Bitcoin Is Disrupting the Argentine Economy

HughPickens.com writes: Nathaniel Popper writes in the NYT that with its volatile currency and dysfunctional banks, Argentina is the perfect place to experiment with a new digital currency. The number of Bitcoin users in Argentina is relatively small; it barely registers on most charts of global Bitcoin usage. But Argentina has been quietly gaining renown in technology circles as the first, and almost only, place where Bitcoins are being regularly used by ordinary people for real commercial transactions. For example, BitPagos is selling bitcoins in over 8,000 Argentine convenience stores and is helping more than 200 hotels, both cheap and boutique, take credit-card payments from foreign tourists. The money brought to Argentina using Bitcoin circumvents the onerous government restrictions on receiving money from abroad

The Rock Hostel is one of hundreds of hotels in the country using BitPagos to collect credit-card payments from foreign customers. If owner Rodriguez Pons accepted credit-card payments from American customers through the usual financial channels, customers would be billed in dollars, and when those dollars came to Pons's Argentine bank account, they would be converted at the official rate, about 30 percent lower than the black-market rate. It would also take 20 days for Pons to get her pesos. BitPagos helped counter these drawbacks by taking the credit-card payment in the United States and then using the dollars to buy Bitcoins, generally from Coinbase, before sending them to Pons immediately.

Bitcoin proponents like to say that the currency first became popular in the places that needed it least, like Europe and the United States, given how smoothly the currencies and financial services work there. It makes sense that a place like Argentina would be fertile ground for a virtual currency. Inflation is constant: At the end of 2014, for example, the peso was worth 25 percent less than it was at the beginning of the year. And that adversity pales in comparison with past bouts of hyperinflation, defaults on national debts and currency revaluations. "In the long run, Bitcoin will be very disruptive to the developed world," says Dan Morehead, a former Goldman Sachs executive who now runs a hedge fund focused on Bitcoin. Things are happening sooner in Argentina, he says, because its financial system creates hassles for the people there. But, he added, "Argentina is just a more extreme example of the situation in every country."

Comments

/.er bitcoin comments are the best!

[Anonymous Coward]

seriously guys, you missed the boat and you're angry, we get it!

now have a rational discussion for once!

Re:/.er bitcoin comments are the best!

[evanbd]

They've hardly missed the boat. If Bitcoin really disrupts things in Argentina, then that means Argentinians holding Bitcoins instead of holding pesos or dollars. That would imply they hold a number of Bitcoins worth some vaguely similar amount to what their current cash holdings are worth. Given that there are about $50B USD worth of pesos, and only $3B USD worth of Bitcoins, then either the price goes up a bunch or Bitcoin isn't actually being all that disruptive.

Re:/.er bitcoin comments are the best!

[drnb]

That would imply they hold a number of Bitcoins worth some vaguely similar amount to what their current cash holdings are worth.

No it would not. Bitcoin would need to be a reliable store of value for the above to be true. And "store of value" is the currency characteristic where bitcoin fails the hardest.

Bitcoin is very useful as a payment technology. But holding bitcoins is an absolute risk. Which is why most merchants who accept bitcoins for payment never actually see or touch a bitcoin. Their merchant exchange immediately converts to fiat upon receipt and the merchant receives only this fiat currency.

Now could the Argentine Peso also be a poor store of value, thats plausible. The US Dollar or Euro, these are likely to be reasonable stores of value. Going from one risky to another risky, peso to bitcoin, does not make sense compared to going peso to dollar or euro, unless people are prevented from doing so. If prevented from going to dollar or euro then a move to bitcoin would seem more an act of desperation.

Re:/.er bitcoin comments are the best!

[Archangel Michael]

Actually it doesn't have to match anything. It has to match what the market in Argentina bears. And since Bitcoin is deflationary, while Pesos are Inflationary they counter each other very well. By having Bitcoins, the average Argentine can increase wealth by performing services and charging BitCoins for them.

In terms of monetary terms, withholding payment in Inflationary currency (Peso) is a net gain, and unless you are paid in cash (or equivalent) immediately, Pesos are a losing proposition for workers. On the other hand, withholding payment in a deflationary currency (BitCoin) is bad for the employer, and good for the worker.

This will result in better economy for Argentina, at least for workers.

Re:/.er bitcoin comments are the best!

[UncleGizmo]

..which, from TFA it is - an act of economic desperation. Their currency loses 25% per year and trying to convert it to dollars takes time and huge fees - losing roughly 30%. If bitcoin provides a better, faster arbitrage, then it is, in this case, a more "reliable store of value."

I think it's more of a damning comment on Argentinian currency rather than a spotlight on the quality and fungibility of bitcoins.

Re:/.er bitcoin comments are the best!

[TWX]

Argentina already went through this headache when the US Dollar became the defacto standard for awhile while the Argentine Peso was pegged by law to the US Dollar and contracts were drafted using the Dollar, not the Peso, as the unit of currency. This became a problem when Argentina wanted to decouple from the Dollar; it meant that Argentines, earning money in Pesos, would be entirely dependent on the exchange rate at the moment to pay back their debts. I expect that's why the currency exchange laws were passed, to make the transition back to their own currency and thus their own monetary policy possible.

Bitcoin, if it gets too big, destabilizes this again, as now people do not look to their own national currency, and their already weak national currency grows even weaker. If you want an example of the effects of a nation not being able to control monetary policy, look at Greece as a constituent of the EU; they can't control monetary policy through the usual means (ie, controlling access to new money) so they can't devalue the currency when necessary to keep the economy flowing.

I expect that the laws will be interpreted to mean that Bitcoin users are in violation, or else new laws will be written to force Bitcoin exchange to follow the same rules as any other currency exchange. Argentina has struggled with their money for too long to let something destabilize the government like this.

Re:/.er bitcoin comments are the best!

[HornWumpus]

This is an unqualified good thing. Any laws the Argentinians pass will be ineffective. Their government will have to stop printing money or see their currency (and fiscal policy) become irrelevant.

Hopefully it wakes up the rest of the worlds 'print and spenders'. The sooner they pull their heads out of their asses the better.

Re:/.er bitcoin comments are the best!

[jythie]

*nod* BTC is generally a bad solution, but it is better than worse ones.

Re:/.er bitcoin comments are the best!

[luis_a_espinal]

..which, from TFA it is - an act of economic desperation. Their currency loses 25% per year and trying to convert it to dollars takes time and huge fees - losing roughly 30%. If bitcoin provides a better, faster arbitrage, then it is, in this case, a more "reliable store of value."

I think it's more of a damning comment on Argentinian currency rather than a spotlight on the quality and fungibility of bitcoins.

Or it could be seen also as a spotlight of bitcoins as a tool to preserve wealth in a free-falling economy.

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[mysidia]

Then either the price goes up a bunch or Bitcoin isn't actually being all that disruptive.

You missed a third alternative.... The price of Argentinian Pesos crashes utterly. So that amount of pesos officially worth "$50B USD" crashes down and becomes worth "$1B USD"

Argentenians buying Bitcoins doesn't necessarily elevate the value of Bitcoins ----- it can equally devaluate Pesos, resulting in more and more Pesos sold for fewer and fewer BTC per Peso.

Re:/.er bitcoin comments are the best!

[ShanghaiBill]

This will result in better economy for Argentina, at least for workers.

It could mean a better economy for all Argentinians, and for people everywhere else as well. Once a precedent has been set that common citizens can opt-out of their national currency and banking systems, it will put pressure on governments to govern more responsibly to keep them from defecting to Bitcoin.

Re:/.er bitcoin comments are the best!

[drnb]

Their currency loses 25% per year ...

Bitcoin recently lost 75% in a year.

Re:/.er bitcoin comments are the best!

[ShanghaiBill]

Argentina already went through this headache when the US Dollar became the defacto standard

Tying the peso to the dollar was a good policy, and gave Argentina a huge opportunity to borrow at much lower costs to invest for the future. Instead they went deep into debt while squandering the money on unaffordable social programs and cheap imports. Much like what Greece did when they switched to the euro. But, unlike Greece, nobody is willing to give Argentina a bail out.

Re:/.er bitcoin comments are the best!

[Hognoxious]

It could do all that wonderful stuff.

It could also cause them to make using bitcoin illegal and throw people out of aircraft over the sea if they transgress.

Re:/.er bitcoin comments are the best!

[Archangel Michael]

People want to know why the rich keep getting richer? It is because they don't deal in currency, they deal in assets. Currency is only used when converting one asset for another. Most Currency is inflationary, meaning if you hold it, you lose. This is such a little known fact of life. BitCoin, should it survive will ultimately be deflationary currency, meaning it gains value the longer you hold it.

Think of it this way, you work hard, when you're young, you can retire if you save anything, because deflationary currency becomes an asset. But that doesn't bode well for the rich n powerful, or politicians who need a dependent class of people to take care of.

Re:/.er bitcoin comments are the best!

[drnb]

Or it could be seen also as a spotlight of bitcoins as a tool to preserve wealth in a free-falling economy.

In the last year or so bitcoin prices have been in freefall too. Its somewhat stabilized at the moment but bitcoin prices are still speculation driven. One negative policy decision from the Chinese government regarding bitcoin and it could easily be in freefall again.

As a payment method bitcoin is great. But as a store of value its "tulips", at least for now while its dominated by speculators.

Re:/.er bitcoin comments are the best!

[turbidostato]

"..which, from TFA it is - an act of economic desperation."

And blatantly illegal. From TFA (note is mine): "The money brought to Argentina using Bitcoin circumvents the onerous government restrictions on receiving money from abroad"

So what they found is that it's easier for Argentinians -at least some of them, to support a black market on bitcoins than dollars (which has been the standard in the past).

"I think it's more of a damning comment on Argentinian currency"

Not so much about Argentinian currency as Argentinian economy (which the former is tied to).

Re:/.er bitcoin comments are the best!

[antiperimetaparalogo]

If you want an example of the effects of a nation not being able to control monetary policy, look at Greece as a constituent of the EU; they can't control monetary policy through the usual means (ie, controlling access to new money) so they can't devalue the currency when necessary to keep the economy flowing.

I agree with you - most people don't appreciate enough their state's control over the value of their currency... until it is ceased! I think that one of the biggest problems with this new Bitcoin "thing" is that people fail to understand what you just described, and that monetary (as a specialization) policy effects the (and must -for things to "just work"- be effected from) general economy.

Re:/.er bitcoin comments are the best!

[Anonymous Coward]

seriously guys, you missed the boat and you're angry, we get it!

now have a rational discussion for once!

Yeah, because all those bitcoin businesses are doing SO WELL these days.

Re:/.er bitcoin comments are the best!

[turbidostato]

"In terms of monetary terms, withholding payment in Inflationary currency (Peso) is a net gain, and unless you are paid in cash (or equivalent) immediately, Pesos are a losing proposition for workers. On the other hand, withholding payment in a deflationary currency (BitCoin) is bad for the employer, and good for the worker."

It isn't, since the employee is paid by the employer. Infation means, as you properly stated, that you don't want to store money, you being either an employer or a worker, money burns in your hands -I remember back in the early eighties an Argentinian telling me people would buy basically anything (his example was people buying half a dozen table fans) in order not to collect money. This means growing internal market and a demand pressure to the offer side of the economy, which is good for everybody. As an added bonus, inflation makes internal debts to dillute with time and it is usually the working class the one with a bigger share of total wealth put in debt (i.e. mortage).

A deflationary currency, on the other hand, makes advantageus just sit on top of your pile of money and seeing it grow just by doing nothing. The more money you have, the better for you and the higher incentive to do nothing with it. So, who do you think this benefits the more? The workers with no money and no jobs neither now nor in the near future, because no rich will invest on the productive economy -what for?, or the rich elites with all the money?

Re:/.er bitcoin comments are the best!

[Anonymous Coward]

Actually it doesn't have to match anything. It has to match what the market in Argentina bears. And since Bitcoin is deflationary, while Pesos are Inflationary they counter each other very well. By having Bitcoins, the average Argentine can increase wealth by performing services and charging BitCoins for them.

