Bitcoin and the crisis
In Argentina, there seems to be a correlation between innovation and economic crisis. Although the country is used to face severe economic breakdowns, it has been the innovation hub of the whole continent for a decade, before countries such as Chile or Colombia became interested in becoming one as well. Companies such as Mercado Libre, Despegar.com and Globant are some of the largest tech companies in Latin America. And they all started in Argentina in the 2000’s, while the country was slowly recovering from a financial crisis that put half the population under the poverty threshold.
Considering that Argentina counts with talented engineers and hackers, ranks among the top ten countries in volume of bitcoin transaction, but faces high economic instability, an obvious question comes to mind: can virtual currency help a country in time of economic struggle? Bitcoin Argentina, a bitcoin promotion foundation, and SatoshiTango, a bitcoin marketplace, tell us whether a virtual currency could be a viable alternative to a broken monetary system.
There are way more bitcoin related projects in Argentina than in any other place in South America (source: http://coinmap.org/)
A rich country struck by a serie of economic breakdowns
It needs to understand first what is Argentina’s economic history. It used to be a rich country, being the most prosperous state in Latin American from the early 19th to World War II. However, it has fallen in only three decades, and hasn’t been able to fully recover yet (see The Economist’s article: “One hundred years ago Argentina was the future. What went wrong?”.
Argentina’s economic influence progressively declined during the second half of the 20th century, and a first financial crisis led to serious inflation in late 1980’s. Later on, from 1998 to 2002, the argentinians had to cope with yet another economic crisis. And the price to get out of the mess was again hyperinflation, from 2002.
More than ten years after, while everyone was thinking that Argentina had already gone through the worst, another crisis shows up, the third one. Vulture Funds have a claim based on a denial of the debt restructuring agreements. Argentina can’t reimburse and is forced to enforce international law to avoid default. The government is doing everything to try to reinstate trust, even lying. This crisis is still going on.
Bitcoin Argentina: “With the crisis, there are more people coming to our meetings”
Bitcoin Argentina is a civil organization dedicated to promote the use of bitcoins. According to their Legal Officer Andrés Chomczyk, there are about 10.000 bitcoin users in Argentina. When asked whether bitcoin be an alternative while the argentinian peso is collapsing, his answer is clear: “this is no magic solution. It is not even viable. With Bitcoin, the user bears the responsibility he usually leaves to the bank.”
And the Central Bank refuses to take care of the topic, obliging organizations such as Bitcoin Argentina to do some lobbying on the government. A large part of their work consist in explaining public officials how virtual currencies work, and why it’s not a danger. A mission of reassuring the administration in order to influence future legislation on the matter.
But virtual currencies could clearly benefit from the mistakes made within a “traditional” monetary frame. The mission of Bitcoin Argentina is actually to promote the use of bitcoins and educate people about the pros and cons. To do so, they have a multidisciplinary team: economists, developers, lawyers, and entrepreneurs are working together to cover all the aspects of the Bitcoin. Indeed, Bitcoin is disruptive in many fields: economics, informatic safety, law, public administration and even social sciences. In time of economic crisis, both worldwide and nationwide, Bitcoin Argentina does see more people coming to the information meetings to learn how virtual currencies work, and what are the alternative solutions to the State’s monetary system.
A Bitcoin Argentina Meetup
Satoshitango: a marketplace to democratize bitcoin use in Argentina
SatoshiTango, is a young startup dedicated to put bitcoins at anyone’s reach. According to Matias Bari, CEO and cofounder, most of the people that are using the platform are bitcoin early adopters, and they are already skilled. But there’s an increasing demand from the population, which can partly be explained by the fact that more people get interested in alternative monetary systems.
Of course, average internet users worry about the safety of their bitcoin accounts. A worry solved by SatoshiTango at once: the platform focuses on the transaction process, and won’t store a single bitcoin for you. They avoid using the traditional virtual wallets as long as possible. They charge a small percentage, 2% on each transaction, and propose some products, like prepaid cards.
Not there yet, but give it a little bit more time
Both Andrés Chomczyk and Matias Bari think that bitcoin is not likely to supplant banks, ever. But they do believe it has the power to have an influence on the traditional monetary system. A virtual currency licence is easier to get than a traditional bank license. A bitcoin startup will go faster than the bureaucracy. “In five years, the bitcoin has achieved more than any other monetary system”, says Matias Bari
Bitcoin is not a mass movement in Argentina, nore it is in any other place in the world. But it can actually have its say, and it may have even more power in a country led by an administration and government known for corruption. As a conclusion, it is not an alternative to an unstable monetary system as such, but it definitely highlights the way to other practices.