollars or cryptocurrencies, or don't know how to get them. As a result, it is said that some citizens are using digital wallets that have spread widely in the country.

Mercado Pago is a digital payment service and investment fund operated by a private company. With this service, you can deposit funds into Mercado Pago digital wallets and access mutual funds. At the time of writing the article, it provides a return of about 60% annually, but Rest of World says that it is used to protect funds that lose value rapidly when deposited in a regular bank account rather than investment. point out.

The reason behind this is that many daily transactions in Argentina have been digitized due to high inflation and the COVID-19 pandemic. According to a central bank report in October 2022, half of the adult population uses digital payment products, and the use of digital wallets has doubled in the past two years. As a result, by 2022 digital payments will account for 50% of all financial transactions in Argentina.



The introduction of digital wallets has also increased rapidly, but since Mercado Libre, which develops Mercado Pago, has built a huge market connection in Argentina, it seems inevitable that Mercado Pago will lead the payment application field. “Mercado Pago is the leading digital wallet in terms of users and e-commerce penetration,” said Ignacio Carballo, head of cryptocurrency and alternative finance at market consultancy Americas Market Intelligence. Concentrating so many users and their money on one app is a concern for cybersecurity experts and economists from a safety standpoint.

Gia Castello, program director at Latin American hacktivist organization 0xche, told Rest of World, 'The authorization code to unlock your Mercado Pago account is sent to your SIM card, so if your phone is stolen, Once it's gone, anyone can access it by simply inserting the SIM card into a new device and resetting the account's password.'

``Users should apply as many factors as possible, such as secure passwords, two-factor authentication, and SIM card encryption, to increase security,'' Castello said. Companies should encourage it and invest as much as possible to strengthen data protection,' he said, saying that Mercado Libre should focus on improving security.

Digital wallets such as Mercado Pago are not required to have the fraud and theft measures required by formal financial institutions, so the problem often tends to get worse. 'The Mercado Pago is said to help improve the situation of the economically unstable, but its high interest rates are rather the weakest,' said Martin Burgos, an economist at the Cultural Center for Cooperation at the Center for Political and Economic Studies. There is a danger of affecting people in a position,' he said. This is because Mercado Pago easily lends money without proper regulation or offers short-term investment at high interest rates.



Experts point out that although poor people often use digital wallets to protect their assets rather than to invest, security risks are common to all digital wallets. On the other hand, digital media The Atlantic points out that American black men, who are also often poor, are forced to dabble in virtual currency instead of applying for mortgages.

The Black Investors Who Were Burned by Bitcoin - The Atlantic
https://www.theatlantic.com/ideas/archive/2022/11/black-investors-bitcoin-cryptocurrency-crash/671750/

The Atlantic, which points out that young blacks are one of the poorest in American society, analyzes that many blacks find it difficult to build wealth across generations. Traditional financial institutions make black people borrow mortgages at higher interest rates and draw lines such as buying houses at low prices. That's what I'm talking about. For these people, virtual currency, which can be purchased without a credit check, was attractive.

According to a survey , while black investors are slower to dabble in cryptocurrencies than white investors, by 2021, when the value of cryptocurrencies reaches a record high, blacks will be more likely than whites to invest in cryptocurrencies. It seems that there was a high percentage of people who owned However, since around November 2021, the value of the entire virtual currency began to decline, and many investors are believed to have lost money.

New York State Senator Zelner Miley addressed the issue, saying, “Cryptocurrency is a way for wealthy corporations and institutions to prey on black people and extract what little wealth they have.”




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