In terms of monetary terms, withholding payment in Inflationary currency (Peso) is a net gain, and unless you are paid in cash (or equivalent) immediately, Pesos are a losing proposition for workers. On the other hand, withholding payment in a deflationary currency (BitCoin) is bad for the employer, and good for the worker.

This will result in better economy for Argentina, at least for workers.

So do people not go into debt in your fantasy world? How would you like to hold a mortgage in deflationary currency? Are people who make a chicken every week supposed to save up for millennia so maybe the grandchildren of their grandchildren might be able to buy a mud hovel with cash?

Deflationary currencies are great for people who have piles of money. For the people actually living in the real world, they'd be a nightmare. Especially for the workers.

Re:/.er bitcoin comments are the best!

[itzly]

If you just want to avoid the poor bank exchange rate, the stability of bitcoin isn't a problem. Instead of accepting dollars, and trading them for pesos, you now accept bitcoin and trade them for pesos.

Re:/.er bitcoin comments are the best!

[itzly]

you can retire if you save anything, because deflationary currency becomes an asset. But that doesn't bode well for the rich n powerful,

Why not ? They'll hoard more than everybody else, while the poor man is forced to trade his savings for food.

Re:/.er bitcoin comments are the best!

[Anonymous Coward]

Oh boy, then you haven't seen /r/bitcoin yet.

Re:/.er bitcoin comments are the best!

[turbidostato]

"People want to know why the rich keep getting richer? It is because they don't deal in currency, they deal in assets."

That's basically the first thing my Economy professor told us: for companies, passives are good, since it means money to run the bussiness that the shareholder didn't take out of their pockets. On the other hand, for "normal" people, actives are the good one of the film, since they are the kind of assets you require to life in confort (a nice car, a big house, an expensive watch...)

"BitCoin, should it survive will ultimately be deflationary currency, meaning it gains value the longer you hold it."

Exactly. And the immediate corollary in a free market economy is that it leads to stagnation. Why anybody would risk his dear money on a bussiness that may fail, when he is going to be richer just by sitting on top of his money?

"when you're young, you can retire if you save anything, because deflationary currency becomes an asset. But that doesn't bode well for the rich n powerful"

So how can it be that if you own X of an asset (your lifetime savings) that's a good thing but if you own 1000x of such asset (you being rich) it becomes somehow a bad thing?

No, sir, within a limited scope, in a deflationary economy the more money you have, the better for you so the one percenters end up much, much better than you, poor worker. On a global scope, no one would benefit in the long run from a deflationary currency since the economy -the one that produces the things both rich and poors will consume, will stop to a grinding halt, leading to a S XVIII-style economy with aristocracy on one side and peasants/serfs on the other.

Re:/.er bitcoin comments are the best!

[Anonymous Coward]

Currency is not magical, nor is it an investment. Inflationary currency exists in part because of how sovereign debt works. Bitcoin is not tied to sovereign debt (or, in principle, sovereign anything), but it's not different in that respect from any other useless commodity, such as gold. That doesn't mean it will magically appreciate in value, any more so than gold does. At best it would be a good store of value during economic stagnation, but a lousy store of value during economic growth, when it is far better to invest in things like equities. But again you don't need bitcoins for that. Things like gold or even (blah) Swiss francs will do the job just fine. You will note, however, that most people don't pump all their assets into these things, because when the economy is growing, it's a highly suboptimal store of value.

Re:/.er bitcoin comments are the best!

[turbidostato]

"Their government will have to stop printing money or see their currency (and fiscal policy) become irrelevant."

You might have an argument were not for the little fact that devaluating currency is a true and tested way to deal with monetary crisis when used properly that allowed a lot of countries to regain a healthy economy.

"The sooner they pull their heads out of their asses the better."

Maybe it's you the one that would benefit from pulling your head out of your ideology ass and see the tools of the trade for what they are: tools.

Re:/.er bitcoin comments are the best!

[Wootery]

Also deflation can be an economic disaster, as it discourages spending.

Re:/.er bitcoin comments are the best!

[ceoyoyo]

Somebody with pesos still has to want your bitcoin. Apparently, somebody does.

Re:/.er bitcoin comments are the best!

[Canth7]

The fact that many countries have mismanaged their finances so badly that a 6 year old software project manages to improve upon things is hardly a critique on Bitcoin. Volatility is part of the process for anything with a small market cap, small user base and drastic swings in public interest.

So Bitcoin has growing pains. What's Argentina's excuse?

Re:/.er bitcoin comments are the best!

[turbidostato]

"Much like what Greece did when they switched to the euro."

Oh, so the problem with Greece was that they "squandered the money on unaffordable social programs and cheap imports", not that a corrupted elite gamed the system in their favour and then got the helpful aid from Goldman Sachs to hide the tracks.

Re:/.er bitcoin comments are the best!

[ceoyoyo]

I don't know anyone who holds a significant amount of currency, rich or poor. If you're poor you're probably not holding any more money in any form than you need to buy essentials for the next month. If you're better off you might have savings, but they'll be in a bank. If you're rich you have investments.

One of the reasons the rich keep getting richer is because the poor and middle class are willing to lend value (in work or money) to them for cheap or free.

Re:/.er bitcoin comments are the best!

[oh_my_080980980]

LMOL you really don't know how the currency and the financial markets work do you.

Re:/.er bitcoin comments are the best!

[oh_my_080980980]

Stop spouting facts. You'll poke holes in his arguments and make him feel bad :(

Re:/.er bitcoin comments are the best!

[Anonymous Coward]

I would not be surprised if there was a law passed banning Bitcoin ownership. A similar thing happened in the US from 1933 to 1964 when people were forbidden to own gold, and any stashes were to be turned over.

Of course, enforcement will be the next question. I'm sure there will be the low hanging fruit that will be made as examples, but trying to prosecute every Argentina resident who might have a public key that can be used as a wallet is a cat and mouse game that is next to impossible, barring a wholesale ban on desktop computers, enacting an approved-apps policy on locked down hardware, and using devices to intercept and log SSL transactions (forcing all devices domestically to trust the MITM device's root key.) Even if this is all done, there is always cold storage (the Trezor device or just offline Bitcoin wallets.)

I am not surprised at Bitcoin's use here. There are two ways to use a currency. One is for transactions, and one is for saving. For transactions where the buyer and seller immediately change their mainly used currency to and from BTC, it is a secure medium. For storage, even the US dollar took about 65 years (from 1792 to 1857) before it was the only currency used in the country, so BTC still has a ways to go for perception before it is considered stable enough to be used for long term storage of value. The good thing is that Bitcoins are limited in number so as wallets get destroyed, each unit of currency gets more valuable over time, while most currencies can be diluted by just printing more units.

Re:/.er bitcoin comments are the best!

[itzly]

If they are constantly recycled, it still doesn't matter a lot if the value moves around.

Re:/.er bitcoin comments are the best!

[Anonymous Coward]

It won't be long before the government cracks down on this. Those "fees" can just as well be classified as "taxes" - we should probably be questioning what a massive overhead of 30% is actually paying for in any real sense.

If it's paying tax then the government with intervene with law.
If it's paying some grubby banker then they will pay the government to intervene with new law.

In any case it would be illegal for me to do the same thing in the US. It's only legal right now because no-one is saying anything. No-one is saying anything because using BTC over here is suicide; there's no economy for it and it's far riskier than the alternatives. If it becomes viable at any point then it'll quickly be shut down.

Re:/.er bitcoin comments are the best!

[ceoyoyo]

Somebody is always left holding the bag. In this case the bitcoins are held entirely by the exchanges so in aggregate they effectively hold the necessary bitcoins statically. If there's no arbitrage between them then movements in the value of bitcoin are shared equally among them. If the hypothetical rich argentinians are somehow unable to turn their bitcoins into us-dollars-in-the-us then they take the loss instead.

Re:/.er bitcoin comments are the best!

[Paradise Pete]

BitCoin, should it survive will ultimately be deflationary currency, meaning it gains value the longer you hold it.

Is that a good trait for a currency? One that discourages economic activity?

Re:/.er bitcoin comments are the best!

[Anonymous Coward]

Wrong. Here in Argentina, Bitcoin is used because of capital controls and a false "official" USD/EUR rate. So when you receive money from abroad the government takes 30% of that. Bitcoin fixes that for us.

Also, sending money to other countries need expensive and difficult permissions that are not available to most of us. So when we need to send money to a bank account of other country, for example, if it's in Europe, we buy bitcoins locally, we send them to Bitstamp/Safello/Coinbase and we sell them there, sending the euros to the bank account.

Bitcoin is not used because of inflation, maybe for some yes, but it's not the import thing about Bitcoin here.

Re:/.er bitcoin comments are the best!

[Powercntrl]

"Bitcoin is about to blow up, because somewhere in bumfuckistan everyone is about to start using it!"

Translation:

"I foolishly invested in Bitcoin and would very much like it if the greater fool theory could work its magic, so I can cash out without too much of a loss, thanks."

Re:/.er bitcoin comments are the best!

[ultranova]

But, unlike Greece, nobody is willing to give Argentina a bail out.

Nobody is willing to bail out Greece, either. What's being done in eurozone is transferring risk from private investors to taxpayers. Who, for some odd reason, seem to be turning against EU and its "socialism for the rich, capitalism for the poor" economic ideology.

"Genius sells and idiot buys", like Helsingin Sanomat once said about modern art.

Re:/.er bitcoin comments are the best!

[codebonobo]

On a global scope, no one would benefit in the long run from a deflationary currency since the economy -the one that produces the things both rich and poors will consume, will stop to a grinding halt, leading to a S XVIII-style economy with aristocracy on one side and peasants/serfs on the other.

First of all Bitcoin isn't deflationary, but disinflationary. Currently it has a relatively high inflation of ~10% (2016 will drop to ~5%) which would explain the year of capitulation to the new found support that is almost 50% higher than the average of 2013 where it peaked in price.

Please provide any evidence that disinflationary currencies where disinflation is a planned intrinsic property of the currency create greater economic disparity as you claim.

Re:/.er bitcoin comments are the best!

[codebonobo]

Their currency loses 25% per year ...

Bitcoin recently lost 75% in a year.

Bitcoin is almost 50% higher than the average of 2013 when it peaked in value. You understand that it was in the ~1100 USD range for a few days right? Most people bought in much lower and any competent investor understands you invest when it has capitulated to a new support. This is why venture capital money is pouring into bitcoin related companies and increasing year after year.

Check for yourself-

http://www.coindesk.com/bitcoin-venture-capital/

Re:/.er bitcoin comments are the best!

[codebonobo]

The Data from payment processors reflects spikes in spending with bitcoin when it goes through disinflationary bubbles however. Perhaps your Econ101 professor didn't understand everything?

Re:/.er bitcoin comments are the best!

[Immerman]

Honest question: Is the Argentinian currency actually tied to the economy? In other words, is the their economy shrinking at a comparable rate to the value of its currency, or is the government just playing the common trick of printing money rather than raising taxes/cutting spending?

Re:/.er bitcoin comments are the best!

[ShanghaiBill]

Oh, so the problem with Greece was that they "squandered the money on unaffordable social programs and cheap imports"

Basically, yes. Greeks retire at 60, or even earlier, with generous pensions, and then expect the Germans, who work till 67, to bail them out.

... not that a corrupted elite gamed the system in their favour and then got the helpful aid from Goldman Sachs to hide the tracks.

Nope. The loans from Goldman Sachs were mostly squandered on the same unaffordable social programs, and generous pensions. What happened in Greece should have been obvious to anyone decades before it finally imploded. Do you also believe that "corrupted elite" elected Syriza?

Re:/.er bitcoin comments are the best!

[Immerman]

Not true, it simply raises the investment bar. Let's say that at present a currency is inflating at 5% per year - that means any investment where the expected (risk-weighted) return is better than -5% is worth considering. If instead the currency is deflating at 3%, then only those investments with an expected return of better than +3% are worth considering. That does mean that low yield investments will tend to stagnate, but the high yield ones will still do fine.

