ARGENTINA and Bitcoin would appear to be a match made in heaven. On the one side stands a country which since the second world war has suffered numerous bouts of inflation, and even hyperinflation--rising to as high as 20,000% in the late 1980s (see our recent briefing on the country). Things are better these days, but inflation is still expected to hit 38% by the end of the year. On the other is a crypto-currency, backed by cold mathematics rather than a populist government. It is meant to provide protection against inflation. And it allows getting around the cepo, the set of legal restrictions put in place to prevent money from leaving the country. Legal purchase of dollars, for instance, is subject to fixed monthly limits at the exchange rate set by the government (usually 30-40% less than the black market rate). Credit-card transactions made outside Argentina incur a 35% surcharge.

So when Bitcoin enthusiasts claim that the use of bitcoin in Argentina is surging, that rings true. How popular really is Bitcoin in the country?

Because Bitcoin is a decentralised system, gauging its popularity in any given country is difficult. But there are signs that adoption is indeed on the rise in Argentina. Some 130 bricks-and-mortar businesses now accept bitcoin, according to CoinMap—more than in any other country in South America. Downloads of software to buy and sell bitcoin are also said to be growing. And since late May, Argentines have had access to a local bitcoin exchange, called Bitex.la.

Yet the best indicator may be that the country’s central bank seems to be getting nervous. On May 27th it issued a statement discouraging the use of virtual currencies. These¸ the bank said, are not backed by the government, and are subject to wild fluctuations in price, among other terrors. It warned that "the risks associated with transactions involving the purchase or use of virtual coins as payment, are supported exclusively by their users."

Other central banks have issued similar warnings recently, however. And Bitcoin users in Argentina are clearly not yet a mass movement. Even the Argentina Bitcoin Foundation says that people holding the crypto-currency only number between 15,000 and 20,000.

One reason for the limited penetration so far is that using bitcoin still requires a high level of digital skills—which are not in rich supply in Argentina (the country regularly ranks in the lower third of indices comparing countries’ digital readiness). Another is that holding bitcoin is indeed risky: in late 2013 and early 2014 the dollar value of bitcoin dropped from nearly $1,200 to below $600 in a few weeks (the rate has since recovered somewhat).

What is more, getting hold of Bitcoin in Argentina is not that easy if one doesn’t have a bank account abroad to buy them there. The pool of bitcoin in Argentina is limited and unlikely to grow quickly. Local Bitcoin business, such as BTCTrip and customers of BitPagos, sell the goods and services abroad, so allow some bitcoins to get into the country. But government rules limit the inflow and creation of bitcoin: international money transfers, which could be used to buy bitcoin abroad, are restricted, as is the import of computers to “mine” bitcoin (which is how they are issued).

Bitcoin champions have high hopes for Argentina to become their currency’s showcase. But at this point the country is more an example of how far Bitcoin still has to go to become a currency that can compete with established ones. That said, if Bitcoin keeps improving (better ease use, less volatility and more liquidity) and Argentina’s monetary policy doesn’t, the country could one day indeed become a hotbed for the crypto-currency or its digital alternatives.