Argentines are using black market exchanges, known locally as “crypto caves,” to buy United States dollar stablecoins in a bid to escape strict currency controls and the triple-digit inflation of the Argentine peso. Argentines are also reportedly shunning Bitcoin (<a href="https://cointelegraph.com/bitcoin-price" rel="noopener noreferrer nofollow">BTC</a>) due to perceived volatility.
Crypto caves are underground peer-to-peer exchanges operating secretly and tucked away in “non-visible places,” CryptoMarket’s strategic alliances manager Guillermo Escudero told Cointelegraph.
<blockquote data-ct-non-breakable="true">
 “It is not a normal commercial place with public attention. They are hidden places where one goes with prior confirmation to meet and can change their local fiat money against cryptocurrencies, mostly USDT.”
</blockquote>
Escudero said that locals can get a far better rate than the official exchange rate if they use crypto caves. Local banks cannot officially accept U.S. dollars, so crypto wallets have become popular to store dollar-pegged stablecoins like Tether (<a href="https://cointelegraph.com/tether-price-index" rel="noopener noreferrer nofollow">USDT</a>).
“Having the ability to save in “digital dollars” allows Argentinians to save money in the long run as the local currency loses value,” Ramiero Raposo, vice president at crypto payroll firm Bitwage, said in a note to Cointelegraph.
<blockquote class="twitter-tweet">
 I lived in Argentina from 14’-17’ where I had to go to a ‘cave’ each month to illegally sell my pesos to buy USD, just so I could guarantee a flight home each year. Anyone who doesn’t understand why crypto/defi is revolutionary is living under a rock. <a href="https://twitter.com/hashtag/bitcoin?src=hash&amp;ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">#bitcoin</a> <a href="https://twitter.com/hashtag/ElSalvador?src=hash&amp;ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">#ElSalvador</a> <a href="https://t.co/IxwjS8Tv5G" rel="noopener noreferrer nofollow">pic.twitter.com/IxwjS8Tv5G</a>— Rich Kane (@richkane_) <a href="https://twitter.com/richkane_/status/1402635822407499778?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">June 9, 2021</a>
</blockquote>
Crypto caves emerged from “financial caves” — entities that previously operated as public money exchanges but went into hiding when Argentina brought in currency controls in the 1980s.
It led to the “blue dollar” — Argentina’s unofficial and informal dollar rate — which currently <a href="https://bluedollar.net/" target="_blank" rel="noopener noreferrer nofollow">offers</a> locals 1,115 pesos for $1.
In December 2023, the official <a href="https://www.google.com/finance/quote/USD-ARS" target="_blank" rel="noopener noreferrer nofollow">rate</a> hovered around 365 pesos to the dollar but has increased to 829 pesos since economist Javier Milei <a href="https://cointelegraph.com/news/javier-milei-wins-argentina-presidential-election" rel="noopener noreferrer nofollow">became the country’s new president</a>.
Argentina’s <a href="https://cointelegraph.com/news/bitcoin-all-time-high-argentina-hyperinflation-outpaces-gains" rel="noopener noreferrer nofollow"></a><a href="https://cointelegraph.com/news/bitcoin-all-time-high-argentina-hyperinflation-outpaces-gains" rel="noopener noreferrer nofollow">inflation rate hit a 32-year high</a> of 211.4% in 2023, according to the latest Jan. 11 figures from the country’s statistics agency, the National Institute of Statistics and Censuses.
Escudero said some crypto caves have been investigated and even raided by authorities. However, the crypto caves don’t give off a “bad image” to locals, as they’re one of the few places they can trade away their inflation-ridden pesos.
<blockquote data-ct-non-breakable="true">
 “[This is a result of] having a government that arbitrarily prohibits access to a money exchange market that should be free as it is in the rest of the world.”
</blockquote>
<blockquote class="twitter-tweet">
 I bought some Pesos in Argentina via a P2P exchange using USDT on Tron. Here's my experience First of all, why go P2P? Because the official USD-ARS exchange rate is 2.5-3x worse than the "blue dollar" rate. I actually tried: I withdrew 30€ from an ATM, paid 10€ in… <a href="https://t.co/KC4uymdfyq" rel="noopener noreferrer nofollow">pic.twitter.com/KC4uymdfyq</a>— Alexei Zamyatin (@alexeiZamyatin) <a href="https://twitter.com/alexeiZamyatin/status/1724140325013188903?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">November 13, 2023</a>
</blockquote>
However, Escudero explained that currency controls are “widely expected” to be wiped under Milei’s leadership, which could drive down demand for crypto caves as access to official channels becomes available.
“But since the tax pressure is so high in Argentina, we will continue to have a ‘black market’ that has a preference to operate under the radar of the comptroller entities,” Escudero added.
Escudero said crypto caves also exist in Cuba, Venezuela, Iran and several African countries.
<h3 data-ct-non-breakable="true" id="argentines-avoid-bitcoin-payments">Argentines avoid Bitcoin payments</h3>
In December 2023, Argentina moved to legalize Bitcoin as a <a href="https://cointelegraph.com/news/argentina-contracts-settled-bitcoin" rel="noopener noreferrer nofollow">payment method for contracts</a> — part of Milei’s election promise to revamp the country’s economy.
CryptoMarket CEO María Fernanda Juppet told Cointelegraph that while the change signals progress, “it’s not wise from a business perspective” to carry out contracts in Bitcoin amid Argentina’s high-inflation environment.
<blockquote data-ct-non-breakable="true">
 “At some point, the transaction will have to convert into Argentine pesos, with its inflation issues [and] you agree to a contract using Bitcoin as a payment method that can have daily price variations over 10% based on a tweet.”
</blockquote>
Related: <a href="https://cointelegraph.com/news/argentina-regularization-law-undeclared-crypto" rel="noopener noreferrer nofollow">Argentina scraps crypto regularization in Milei’s new economic reform</a>
“From a corporation’s point of view, that is adding volatility over volatility,” Juppet added.
Escudero explained that Argentines prefer to use USDT on the Tron network as fewer conversions are involved.
“This is due to its speed of accreditation, and at its accessible cost, in addition to the fact that it has no variation being its parity 1:1, he said. “This avoids the need to make conversions at the time of sending balances.”
<blockquote class="twitter-tweet">
 Here in Argentina usually the preferred method of payment is USDT over Tron (if someone sends it), mainly because of lower tx costs. <a href="https://t.co/dnSxB2fBJ0" rel="noopener noreferrer nofollow">https://t.co/dnSxB2fBJ0</a>— BowTiedMara (@BowTiedMara) <a href="https://twitter.com/BowTiedMara/status/1680184021735682049?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">July 15, 2023</a>
</blockquote>
Magazine:&nbsp;<a href="https://cointelegraph.com/magazine/bitcoin-ogs-experts-how-to-protect-your-crypto/" rel="noopener noreferrer nofollow">How to protect your crypto in a volatile market — Bitcoin OGs and experts weigh in</a>

In inflation-torn Argentina, locals use ‘crypto caves’ — and avoid Bitcoin

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