You're also conflating money supply with inflation/deflation: Let's take a hypothetical world in which there's a fixed amount of the One True Currency (OTC) which is the only medium of exchange. That does NOT mean that the value of the currency will increase, decrease, or stay the same - THAT will depend on the total value of the economic activity. Lets say that initially the economy is growing at 10% - the value of the OTC will likewise grow at 10%. And since it's hard to find investments with a 10% expected return, investment will begin to stagnate. For the sake of argument lets say that directly implies that the economy will stagnate as well (there's a huge debate to be had there, but let's ignore it for the sake of simplicity), so next year the economy grows at only 3%. So now the value of the OTC will likewise only grow at 3%, making far more investments become viable, and the economy stagnates less, but perhaps not enough to avoid sliding into decline. So the next year the economy shrinks 2%. Wham - now the value of the OTC is shrinking at a 2% rate, and even investments that are only expected to break even become more attractive than sitting on your money - we're back into the current inflationary currency situation. So investment picks up, the economy begins to grow, along with the value of the OTC, and we're back into a deflationary scenario. Basically the economy would tend towards the historical norm of equilibrium rather than the perpetual growth that has characterized the last few centuries.

But of course that scenario is based on there being only one currency to deal with - which is unlikely. Without oppressive regulation there's nothing stopping people from creating alternatives, and at least some of those alternatives will inevitably go on to capture a share of the total economic activity - thus reducing the percentage of activity conducted in OTC, and with it the value of the currency.

Re:/.er bitcoin comments are the best!

[drnb]

The fact remains that in the last year bitcoin has lost 50%. That bitcoin was over $500 for over half the year and is now about $230. That its trend is lower highs and lower lows.

The fact also remains that you are comparing an era where bitcoin was dominated by enthusiasts with an era where it is dominated by speculators. Its speculators that got bitcoin over $160 in the first place. Without the speculators it might return to something in that region. Its certainly heading that way at the moment.

Again, bitcoin is an awesome payment/transaction technology but it is not a good store of value.

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[Immerman]

You are conflating currency supply with inflation/deflation, which muddies the waters. Inflation/deflation depends on both the amount of currency in circulation, AND the amount of economic activity represented by that currency. The only way Bitcoin inflates at 10% is if the amount of economic activity conducted in Bitcoin grows 10% slower than the currency supply.

Of course at present the value of BTC is dominated by currency speculators, which throws everything off, but the basic principle remains.

Re:/.er bitcoin comments are the best!

[TwoEyedJack]

I lived in Argentina in the early 80's for a few years. I held dollars as much as possible, which I understand is much more difficult now. When I got there they had a 10,000 peso bill, kind of pinkish color, colloquially known as a palo. When I got there it was worth $5. When I left it was worth $0.25. The exchanges were quite active and I never saw so many American C notes before or after.

Re:/.er bitcoin comments are the best!

[HornWumpus]

We've been in continuous financial crisis for the last 60 years? No. Well you must be fundamentally wrong about something.

Printing money also leads to financial crisis. When every nation does it at the same time it's a waking nightmare. The tide will go out, everybody will be revealed to be naked. The money printers will blame it on 'evil capitalism' and attempt to take even more power.

Re:/.er bitcoin comments are the best!

[slashdot_commentator]

Now could the Argentine Peso also be a poor store of value, thats plausible

If you believe the Argentine Peso to be a more reliable store of value than bitcoin, then apparently you don't know what you're talking about.

The fact that bitcoin can be converted to USD or Euro, would make it a (slightly) more reliable store of value, because the Argentine Treasury department has no qualms about fixing exchange rates, penalizing conversions, or outright banning currency conversions.

Re:/.er bitcoin comments are the best!

[bobbied]

I think it's more of a damning comment on Argentinian currency rather than a spotlight on the quality and fungibility of bitcoins.

EXACTLY... Argentina's currency is in SERIOUS trouble and has been in decline for a decade or more. It's where Greece is headed, and the whole EU if they don't disconnect from Greece or just outright forgive the bulk of their debt. The biggest problem they face is there is literally NOTHING they can do about the devaluation of their currency except abruptly stop nearly ALL government spending, but that would leave the country in anarchy, the government out of power and the country rife for being taken over by less than desirables. We are quite literally seeing them fall into the third world, where they once where a thriving industrial and agricultural power house.

BitCoin is just the latest symptom of the debt sickness that's killing them.

We cry for YOU Argentina.

Re:/.er bitcoin comments are the best!

[bobbied]

Yes sir, this is by far the best of the bad solutions we have sir.

Re:/.er bitcoin comments are the best!

[codebonobo]

You are conflating currency supply with inflation/deflation, which muddies the waters. Inflation/deflation depends on both the amount of currency in circulation, AND the amount of economic activity represented by that currency. The only way Bitcoin inflates at 10% is if the amount of economic activity conducted in Bitcoin grows 10% slower than the currency supply.

Of course at present the value of BTC is dominated by currency speculators, which throws everything off, but the basic principle remains.

What you are saying is valid but I was clarifying the difference between a disinflationary currency going through volatile bubbles because of speculators and capitulating because of high inflation and a deflationary Fiat currency with governments and banks printing more than ever in a depressed economy.

Re:/.er bitcoin comments are the best!

[codebonobo]

Again, bitcoin is an awesome payment/transaction technology but it is not a good store of value.

I agree with this comment. It will be interesting to see if Bitcoin continues its trend of becoming more stable or remains unstable. But as a general rule Bitcoin has been as unstable as some small currencies lately which in itself is very impressive for a 6 year old project.

Bitcoin is already moving out of the era of speculation and into the era of everyday use. I buy items, tip and pay employees all the time in bitcoin. I just saved 24% on a large amazon purchase with bitcoin.

Re:/.er bitcoin comments are the best!

[tnk1]

If you have pesos, sure. If you have dollars? Then bitcoin is a speculative currency. It's just that Argentina has such a bad situation that even a gamble is better than the sure loss of trying to hold their currency for any period of time.

Re:/.er bitcoin comments are the best!

[tnk1]

Whipsawing around is a shitty reason to throw investment money into a currency like Bitcoin, no matter how high it goes.

Hopefully, they are buying because they expect it to stabilize in a good place or the utility of it will make it ubiquitous, but if its value doesn't stabilize, then you're not investing, you're speculating. Full-on gambling.

I've seen the lottery hit 500 million dollars. That doesn't make a lottery ticket a good investment.

Re:/.er bitcoin comments are the best!

[tnk1]

Actually, they got in trouble by *not* printing money, but instead by borrowing. They were working hard to keep inflation down for awhile in the 1990's and that meant that they borrowed to cover their work on building infrastructure. This actually worked fairly well... for awhile.

When the global financial crisis hit in the early 2000's it left Argentina unable to service debts. Argentina had to deal with huge unemployment and political instability. That resulted in the largest default on sovereign debt ever. No bueno.

Argentina is still a "pariah" but was doing a little better until recently. Some people are blaming new populist policies for having put Argentina back in trouble with a shrinking economy again.

Argentina is just chock full of corruption, as well. That means that unless things are peachy keen and there's enough money for everyone, like in the 1990s, people don't want to touch Argentina with a 10 foot pole. That hurts their ability to recover where less corrupt countries might bounce back faster.

Re:/.er bitcoin comments are the best!

[tnk1]

No, it is not. It gives the sort of people who want to hide their money under their bed a warm fuzzy, but it's basically condemning the economy to stagnation at best.

Yes, inflation does have a dark side of printing more money to pay for things that you can't afford, but the positive side of it is that it encourages people to provide cash to economic engines to maintain value. Companies need to be able to borrow against future revenues to grow their capacity, and the only way to do that is for people to invest money in them. So inflation provides growth because it demands growth.

People who have a simpler view of the "value" of their money will believe that they should be able to not lose value by holding on to it. The reality is that money has never been actually "valuable" by itself. You can't eat it and it doesn't make for a very good roofing material. It is there to spend, and if it isn't being spent, then you have potential which is not being realized.

Re:/.er bitcoin comments are the best!

[drnb]

Now could the Argentine Peso also be a poor store of value, thats plausible

If you believe the Argentine Peso to be a more reliable store of value than bitcoin, then apparently you don't know what you're talking about.

Someone mentioned the Argentine Peso lost 25% this last year. Bitcoin lost over 50%. A 25% loss seems a relatively better store of value than a 50% loss.

The fact that bitcoin can be converted to USD or Euro, would make it a (slightly) more reliable store of value, ...

USD that was easily converted to bitcoin a year ago, and easily converted back to USD today, leaves you with over 50% fewer USD. Easy conversion does not make it a reliable store of value. Easy conversion makes it an effective transaction/payment system, assuming the recipient immediately converts the received bitcoin to USD/EUR.

Re:/.er bitcoin comments are the best!

[codebonobo]

I wouldn't recommend anyone invest everything into bitcoin and do agree that it is a high risk / high reward investment. I use it daily for its utility because it allows me to do things that paypal or my credit cards cannot replicate. If it goes up in value great, if not that is fine as well because I am using it now tipping micropayments to strangers who don't even know bitcoin exists, wiring money across the world for 2 pennies to pay employees, and just saved 24% using bitcoin with a large amazon order.

Additionally there are ethical reasons to use bitcoin as I am a conscientious objector.

Re:/.er bitcoin comments are the best!

[Anonymous Coward]

You guys are missing each other.

..venture capital money is pouring into bitcoin related companies and increasing year after year.

..a shitty reason to throw investment money into a currency like Bitcoin

You are talking about buying bitcoins. He is talking about using bitcoins.

I've seen the lottery hit 500 million dollars. That doesn't make a lottery ticket a good investment.

Lottery tickets as investments, has jack shit to do with whether or not you would buy a convenience store which sells lottery tickets (and smokes or gum to the people who came to the store to buy tickets).

You know what, I think I like this lottery ticket analogy. Imagine today, the market said a $2 lottery ticket was worth about $0.89, though tomorrow it might be worth $0.85 or $0.93. Wait.. forget that dollar amount, because nobody cares about that. There's a guy on this side of the street who will sell you a $2 lottery ticket for a piece of gum (and you see a store that sells gum for $0.89 per piece fairly near by). There's a guy on the other side of the street, who will give you a cup of coffee in exchange for a $2 lottery ticket. And annoyingly, there's no coffee on this side of the street. And you want some coffee.

You might get into lottery tickets.

And then as an investor, a question you might consider is: Will you invest a toll bridge over the street, so that people can carry lottery tickets back and forth without getting run over? There's sure a lot of gum over here and a lot of coffee over there.

Re:/.er bitcoin comments are the best!

[Kjella]

EXACTLY... Argentina's currency is in SERIOUS trouble and has been in decline for a decade or more. It's where Greece is headed, and the whole EU if they don't disconnect from Greece or just outright forgive the bulk of their debt.

The Greek economy is something like 2% of the EU. Germany could pay it all off alone and still be in the comfort zone. There was a time when it looked like many dominoes could fall, but Ireland, Portugal and Spain all seem to be on a slow recovery, Italy still gives grounds for concern. The reason they can't give in to Greece is because many countries have been responsible. Many countries have taken harsh steps to bring their budgets in line. The opposition against giving Greece special treatment is strong all the way from the rich countries to the other poor countries.

Re:/.er bitcoin comments are the best!

[schnell]

The Data from payment processors reflects spikes in spending with bitcoin when it goes through disinflationary bubbles however. Perhaps your Econ101 professor didn't understand everything?

Or perhaps he understood more than you, and those spending spikes reflect idiot speculators trying to unload bitcoins before they fall too far? Kind of like the spike in unloading any speculated currency or commodity when it starts to crash?

Also - honest question - you keep referring to "disinflationary." That's not a term I have heard before, can you explain where this term came from and how it differs from deflation?

Re:/.er bitcoin comments are the best!

[MobSwatter]

"Bitcoin Is Disrupting the Argentine Economy" ...

"Bitcoin Is Disrupting Control of Argentine Banks"

There, FTFY.

Re:/.er bitcoin comments are the best!

[bloodhawk]

25% per year? so far less than what bitcoin lost in the last year? seems to me the story is shit and it certainly isn't any sort of disruptive influence on the economy as it is too small to be noticed. What I find amusing though is people claiming it is more stable, botcoin has collapsed far worse than pesos in last 12 months.

Re:/.er bitcoin comments are the best!

[Anonymous Coward]

Bitcoin is very useful as a payment technology. But holding bitcoins is an absolute risk. Which is why most merchants who accept bitcoins for payment never actually see or touch a bitcoin. Their merchant exchange immediately converts to fiat upon receipt and the merchant receives only this fiat currency.

Bitcoin is not even a good payment technology, there are no chargebacks, no arbitration, no system to mitigate fraud. It's just digital cash. That's fine for what it is. Modern payment systems are a lot more than handing someone money, even if that's what happens at the end of the day[s].

The key here is bitcoin bypasses Argentine's currency controls. It's sort of grey market.

Re:/.er bitcoin comments are the best!

[Tokolosh]

You are forgetting another factor in the equation, which is the velocity of money. Compared to other currencies, bitcoin is almost frictionless. This means it can sustain a high velocity compared to dollars and pesos, which counters its deflationary structure.

The same bitcoin can make the peso-BTC-$-BTC-peso roundtrip a hundred times a day while the credit card transaction $ is stuck in the bank for at least a day, even with fractional reserve banking.

Re:/.er bitcoin comments are the best!

[ToasterMonkey]

If you have pesos, sure. If you have dollars? Then bitcoin is a speculative currency. It's just that Argentina has such a bad situation that even a gamble is better than the sure loss of trying to hold their currency for any period of time.

If their currency is a gamble, why wouldn't they buy one that is much less risk, as in holds value vs. imported goods they might need.
I don't think this is about getting out of pesos as much as it is about getting foreign money into the country cheaply.

Re:/.er bitcoin comments are the best!

[turbidostato]

"Basically, yes. Greeks retire at 60, or even earlier, with generous pensions, and then expect the Germans, who work till 67, to bail them out."

Except that, as per OCDE data, Germans and Greeks retire at the same effective age of about 62 year old. Given that the official retirement age is, yes, higher at Germany than Greece, this also should tell you something about retirement conditions in both countries.

And then, poverty rates among older-than-65 y.o. in Germany is about 11% while in Greece it's about 16%, median financial wealth in the 65-74 y.o. group is about 16.000â in Greece and 58.000â in Germany and the enhancing rent effect of public services in Greece vs Germany is 15.000â vs 20.000â, again, all taken from OCDE data.

So, all in all, Germany provides higher rents and services for their elders than Greece by a significant margin. But, hey, don't let data interfere with your political visions.

"The loans from Goldman Sachs were mostly squandered"

It's not Goldman Sachs' loans what this is about but how Goldan Sachs lied when auditing Greek economy before the crisis in order to preserve the statu quo, if even for a while, both for them and a selected elite.

Re:/.er bitcoin comments are the best!

[codebonobo]

Or perhaps he understood more than you, and those spending spikes reflect idiot speculators trying to unload bitcoins before they fall too far? Kind of like the spike in unloading any speculated currency or commodity when it starts to crash?

Always a possibility, but until there is more data in this experiment they should withhold judgment. Perhaps it would be a good idea to also expose students to different economic schools of thought as well, rather than all Keynesian theory.

Also - honest question - you keep referring to "disinflationary." That's not a term I have heard before, can you explain where this term came from and how it differs from deflation?

Certainly. Bitcoin is intrinsically is disinflationary till 2140 and than it will have no inflation. Since there is a planned and fixed money supply without central planners manipulating the supply it can and does sometimes act inflationary or deflationary in the wild based upon market demand and thus why it has been so volatile. It is important that you understand that inflation is really high (Starting around ~20% and now ~10%) in the context of understanding the capitulation over the last year to the new support. What this is telling you is that speculators are taking profits correcting the inflated price and bitcoin has downward pressure from the fact that miners are forced to sell most of their coins to cover costs. This has happened many times in bitcoin's history and will continue to happen. Expect another bubble to happen shortly before mid 2016 when inflation drops to ~5%. What we do not know is whether or not bitcoin will stabilize as the disinflation rate slows and the market cap grows. On a macro level Bitcoin has been stabilizing but we cannot be sure if this trend will continue. Interestingly enough it has been more stable than the euro over the past few months however.

http://www.investopedia.com/terms/d/disinflation.asp

Re:/.er bitcoin comments are the best!

[turbidostato]

"First of all Bitcoin isn't deflationary, but disinflationary."

My argument states as long as the premise it answers to: ""BitCoin, should it survive will ultimately be deflationary currency, meaning it gains value the longer you hold it."

If this is true, my argument also must be true: any currency that gains value the longer you hold it, leads to economic stagnation.

Re:/.er bitcoin comments are the best!

[turbidostato]

"Not true, it simply raises the investment bar."

Yes, you are right. Certainly things rarely are black or white but shades of grey (don't know if fifty or any other number).

But then, free market is considered a good thing because the invisible hand should take care of maintaining profit margins to their bare minimum (by means of competition). Any thing that introduces resistance into the system makes it worse (by the degree of the resistance it introduces).

A deflationary currency certainly won't stop all and every business but just those where the return/risk gets below the deflation treshold.

"Basically the economy would tend towards the historical norm of equilibrium rather than the perpetual growth that has characterized the last few centuries."

Exactly that... on theory. Because your argument fails on the risk aversion principle: in you example, investments pair with little or no delay to deflation. But that's not the case: if I can start a business with an expected 10% ROI and a 50% risk, I'm at odds with a 5% deflation and probably I'd accept even 4% or 3% because no risk is no risk, after all. And, since economics is a dynamic system, there's also another element to take care of: bussiness risk is not an indepent but also varies with economic status: opening a pub on a fair good place in good economic times can be an almost sure bussiness but still a ruin on declining times and basically the same can be said for every other business so you enter on a downwards spiral that goes well beyond the expected limits on your static examples. This is not just theory since there have been historic examples of demand-driven crisis up for the demand-inducing policies being the first ones "scientifically" tried because being the more obvious (Keynes -in fact, '74 "stagflation" came as a surprise because it worked against this basic premise).

Re:/.er bitcoin comments are the best!

[LordLimecat]

The anger-generated-per-word ratio in this post is off the charts; well done.

Re:/.er bitcoin comments are the best!

[LordLimecat]

not that a corrupted elite gamed the system in their favour

My understanding is that essentially no one pays taxes in Greece-- not because they arent owed, but because no one wants to.

Its not just the elite who are the problem, as fun as it is to try to make them universal scapegoats.

Re:/.er bitcoin comments are the best!

[codebonobo]

"First of all Bitcoin isn't deflationary, but disinflationary."

My argument states as long as the premise it answers to: ""BitCoin, should it survive will ultimately be deflationary currency, meaning it gains value the longer you hold it."

If this is true, my argument also must be true: any currency that gains value the longer you hold it, leads to economic stagnation.

First of all this is demonstrably untrue as shown by a years worth of capitulation due to a high inflation of 10%. We don't know how bitcoin will behave longterm is the correct answer. Secondly, lets assume that bitcoin always "behaves" deflationary (despite it being disinflationary till 2140)... what historical evidence do you have that a planned disinflationary currency leads to economic stagnation? Upon reflection you should begin to understand that this experiment hasn't happened before and the only data we have thus far(bitcoin payment processors) reflects the opposite to be true.

Re:/.er bitcoin comments are the best!

[Archangel Michael]

And this is different than now how? You're under the assumption that what you said is something that isn't happening now. I already said the rich hold assets. Changing what is an asset doesn't actually change anything.

However, a poor man, being frugal, can become rich over time. A worker earns his wage and doesn't lose value before he is even been paid.

Here, I'll show you: A worker works for an hour, and earns a bit coin. The person paying him owes him a bit coin. If the currency is deflationary, the longer the payer holds that coin, the worse it is for the payer. He owes that coin no matter what its purchasing power is. Today, one bitcoin can buy a shopping cart full of food. Tomorrow, the shopping cart and something else (a candy bar).

With Inflationary money, a worker can work for $500, which can buy a shopping cart of food. If the payer holds that currency, the worker waits and when he gets it, he can buy a shopping cart of food, minus a candy bar.

Guess which is better for which person. I work for a salary. I haven't had a raise in 7 years. Guess what happens in the inflationary currency? If I work for deflationary currency, guess what happens (hint, it is the opposite).

There are other issues with deflationary currency. However, those that work hard, work extra, save currency are rewarded in deflationary currency market, and punished in inflationary currency.

Re:/.er bitcoin comments are the best!

[Archangel Michael]

Not really. At some point, because it is currency (and not just an asset), it is useful and needed in commerce. Those products and services that actually provide usefulness become valued, while extemporaneous superfluous expenditures.

Here is a good example of the difference between currency and an asset. You had $1000 in 1987 to use. You could buy an Apple MacBook, or invest it in Apple stock. Looking back did you make the right decision between Asset or Currency (buying something). Now, if buying the MacBook made you enough money, to later buy $1000 in stock, and other things (it was a tool) then you made a good decision. If not, then it wasn't a good decision.

The long term view of deflationary CURRENCY is that it is also an asset, but it also remains a currency. It has double usefulness. Inflationary currency is a long term net loss if you hold it. It is a liability. The currency part means that you work hard, and save ANYTHING it because a net gain for you. There is no loss over time.

Re:/.er bitcoin comments are the best!

[eric_harris_76]

Sounds like Argentinians and those in similar or worse situations will be the early adopters.

If (perhaps a big "if") they start using it for a significant fraction of their dealings, their transactions (and their holding) will work to decrease the percentage of the transactions (and the holding) of the speculators.

A long-term contract expressed and paid in bitcoin is probably a bad idea in Argentina at the moment. (I'm guessing.) But that may not be true, or it may change.

A currency that fluctuates at most 20% in the course of a year might be preferable to one that drops in value 15% a year in a good year, and a lot in a bad year. (I've not been following BTC much lately, but the price seems to be stabilizing of late.)

And if the Greek drachma comes back (definitely a big "if"), it may be in the same league as the Argentine peso. Another opportunity for bitcoin.

Re:/.er bitcoin comments are the best!

[eric_harris_76]

"BitCoin, should it survive will ultimately be deflationary currency, meaning it gains value the longer you hold it."

Exactly. And the immediate corollary in a free market economy is that it leads to stagnation. Why anybody would risk his dear money on a bussiness that may fail, when he is going to be richer just by sitting on top of his money?

And yet, in the late 19th Century US, people did invest. And quite often profited.

I guess they weren't smart. Otherwise, they would have made reality match theory. ("Stupid reality.")

Re:/.er bitcoin comments are the best!

[slashdot_commentator]

Easy conversion does not make it a reliable store of value.

It does when you live in Argentina, and experience gov't mandated fixed rate of Argentine Peso -> USD, arbitrary fee/tax for exchange, shortage of available USD currency at an Argentine bank, or even temporary ban on currency exchanges for "the little people". Compare that to the market determining USD/bitcoin or peso/bitcoin exchange rate..

Re:/.er bitcoin comments are the best!

[Immerman]

Keep in mind that that 10% *expected* return on investment already factors in the 50% risk factor. Assuming an over-simplistic pass/fail investment, the expected return = value of investment on success * .5 + failure*.5 = 1.10. or s = 2.2 - f. So if failure would cost you a 10% loss (0.9 return), success would net you 2.2-0.9=1.3 : a 30% gain. Much more tempting.

Basically, if you're making lots of diversified investments at x% expected return, then your overall portfolio can be expected to go up at at x% regardless of the success or failure of the individual investments. The challenge of course is that it's nigh impossible to accurately quantify the expected return. And risk aversion will tend to effectively bias that number downwards when making your decision. Of course the same can be said for trying to anticipate the inflation/deflation rate, and with it the risk of investing in cash.

What has thrown a lot of "science based" traditional economic theories is that they were based on the theory that humans are rational actors - a theory which has since been proven rather emphatically false by modern research. Heck, the entire advertising industry pretty much depends on that fact.

I don't contest that the situation is more complicate and unpredictable than I've portrayed above, just throwing out some food for thought.

Argentina outlaws Bitcoin in 3...2...1...

[Anonymous Coward]

If it disrupts the currency, the government will not allow it to continue. What do you think would happen in the US?

Re:Argentina outlaws Bitcoin in 3...2...1...

[Anonymous Coward]

The money brought to Argentina using Bitcoin circumvents the onerous government restrictions on receiving money from abroad.

So it's probably already illegal, but people like to pretend the law doesn't apply. Sounds a lot like Uber.

Re:Argentina outlaws Bitcoin in 3...2...1...

[Dunbal]

It's silly - in order to affect the economy someone sooner or later HAS to change their bitcoin to US dollars and the net result is exactly the same as if they had bought US dollars in the first place. Except perhaps getting around the tax.

Re:Argentina outlaws Bitcoin in 3...2...1...

[Anonymous Coward]

The uses for BitCoin as a currency for the Silk Road and other markets lasted a bit, then got shut down. Similar with BTC exchanges. We hear about how great the exchanges are... until they get big, then they shut down and all the BTC held by the exchange vanish into thin air. Well, we know whose wallet owns the coins... but who owns the wallet is completely different, and it might be that someone who sits on the coins for 7 years... time enough for the statute of limitations to run out, will have a bonanza on their hands, since BTC is now only trending up after its growing pains.

Now for the bad stuff: Bitcoin is 100% tracable. Yes, you can tumble coins, but there isn't anything that makes that cool tumbler that is only accessible from a .onion site just say "fuck you" and walk off with all the BTC. With enough police work, they can find who owns a wallet if any coins in that wallet are spent (hint... most Web browsers leave a fingerprint, and a lot of ISPs leave a X-UIDH tag that can be easily used as a fingerprint.

I won't be surprised to see:

1: People use BTC.
2: Argentina outlaws it.
3: ?????
4: Interpol and the Argentine popo seize a lot of servers and make a lot of arrests.

All and all, I wouldn't be surprised to see governments work together to create an extensive BTC tracing mechanism with geolocation, then use some other means of parallel construction to ensure a conviction.

Re:Argentina outlaws Bitcoin in 3...2...1...

[HornWumpus]

30% government grift isn't significant where you are from?

You do understand just how bad currency pegs are? A tool of economic warfare. e.g. China pegs it's currency to the US$, setting 100% industrial utilization as a target and using the exchange rate to get there. The US sees that China/US now share a common fiscal policy and prints money, knowing they are causing inflation in China as much as the USA. In CS terms a 'deadly embrace'. Wait till that breaks down, I just hope it doesn't involve nukes.

Re:Argentina outlaws Bitcoin in 3...2...1...

[HornWumpus]

You don't understand bitcoin. It was designed to route around government interference.

Re:Argentina outlaws Bitcoin in 3...2...1...

[Dunbal]

There's already a healthy black market to get around that 30% - as there is in any country where the currency is artificially pegged. You can't say bitcoin is bigger than the black market or is affecting things more than that black market.

Re:Argentina outlaws Bitcoin in 3...2...1...

[HornWumpus]

It's part of the black market. But the old black market has high economic friction. They would take less than 30%, but bitcoin takes close to 0%.

Re:Argentina outlaws Bitcoin in 3...2...1...

[ceoyoyo]

Not if you can't spend the bitcoin to buy stuff. If you have to convert it into pesos first, the black-market peso-bitcoin dealer is going to take is cut the same as he would for dollars.

Re:Argentina outlaws Bitcoin in 3...2...1...

[itzly]

But the black market dealer is taking a much smaller cut than the official banks.

Re:Argentina outlaws Bitcoin in 3...2...1...

[oh_my_080980980]

Digital information is very traceable.

Re:Argentina outlaws Bitcoin in 3...2...1...

[ceoyoyo]

Yeah. The interesting question is, why?

Someone suggested it's rich Argentinians who want to get their money out of Argentina. Sounds like there's a market for a US-dollars-located-in-the-US to pesos-located-in-argentina exchange business. That would replace at least two middlemen with just one and eliminate the risk of dealing with an unstable medium of exchange. There's really no reason to involve bitcoin at all, except to facilitate two separate exchanges skimming off a fee.

Re:Argentina outlaws Bitcoin in 3...2...1...

[Dunbal]

You still have to get the physical dollars into the country. That will cost you. Bitcoin does not magically turn into dollars. You need the middleman to provide you with the actual paper. You can't get around him - unless you're keeping the funds outside of Argentina - in which case it doesn't help the local economy now does it?

Re:Argentina outlaws Bitcoin in 3...2...1...

[ceoyoyo]

You're correct if the bitcoin is actually being used inside argentina (you'd have to replace that with dollars). But it doesn't seem to be. It's immediately exchanged for pesos. The argentinian exchange has to somehow buy pesos with bitcoin, and since argentinians aren't walking about the grocery store with BTC wallets the suggestion is that those pesos come from argentinians with savings who want to move their money out of the country. You could replace that chain of exchanges by simply matching up argentinians who do business with foreigners with argentinians who want to buy foreign currency.

Re:Argentina outlaws Bitcoin in 3...2...1...

[codebonobo]

Not if you can't spend the bitcoin to buy stuff. If you have to convert it into pesos first, the black-market peso-bitcoin dealer is going to take is cut the same as he would for dollars.

There are hundreds of thousands of stores that accept Bitcoin directly and many more that accepts bitcoin indirectly. I just saved 24% off a large amazon order by using bitcoin to buy the items. You are assuming that just because bitcoin isn't accepted everywhere that I cannot leverage it as a tool to save money where it is accepted and when it is an opportune time to use it. Using Bitcoin doesn't invalidate my use of other tools like stable forms of Fiat.

Re:Argentina outlaws Bitcoin in 3...2...1...

[codebonobo]

Yeah. The interesting question is, why?

Someone suggested it's rich Argentinians who want to get their money out of Argentina. Sounds like there's a market for a US-dollars-located-in-the-US to pesos-located-in-argentina exchange business. That would replace at least two middlemen with just one and eliminate the risk of dealing with an unstable medium of exchange. There's really no reason to involve bitcoin at all, except to facilitate two separate exchanges skimming off a fee.

Wealthy Argentinians have always been able to launder their assets for more stable stocks or currencies. Bitcoin allows individuals without the ability to afford laundering large amounts of pesos for dollars the ability to launder a small amount of pesos for bitcoin.

Re:Argentina outlaws Bitcoin in 3...2...1...

[codebonobo]

Digital information is very traceable.

Why the need for mandated cryptographic backdoors than? The funny thing is regulators have been focused on studying Bitcoin as a technology as it existed 4 years ago and have yet to understand some of the new privacy features we have invented like stealthaddresses, coin shuffle, coinjoin, and cryptonote.

Re:Argentina outlaws Bitcoin in 3...2...1...

[HornWumpus]

There is plenty of Argentine pesos outside Argentina.

Whenever the government is confiscating capital (via 30% exchange taxes) connected insiders still get the black/open market rate. If you have Argentine pesos in NYC what is the exchange rate? That's the rate the families of Argentine government officials get.

Why anybody would keep value in that currency is beyond me, but some do.

Re:Argentina outlaws Bitcoin in 3...2...1...

[HornWumpus]

What?

How?

Start with the 'drinking from a fire hose' problem.

Re:Argentina outlaws Bitcoin in 3...2...1...

[bobbied]

The government of Argentina doesn't have the resources to actually ENFORCE the laws they have now, what makes you think they could enforce a new one?

I'm pretty sure they have laws about converting out of the local currency into just about everything. In fact, they probably have some seriously tight currency exchange rules to keep the locals from ditching their currency and say floating into Dollars, Euros, Mexican Pecos, Oreo Cookies and poker chips, you name it. NOBODY wants to hold the local currency, at least not for long. BTC likely affords the locals a way to quickly convert to *something* other than the local script, and most likely they are willing to convert at many times the "official" exchange rate.

The government cannot pay it's debts now, so I'm sure that hiring a police force to catch and prosecute people breaking the currency trade rules doesn't rate very high on the priority list.

Let's rephrase the article

[Anonymous Coward]

Business owners in Argentina are using bitcoin to break the law.

Re:Let's rephrase the article

[ArcadeMan]

If governments keep pushing laws that have nothing to do with justice, in the end they can only get civil wars.

Re: Let's rephrase the article

[Anonymous Coward]

Lol, like the revolution that is always supposed to come, any moment now? Won't happen. Ever.

Re:Let's rephrase the article

[PPH]

break the law

Whose law? Argentina's?

And why should we care?

Re: Let's rephrase the article

[Anonymous Coward]

You sure about that? A single snowflake can bend the leaf of the bamboo.

Re:Let's rephrase the article

[orasio]

I live across the river from them, you insensitive clod!

Re:Let's rephrase the article

[smooth wombat]

So you're saying a country doesn't want its currency to be stable? That anyone and anyone should be able to create a currency out of thin air and use it?

Don't know your American history that well, do you?

Re: Let's rephrase the article

[jythie]

Well, they do happen, but they are not what techno-libertarians picture when they wax eloquent about the coming citizen uprising. They tend to look more like what has been happening in Baltimore and are driven by actual 'impacts your life' lower class people, as opposed to 'minor inconvenience, philosophically unhappy, and would be richer if not for the government and minorities stealing my wealth!' middle class ones

Re: Let's rephrase the article

[HornWumpus]

The 'lower class' never pulls off successful revolutions. Revolutions are hard, too much work, almost like a real job.

Re:Let's rephrase the article

[HornWumpus]

This is cutting into your black market currency exchange?

Re: Let's rephrase the article

[luis_a_espinal]

Oooooooo, a philosopher.

Re: Let's rephrase the article

[Hognoxious]

Ancient sages said, "Do not despise the snake for having no horns. For who is to say it will not turn into a dragon? Thus may one just man become an army."

I say, "Ancient sages full of shit".

Re:Let's rephrase the article

[Hognoxious]

Sir, your opinions are not worth a continental.

Re:Let's rephrase the article

[orasio]

Luckily, Uruguay's financial markets no longer rely heavily on dirty Argentinian money. There is still a lot of that money around here, but not as much as it used to be, so less financial risk for us.
Anyway, a major financial meltdown in Argentina would most definitely affect us, and that's why I care.

Re: Let's rephrase the article

[itzly]

Looting stores isn't a very tough job and has a nice reward.

Re: Let's rephrase the article

[Anonymous Coward]

Lets be real here. Take Syria, which is not exactly a great place to live, far worse than Argentina. The government in Damascus is still just fine, even fighting against many different armies of well financed rebels.

A revolution isn't going to happen these days. It doesn't take much to toss some Sarin gas canisters at every suspected place rebels may be hiding, and then drag out and execute remaining rebels, family, and friends. With social networking, finding friendship links is quite easy, and purges are easy to do with modern technology.

I absolutely laugh at people who talk "revolution". For 1000 years people tried that against the Romans. The results are obvious. Don't point out Iraq and Afghanistan -- those were half-hearted efforts. If a regime felt truly threatened, a disputed area where a civil war was would be turned into like a large chunk of Russia during WWII -- not a tree left standing for thousands of miles.

If by some miracle, something stops the tanks and makes all the country's planes and other armaments inert... there is the fact that the revolutionaries will be led by the most brutal, psychopathic, sadistic person in the region. This was predicted in 2008 in Iraq, and it came true... ISIS is so brutal that some European countries are recognizing them as a state in hopes to not have a terrorist attack on their soil. So, what once was something where life was unpleasant playing World of Warcraft in an apartment now becomes trying to find food with hundreds of thousands of others in refugee camps.

Think twice about revolution. The Syrians can tell you there is no honor or glory in what they are going through.

Re: Let's rephrase the article

[Anonymous Coward]

Only niggers confuse stealing stuff with fighting for freedom.

Re: Let's rephrase the article

[Anonymous Coward]

Confucius say: Man who goes to be with itchy arse wakes up with smelly finger.

Re:Let's rephrase the article

[HornWumpus]

I'm still drinking good Brazilian rum I got for less then $1/750 ml when their reds wrecked the real. Not a big rum drinker, I'll leave the last of it to my heirs.

Think of the opportunity.

Banks

[ArcadeMan]

As usual, if you can't understand that you can't screw your users without losing them, you merit losing ground to new technologies.

Re:Banks

[Anonymous Coward]

As usual, if you can't understand that you can't screw your users without losing them, you merit losing ground to new technologies.

Not much love for commercial banks, but

"Merchants in Latin America struggle to accept international credit cards, often paying upwards of 30 percent in fees and currency conversion losses, while waiting as much as three weeks to receive payment from their processor."

I'm preeeeeeeeeetty sure that has something to do with government or central bank policies.

Re:Banks

[HornWumpus]

Why should they be free to screw their users? Seriously, fuck them right in the ear.

Re:Banks

[Anonymous Coward]

It wasn't the banks that screwed the Argentinian people, it was their own government.

So take your off-topic, ideological bullshit somewhere else.

Kind of sad, really.

[FooAtWFU]

Technological marvel and portent of things to come or not, it's really quite sad that Argentina's is so messed up that it makes Bitcoin look good.

Don't cry for me, Argentina, cry for yourselves.

Re:Kind of sad, really.

[ubergeek65536]

Bitcoin stability only needs to be measured in days. All that's needed is enough time to bill someone in currency x and redeem it in currency z. It's primary function is to keep banks and governments out of the transaction.

Re:Kind of sad, really.

[im_thatoneguy]

But as the article points out... it's really just a way to streamline an existing black market in money changing. And the reason the black market has to exist at all is because legal money changing it a bad deal.

So as soon as bitcoin actually becomes popular enough to disrupt the existing black-market it'll also be popular enough to attract government intervention as has been done to the banks.

Essentially all this article is saying is "Look at this awesome black market full of illicit goods! Look at how great it is!" Which is true of every black market until it actually grows large enough to warrant a response from the government.

Re:Kind of sad, really.

[Anonymous Coward]

So what you're saying is... Argentina will just arrest the CEO of Bitcoin? I must inform her immediately...

Re:Kind of sad, really.

[jijitus]

People in other countries may have a hard time understanding the willingness we have to exchange into strong currencies like US dollar or euros our pesos.
Maybe this helps: our biggest bank note is the ARS 100 bill. It is worth USD 7.60, and you need 72 of them to buy a non-smart 40" LED TV. Last year we needed just 60 of them. And we are frickin' sure we'll need 90 next year.

Re:Kind of sad, really.

[oh_my_080980980]

LMOL or go after the businesses that use bitcoin - kind of easy to do.

Re:Kind of sad, really.

[Jack Griffin]

Bitcoin stability only needs to be measured in days. All that's needed is enough time to bill someone in currency x and redeem it in currency z. It's primary function is to keep banks and governments out of the transaction.

This is still a problem when you're poor and living hand to mouth. If you earned $10 today and then found out it was only worth $8 two days later when you go buy your groceries you'd be pretty pissed off. I can't see how bitcoin is better in any situation other than illegal trading where losses are accepted as part of laundering.

Re:Kind of sad, really.

[Shalhav]

Yes. It also says, "Look, black markets arise when the government by Fiat circumvents the market valuations of goods and services."

Re:Kind of sad, really.

[david_thornley]

Actually, no,. the stability matters.

Suppose I want to send you $1K, and I use Bitcoin. I buy some BTC, send them to you, and you sell them. Presumably we're using an exchange of some sort.

That means that the exchange has to worry about BTC volatility. Much of their assets are in BTC. If nothing else, the dollar value of their BTC determines how much business they can do in a given time period. The exchange is taking a big risk, and they're going to pass it on to the users in the form of large fees. If BTC were more stable, then an exchange wouldn't need to worry much, and could charge smaller transaction fees (and "could" means "will" in a competitive market).

BTC is also a bad way to send money. Each BTC transaction has a real cost in the form of computations to be made, and if I send you dollars this transaction has to be done twice. If it's a better way to send money than normal means, it means that somebody's making excessive profit off the normal means of sending money. Since the real costs of changing numbers in registers are much less than the real costs of validating the blockchain, banks can undercut BTC whenever they want.

And why is bitcoin different?

[gstoddart]

Other than proponents saying "because it's distributed, digital, and magic" I fail to see how failing to tell your government about one source of money is going to be any different that failing to disclose another.

Other than the pixie dust and unicorn poop, what exactly keeps the government from charging you with nor reporting the money?

Bitcoin doesn't exist outside of the real world just because people who use it claim that to be the case. But it definitely carries its own reality distortion field with it.

Re:And why is bitcoin different?

[Anonymous Coward]

If you can do all transactions in bit coin it could be fairly difficult for governments to track. It's only when you must convert to a fiat currency and store the money in a bank that things get reported to the government, right?

Re:And why is bitcoin different?

[Anonymous Coward]

If you can do all transactions in bit coin it could be fairly difficult for governments to track.

Yes, it isn't like all bitcoin transaction are public, open for anyone to see.

Re:And why is bitcoin different?

[shaitand]

If bitcoin can be spent at businesses you don't need to convert to pesos and that is the only point the government has visibility into things. Even if you do convert to pesos no government has the resources needed to trace every transaction in every business to determine if the bitcoin funds originally came from tourists vs locals.

This is an oppressive government with immoral laws that are being circumvented. It doesn't let them avoid reporting income altogether unless bitcoin usage reaches critical mass but it does circumvent being legally forced to rely on the corrupt Argentinian fiat system by the corrupt Argentinian government.

Re:And why is bitcoin different?

[Anonymous Coward]

If you can do all transactions in bit coin it could be fairly difficult for governments to track. It's only when you must convert to a fiat currency and store the money in a bank that things get reported to the government, right?

Then you have the digital equivalent of hording [black market currency] under your mattress and a whole other set of problems.

Re:And why is bitcoin different?

[antiperimetaparalogo]

Other than proponents saying "because it's distributed, digital, and magic" I fail to see how failing to tell your government about one source of money is going to be any different that failing to disclose another.

Other than the pixie dust and unicorn poop, what exactly keeps the government from charging you with nor reporting the money?

Bitcoin doesn't exist outside of the real world just because people who use it claim that to be the case. But it definitely carries its own reality distortion field with it.

I am a Greek, living in Greece, which is currently (in)famous for its state's financial problem (in reality, Greece is a poor state with rich citizens). Few weeks ago there was a stupid story from non-Greek media about how Greece should adopt Bitcoin and be saved "magicaly"! The reason we Greeks are not in the same situation as Argentina is because we have this strong (and "real") currency called Euro (backed by Nothern European economies, e.g., Germany) - imagine if we "adopted" Bitcoin as our currency...

I don't blame any Argentinian for trying to protect his wealth by avoiding the goverment's checks (althrough that is one of the reasons they are in this situation...), but this Bitcoin's "reality distortion field" (as you correctly call it) it starts to make me really angry. If we Greeks ever wanted to leave the Euro currency (something that the vast majority -85% by just yesterdays polls- does not want), we would return to Drahma - a real currency (with a history of some mileniums!), backed by a (maybe bankrupt but with plenty of intangible and tangible property) Greek state... not this "magical" Bitcoin that its value depends on a fucking script!

Re:And why is bitcoin different?

[misexistentialist]

At least it can't be devalued like government's magic paper. Government will have to steal it openly. Though it's true bitcoin's value is somewhat unstable, and its resilience to government repression hasn't really been tested.

Re:And why is bitcoin different?

[lister king of smeg]

If you can do all transactions in bit coin it could be fairly difficult for governments to track.

Yes, it isn't like all bitcoin transaction are public, open for anyone to see.

but you could use a new address for every incoming transaction making much harder to trace.

Re:And why is bitcoin different?

[HornWumpus]

Which puts you WAY ahead of the stinking law abiders.

Re:And why is bitcoin different?

[HornWumpus]

It's _not_ going to be your choice to leave, of course you like it (thieves always do). When you are bouncing down the road, having been ejected from the euro, your government will no doubt bring back the Drachma. But your citizens will have a choice. They can make payments in bitcoin and leave savings in the strong currency of their choice. Effectively giving the finger to the Greek government. I'd bet 99% of Greek government employees will.

Re:And why is bitcoin different?

[HornWumpus]

In fact, nobody you don't tell your wallet id to knows it. So you are unintentionally right.

Re:And why is bitcoin different?

[JustNiz]

>> This is an oppressive government with immoral laws that are being circumvented.

Thats also true of literally every government in the world.

Re:And why is bitcoin different?

[Hognoxious]

There are several things I might put under a mattress, but Genghis Khan's army isn't one of them.

Re:And why is bitcoin different?

[JustNiz]

>> At least it can't be devalued like government's magic paper.

Sure it can. The government already got their hands on 30,000 ( worth about $18 million then) of Silk Road's bitcoins and more from other busts, and the NSA already has masive computers that could mine bitcoins like there's no tomorrow.

Complete conspiracy theorizing herre, but it really wouldn't be hard or even unlikely for the US government to use any bitcoins they recover from criminal activity, along with power-mining to keep anonymously bulk-selling bitcoins at a big loss just to crash the whole bitcoin market. Their motivation would presumably be to both kill anything that faciliates the existence of black-markets and also kill anything that competes even slightly with the almighty $.

Re:And why is bitcoin different?

[antiperimetaparalogo]

It's _not_ going to be your choice to leave, of course you like it (thieves always do). When you are bouncing down the road, having been ejected from the euro, your government will no doubt bring back the Drachma.

We Greeks have not steal from anyone by entering the Euro - we asked to enter, and the other partners agreed (and we were from the first to enter, as we were from the first members of the European Union). For doing that we ceased the Drahma (believe it or not, our national currency was quite strong - sometimes we had to devaluate it on purpose to help our exports, something that we can not do now). You have to understand that there is no way we can be "ejected from the euro" if we don't push the ejection button ourselves - and that is actually what we Greeks discuss internaly: if by returning to Drahma (remember: it may be devaluated compared to Euro, but in this situation is what we may need as an economy) we would survive the first few months of "turbulence".

By the way, and because you thing we Greeks are "thieves": we pay back our loans with interest - the money we received so far was added to our debt, and was used to pay back our loans... creating this cycle because we don't want to officialy declare bankruptcy (something that will not have so many consequences for Greece as you may think). I am one of those that strongly supports our staying in the Eurorozone (and of cource not declaring bankruptcy, i.e., paying back the loans) - but remember that we originaly got the loans paying huge interests, so the private entities giving us the loans had huge profits for DECADES (no one had any complaint!).

Re:And why is bitcoin different?

[Zontar_Thing_From_Ve]

Other than the pixie dust and unicorn poop, what exactly keeps the government from charging you with nor reporting the money?

It's a valid question but I can speculate on reasons why they may not do that.
1) Incompetence.
2) Corruption. Specifically I mean that the people who investigate this can often be bribed in nations with major economic problems to look the other way.
3) The current president can always fall back on the old tried and try cry of "Britain stole the Islas Malvinas from us! We must get them back!" to distract citizens from paying attention to the economy.
4) Blaming the USA for everything is another always successful policy to distract the population.

Re:And why is bitcoin different?

[itzly]

anonymously bulk-selling bitcoins at a big loss just to crash the whole bitcoin market.

The problem is that they'll run out of bitcoins to sell, and mining produces smaller and smaller amounts over time.

Re:And why is bitcoin different?

[JustNiz]

>> The problem is that they'll run out of bitcoins to sell,

No, they just need to keep busting drug dealers that take bitcoins. if those hauls over time net less bitcoins it just means the popularity of bitcoin itself is going away, therefore the number of bitcoins they need to sell to affect the market is less.

>> mining produces smaller and smaller amounts over time.
True but thats controlled by difficulty which is adjusted montlhy, and does not necessarily always increase. In fact its decreased several times lately, since there is no new generation of hardware that can mine bitcoins significantly faster or with using less power to justify the cost of keeping mining given a continuing increase in difficulty and a continuing cost of electricity. In fact we're already well past the break even point for most miners.
The government have no such problem, since unlike every other miner, their goal is not to make a net profit, but to crash the bitcoin economy at any cost.

Re:And why is bitcoin different?

[shaitand]

Well, I'd agree which extends the validity of my point beyond Argentina. But for now we are talking about Argentina and it's an easier case to make.

Re:And why is bitcoin different?

[Anonymous Coward]

Devil's advocate: If one is presented with a currency that is sharply inflating (but can be stored in banks), versus one that would require some thought in storage, it might be better to move to BTC either as a quick exchange medium to trade for a stable currency or precious metals, or even hold for a long while. Just holding a currency that is hyperinflating, one is losing value, so it might be that dealing with BitCoin is better financially, even with the risks of it being stolen via malware or other means.

[1]: A stable currency can be a subject of subjective debate.

Re:And why is bitcoin different?

[Dastardly]

but remember that we originaly got the loans paying huge interests, so the private entities giving us the loans had huge profits for DECADES (no one had any complaint!).

And, the "bail out" loans did not really go to running the Greek government or Greek people, it went to bailing out the banks that used to hold greek sovereign debt. Currently, Greek debt is essentially held by the IMF and ECB. Much like in every other country banks do not suffer the consequences of the bad loans they make, but instead privatize the profits and socialize the losses.

Re:And why is bitcoin different?

[codebonobo]

>> At least it can't be devalued like government's magic paper.

Sure it can. The government already got their hands on 30,000 ( worth about $18 million then) of Silk Road's bitcoins and more from other busts,

The amount of Bitcoins the US government stole was much higher at over 144 million BTC. Those have already all been sold as well.

and the NSA already has masive computers that could mine bitcoins like there's no tomorrow.

Nope, Not even close. Are you suggesting the NSA's datacenters and supercomputers can encode a double round of SHA256 anywhere near 324,680,873 GH/s ?

Re:And why is bitcoin different?

[codebonobo]

Please do some research first into bitcoin before spreading misinformation.

>> The problem is that they'll run out of bitcoins to sell,

No, they just need to keep busting drug dealers that take bitcoins. if those hauls over time net less bitcoins it just means the popularity of bitcoin itself is going away, therefore the number of bitcoins they need to sell to affect the market is less.

Or they cannot efficiently steal large caches of Bitcoins anymore since they squashed the Silk Road and many decentralized exchanges started appearing. Open Bazaar will be an example where there is no company to steal from or server to take down. They will have to investigate and spend millions to attack every dealer individually and only be able to seize small amounts as there is no centralized escrow or profiting company.

True but thats controlled by difficulty which is adjusted montlhy, and does not necessarily always increase. In fact its decreased several times lately,

Bitcoin doesn't adjust difficulty every month or set amount of time but every 2016 blocks which is approximately 2 weeks on average.

The government have no such problem, since unlike every other miner, their goal is not to make a net profit, but to crash the bitcoin economy at any cost.

This would be quite entertaining to see. I would like to see them spend a billion dollars to perform 2-3 double spends on a 51% attack while they simultaneously keeping these plans a secret. We are ready for them.

Re:And why is bitcoin different?

[antiperimetaparalogo]

but remember that we originaly got the loans paying huge interests, so the private entities giving us the loans had huge profits for DECADES (no one had any complaint!).

And, the "bail out" loans did not really go to running the Greek government or Greek people, it went to bailing out the banks that used to hold greek sovereign debt. Currently, Greek debt is essentially held by the IMF and ECB. Much like in every other country banks do not suffer the consequences of the bad loans they make, but instead privatize the profits and socialize the losses.

I am a very "right-wing" person and i strongly support "the banks", but, yes, what you just described is what happened ("privatize the profits and socialize the losses"). To be fair, some measures had to be taken -because a collapse of the banking sector could/would effected very negative the rest of the (real) economy-, but not this "IMF/ECB/etc buys the Greek debt from the banks and let the Word/European citizens think that we, the fucking Greeks, steal from them directly".

(sorry if i double post, a bug eat my first reply!)

Re:And why is bitcoin different?

[HornWumpus]

When they kick you out, you can complain that they wrote the 'kick you out' rules after you joined.

I'm sure the Germans and Finns will be very sympathetic.

There are also no 'leave the euro' rules. As the law stands you are all stuck with it. But he who has the gold makes the rules. You're fucked.

Your government loans are at below market interest. Because the lenders know the rest of the euro zone is (sort of) guaranteeing your debt. Greece is not credit worthy on its own.

The only thing that has protected you so far is the others that will be knocked down when you default. But they are getting their shit together. Once Iceland, Italy and Spain can take the shock of Greece falling on it's face, Greece will allowed to fall.

Re:And why is bitcoin different?

[antiperimetaparalogo]

When they kick you out, you can complain that they wrote the 'kick you out' rules after you joined.

I'm sure the Germans and Finns will be very sympathetic.

There are also no 'leave the euro' rules. As the law stands you are all stuck with it. But he who has the gold makes the rules. You're fucked.

Your government loans are at below market interest. Because the lenders know the rest of the euro zone is (sort of) guaranteeing your debt. Greece is not credit worthy on its own.

The only thing that has protected you so far is the others that will be knocked down when you default. But they are getting their shit together. Once Iceland, Italy and Spain can take the shock of Greece falling on it's face, Greece will allowed to fall.

Judging from all those "they will kick you out", i think that what you probably don't understand my dear friend is how true the saying "you owe someone a small amount, you have a problem - you owe him a big amount... he has the problem!". If we leave the Euro (even if they "kick us out", althrough i insist that we can leave only if we want, or stay if we want - we can default inside Euro, and since we don't have a deficit anymore we would be just fine), our economy would suffer for a small period (imports would be expensive), but sooner (or later) we would recover (Greece is not a third world country - we are among the richer nations, and we are actualy a poor state with rich citizens). But i repeat that i (and most Greeks) want to not default and stay in Eurozone.

Re:And why is bitcoin different?

[JustNiz]

>> Please do some research first into bitcoin before spreading misinformation.

and you please stop being an arrogant dick.
As it happens I already know quite a lot about bitcoin.

Re:And why is bitcoin different?

[HornWumpus]

The thing is Greece is _small_. An infected pimple on the euros ass So long as they don't allow gangrene to set in the rest of the euro will be fine.

And now all the bad Greek debt is in the hands of the ECB. An entity that actually can print the money (but won't do it for any individual 'nation'*)

Greece can be allowed to fail, but cannot be allowed to take down the next weakest economies. It also cannot be allowed to continue to print money on the euro forever. Old debts are one thing, they are gone, everybody understands you are deadbeats. New debts are what the Greeks new reds continue to ask for.

*all eurozone countries get scare quotes on 'nation'.

Re:And why is bitcoin different?

[antiperimetaparalogo]

Well, without commenting about all those "infected pimple/gangrene", i agree to an extend: both the Eurozone and Greece had the time to prepare for the future (with each one helping the other by not doing something drastic) - so, when/if new things happen, i hope we will be here to discuss them (i strongly believe i will have the needed electricity to log in to Slashdot)

25% deflation? Amateurs, I tell you!

[Overzeetop]

Losing 25% year on year in the Peso looks like kid's stuff in the devaluation game. They need a *real* currency to lock in year on year decreases of more than 50%. And that's why they've turned to Bitcoin!

4/15/2014 = $496
4/15/2015 = $223

It's not as fun as lighting cigars with $100 bills, but it's just as productive!

Re:25% deflation? Amateurs, I tell you!

[Anonymous Coward]

I assume that the BTC are used as temporary storage and transfer of value. I assume that the owner then immediately sells them in the local market for pesos, so the BTC don't lose their value. So you have the following diagram that shows transfer of value which results in circumeventing the regulations: credid card -> USD -> BTC -> pesos.

Re:25% deflation? Amateurs, I tell you!

[Anonymous Coward]

I would assume this as well. They are working around gov restrictions on cash flow and goods flow. Any currency could fit the bill as this medium. Physical paper is easier to control than bits.

Re:25% deflation? Amateurs, I tell you!

[Anonymous Coward]

Isn't that called inflation? Deflation is when the same amount of the currency purchases more of a product. But here, the same amount of currency--1 bitcoin--buys less of the product--US dollar. IOW, deflation doesn't mean losing value; quite the contrary.

That said, doubtless bitcoin will cause trouble in various countries, to both positive and negative effect. I think that's what the hedge fund manager meant in the summary---that he's looking forward to making bank on the storm that bitcoin will brew, not that bitcoin will stabilize different economies.

Re:25% deflation? Amateurs, I tell you!

[Anonymous Coward]

It's obvious he doesn't know the difference.

Re:25% deflation? Amateurs, I tell you!

[shaitand]

That is the price on the speculators market not the value. Most of those involved in those price shifts aren't even utilizing bitcoin and those markets only come into play when seeking liquidity in a secondary currency. Bitcoin has innate value as the only currency (along with clones):

1. Divisible to an infinite number of units so there are always enough pieces to grow to any transaction volume. (Gold has this flaw, there aren't small enough bits to use to transact in actual gold.)
2. No known method of counterfeiting.
3. Innately digital and transmittable in all major ways.
4. De-centralized system of initial creation and distribution.
5. Innate value in the sense of a useful commodity.
6. Is universal and requires no secondary currencies exchange once critical mass is achieved.

In other words, Bitcoin is the only currency that has innate value in the form of utility where that utility is to function as a quick assured universal means of value transmission where the assurance is not subject to the interests of a third party. Fiat currencies must be valued against other fiat currencies at critical mass. If bitcoin ever reaches critical mass it eliminates the utility of all other currencies except goods with valuations based on supply and demand so the speculative currency market becomes a non-entity.

Re:25% deflation? Amateurs, I tell you!

[demonlapin]

It's the reverse trade that points out the real value of this business: the steady stream of people who are willing to sell pesos to buy BTC. Those would be wealthy Argentines trying to get their bank accounts out of the country without the government getting a share. You charge them a modest fee (say, 10%) and you can provide your dollars->pesos service for free (because you can only offshore money as quickly as you can get dollars to trade).

Re:25% deflation? Amateurs, I tell you!

[Anonymous Coward]

What we have above is a perfect failure of moderation. Gloss right over the fact that he's confused deflation with inflation, and reward him for a useless insult to bitcoin.

Newsflash: to be "informative" requires a bit more than a layman's understanding of the issue at hand.

Re:25% deflation? Amateurs, I tell you!

[Hognoxious]

What's the betting he graduated magna cum laude?

From A&M.

Re:25% deflation? Amateurs, I tell you!

[Anonymous Coward]

5. Innate value in the sense of a useful commodity.

Wait WHAT!!!??

Did you seriously just say something that exists only in the digital realm, which solves a cryptographic puzzle nobody actually asked or cares about, actually has a useful function as a commodity.

Do you understand what the words innate, value, useful and commodity even mean?

The only part of that sentence that makes any sense at all are "in the" and "of a" the rest is just nonsense.

Re:25% deflation? Amateurs, I tell you!

[tomhath]

I'd say it's neither inflation nor deflation since it's only tied to the exchange rate.

It would usually be called devaluation of a currency. But any valuation of bitcoin against a currency backed by a government is pure speculation anyway, so what you're seeing is the bursting of a speculation bubble

Re:25% deflation? Amateurs, I tell you!

[Anon-Admin]

Wow, way to cherry pick your data. How about we look at 4/15/20xx over more than a year
04/15/2011 $2.98
04/15/2012 $4.96
04/15/2013 $91.79
04/15/2014 $452.14
04/15/2015 $216.95

Re:25% deflation? Amateurs, I tell you!

[shaitand]

"Did you seriously just say something that exists only in the digital realm"

Seriously are we back in the 90's? Some of the most valuable things on earth only exist in the digital realm, see microsoft office and windows, google, and everything produced by the television and movie industries.

"which solves a cryptographic puzzle nobody actually asked or cares about"

The puzzle of money that can't be counterfeited, doesn't require inflation, and doesn't depend on a central bank? I'm not sure how that falls under a cryptographic puzzle nobody cares about. Using bitcoin to trade with the Chinese would certainly solve some massive problems for the US very quickly.

Re:25% deflation? Amateurs, I tell you!

[Anonymous Coward]

Um, OK?

How about looking at the all-time continuous graph of bitcoin prices rather than countering the cherry-picking with an incomplete and misleading set of numbers? Having consistent invervals means nothing; you're lying more with your data more than he. The currency has never been stable for even 60 days at or above today's price, it's only been stable back when it was practically unknown and worth less than $10. The only period of stable *change over time* is a rather steady *decline* since late 2013. You could draw a pretty decent linear fit line on the daily closing prices for any exchange. How does a currency designed for deflation falling month over month for almost 18 straight months represent stability or opportunity?

His data represents the trends since bitcoin became well known, not yours. One massive boom doesn't prove jack shit; at this rate bitcoin will be back below $100 by Christmas. It may be way, way up since 2011 but the only stable behavior it's ever shown is a slow decline.

That's not something you bet on. That's not a growth currency. If you can find uses for it, fine, but don't play the whole "it's worth so much and grew so much and it's practically a sure thing if you look at the data" angle, because the numbers show the exact opposite.

Re:25% deflation? Amateurs, I tell you!

[bloodhawk]

seeing as he said DEVALUATION not deflation he seems to understand the difference just fine and used the correct term. The error is in your reading capabilities.

Re:25% deflation? Amateurs, I tell you!

[Anonymous Coward]

Huh? And Bitcoin isn't speculation? What about Litecoin? Or any of the other clones? What about the infinite number of possible future clones?

"Speculation" is just a word you use to cast dispersions. It's meaningless.

Where there are willing buyers and willing sellers, you have a market. Period. Market determines valuation, which is simply whatever somebody was willing to pay at that very instant. And aggregate of instant valuations is just an ephemeral statistic, although obviously it's useful to treat it more concretely. But if you think there's some magical, fixed, underlying, inherent value... that's pretty much the fundamental premise behind Marxism--inherent value.

Re:25% deflation? Amateurs, I tell you!

[DRJlaw]

Seriously are we back in the 90's? Some of the most valuable things on earth only exist in the digital realm, see microsoft office and windows, google, and everything produced by the television and movie industries.

We get it. You have an enormous hard-on for Bitcoin.

Too bad I cannot use Bitcoin to pay my taxes, my mortgage, my children's school fees, my grocery bill, any gas station, the parking meter, or anything else that requires interaction with the physical realm around me.

The value of Bitcoin is what I can buy with it, which is very little beyond mail-order luxuries that, let's face it, are better ordered via and protected by my credit card.

We do not care whether you have some anrcho-capitalist obsession with Bitcoin. Counterfeiting does not affect us. Inflation and a central bank is not a concern when compared with a "currency" whos value fluctuates far more against real world goods than the US dollar has in decades, if not longer. Using Bitcoin to trade with the Chinese has the fundamental problem that nobody in the private sphere wants a public and de-anonymizable record of all curreny flows in international and intrastate trade -- it's a surveillance state's dream, but a citizen's and a business' nightmare.

Go troll somewhere else.

Troll somewhere else.

BitPagos? Rock Hostel?

[VuduID]

"But Argentina has been quietly gaining renown[...]" No kidding... Ill say "extremely quietly". As a tech savvy Argentinean that has been living in Argentina for the last 33 years (that is all my life), I never heard of BitPagos, Rock Hostel or all those 8000 convenience stores apparently accepting BitCoins. I guess I should really get out more. The inflation is real though. And it sucks.

Re:BitPagos? Rock Hostel?

[Anonymous Coward]

I concur, i also haven't seen anything related. On the other hand i did see a BitCoin trading house in Uruguay...

Re:BitPagos? Rock Hostel?

[Anonymous Coward]

"But Argentina has been quietly gaining renown[...]"

No kidding... Ill say "extremely quietly". As a tech savvy Argentinean that has been living in Argentina for the last 33 years (that is all my life), I never heard of BitPagos, Rock Hostel or all those 8000 convenience stores apparently accepting BitCoins. I guess I should really get out more.

The inflation is real though. And it sucks.

Same here. This news is completely inflated, probably for self-publicity.

Slashdot's new slogan should be: "Pseudo-news for pseudo-nerds"

Re:BitPagos? Rock Hostel?

[orasio]

The one in Plaza Independencia?
They have a neon sign for bicoin safe deposit boxes, but they don't look that secure, I think you can even see them from the street.
Also, their windows are lined with weird posters, like 9/11 conspiracy stuff.

I'm betting that''s just some guy, slightly nuts, with a bit of money to rent a place, not a real business.
 

Re:BitPagos? Rock Hostel?

[hjf]

As a fellow argentinian I can confirm I've never heard of this bullshit before. There was an a(dve)rticle on Infobae the other day with the same phrasing.

When MercadoPago accepts BTC we can talk.

Re:BitPagos? Rock Hostel?

[Anonymous Coward]

Rock Hostel is in Plaza Congreso, they use BitPagos as many hotels because the receive 30% more money from tourists credit cards. I know that because I bought bitcoins from them more than a year ago.

Re:BitPagos? Rock Hostel?

[Anonymous Coward]

As a fellow argentinian I can confirm I've never heard of this bullshit before.

From hence forth, let us call it -- "BitShit".

Re:BitPagos? Rock Hostel?

[Anonymous Coward]

I second this. The article is pure advertisement BS, probably paid by BitPagos itself.

The country (like 40 million people) continues to live by without knowing what BitCoin is.

Not what you'd call a "disruption", really.

Re:BitPagos? Rock Hostel?

[Anonymous Coward]

And the proponents of this BitShit are batshit dipshits...

Year of Bitcoin!

[Anonymous Coward]

Yup,2015 will be the year Bitcoin revolutionizes everything!

Just like 2014.

Errr, 2013.

2012?

Wait, this thing is six years old? Man, people must be incredibly stupid if they haven't adopted this amazing, world changing, perfect technology in six years.

Re:Year of Bitcoin!

[bobbied]

Oh no you don't.. It's not the year of bitcon until AFTER the year Linux takes over the desktop..

Odd definition of "disruptive"

[pla]

The Argentine economy has hyperinflation and unreasonably burdensome government controls. Bitcoin hasn't "disrupted" the Argentine economy, it has made daily life possible for the average Argentinian.

Yes, from the perspective of the government, Bitcoin has made their self-destructive policies moot. It has given the populace an alternative to their collapsing fiat currency. Fortunately, however, the government doesn't get to define "the economy" - The participants in the economy do, and Argentinians have said "no thanks!" to the local Peso.

Argentina doesn't highlight the problems with Bitcoin, it exemplifies the entire raison d'etre for it!

Re:Odd definition of "disruptive"

[Anonymous Coward]

I'm an "average Argentinian" and I never heard of BitPagos, I know no one which needs something like bitcoin, at least you consider "average Argentinian" all those person who cryies because they can't buy notebooks on ebay freely (or if you are one of those stupid people whom thinks "Argentinian" are just the people who lives in Capital Federal. So, summarizing: shut up, stop saying stupid things.

Re:Odd definition of "disruptive"

[PPH]

In this case, disruptive means that the people who need to prop up the peso/dollar exchange rate to pay back loans denominated in dollars will get screwed. Because the supply of pesos flowing through the system available for the banks to skim will dry up. And US investment banks who took risks wil have to renegotiate loans. Or accept default.

And if there's one thing we know about wealthy investors: They never take a loss on a gamble. Someone else must be found to make them whole.

Re:Odd definition of "disruptive"

[im_thatoneguy]

They aren't replacing the local Peso with Bitcoin. They're just using Bitcoin as a transactional currency to run an unregulated currency exchange. Bitcoins in this instance are essentially a proxy for US dollars.

If I have $100 USD and I want to convert it to Pesos I can either go to a regulated currency exchange which apparently is attempting to combat inflation by keeping the peso value low or you can exchange your $100USD for say 0.5 bitcoins on the open bitcoin market. Then you find someone who wants "bitcoins" aka USD and you sell them your bitcoins in exchange for pesos at market rates.

The person who sold you pesos for Bitcoins really just wants USD (or Euros).

Now doing this is almost certainly illegal if the government has mandated exchange rates since all you're doing is adding an intermediary step but ultimately performing a currency exchange illicitly. All you've done is employed Bitcoin as an escrow service.

Re:Odd definition of "disruptive"

[Anonymous Coward]

Bitcoin has made their self-destructive policies moot

Hardly.

A small percentage of the population is using it as a black market currency exchange. That is all.

Re:Odd definition of "disruptive"

[pla]

A small percentage of the population is using it as a black market currency exchange. That is all.

That also doesn't really fit the definition of "disruptive".

Would you use that word to describe US drug dealers using Tide (the detergent) as a medium of exchange?

Headline vs. Article... FIGHT!

[im_thatoneguy]

Bitcoin Is Disrupting the Argentine Economy

The number of Bitcoin users in Argentina is relatively small; it barely registers on most charts of global Bitcoin usage.

So it's disrupting the Argentine Economy... but only in a way that's so small as to be imperceptible. Gotcha.

Re:Headline vs. Article... FIGHT!

[jeffmeden]

Disrupt is an overloaded word. In this case it's in the "disruptive technology" sense: the USD > bitcoin > ARS automation allows for a 30% increase in revenue for any business that accepts foreign bank cards. Thats enough for people to stampede to it, the only thing holding it back will be how fast the payment terminals can be set up.

Re:Headline vs. Article... FIGHT!

[im_thatoneguy]

No it's 'disruptive' aka the buzzword that Silicon Valley douches use about their latest fart app.

In this instance if a bunch of payment terminals were set up, the government would just ban it and it would go back to the fringes.

God proven to exist!

[Dunbal]

Disrupting the Argentine economy by not disrupting it?

Inflation is constant

The number of Bitcoin users in Argentina is relatively small; it barely registers on most charts of global Bitcoin usage.

Both from TFS.

I too can make extravagant claims in the subject line of my post, only to actually disprove the claim in my message. God has not been proven to exist.

No shit

[Sycraft-fu]

If the problem is that the Argentine currency is unstable... well then Bitcoin is the WRONG answer. It is exceedingly unstable, it would be unstable even for a stock, never mind a currency, it moves like a thinly traded penny stock. So trying to use it for some kind of stability is just about the dumbest thing you can do.

To me, this seems like more Bitvertisement by which ever of Slashdot's editors is heavily invested in them and trying to drum up interest.

Re:No shit

[Actually, I do RTFA]

it moves like a thinly traded penny stock

It pretty much is a thinly-traded penny stock.

Re:No shit

[Anonymous Coward]

To me, this seems like more Bitvertisement by which ever of Slashdot's editors is heavily invested in them and trying to drum up interest.

Yeah really, like the Gold hoarders that sell ads on Glenn Beck and Rush Limbaugh.

And this whole thing is to bankrupt the government for resisting against the IMF, World Bank, or whoever it was a while ago. It turns out Bitcoin makes a pretty effective weapon against fragile, and corrupt economies

Argentian laws

[Anonymous Coward]

People should read the post but for those of you that are not going to...The Laws that they are talking about circumventing are the ones that define 5 peso's to 1 dollar. Any dollars that get sent to Argentinean banks automatically get converted using this value. What these companies do is the convert the transaction from dollars/euros/blah to bitcoin. Bitcoin is then converted to pesos at the market rates. Currently because the black market is 8 peos to 1 dollar people are loosing up to 30% of their value using banks. meaning they can save 30% just by using bitcoin...so this is as illegal as using bitcoin in the US...

Re:Argentian laws

[Anonymous Coward]

Just a correction: 8 pesos to 1 dolar is the current "legal" rate. The "black marcket" is a about 12 - 13 pesos.

Re:Argentian laws

[Anonymous Coward]

What? Are you calling back from 2013? The actual rates are 1 USD=8.91 ARS (official) and about 1 USD= 13ARS for the black market.

Chill, bitcoin-istas

[jodido]

This scheme works by buying dollars with bitcoins. How is that any different from buying dollars with pesos? The value of the bitcoin is pegged to the dollar. The value of the peso is pegged to the dollar. Until bitcoin replaces the dollar as the world's standard currency, all this scheme does is circumvent some government rules. It certainly doesn't disrupt anything, any more than not reporting income disrupts anything.

Re:Chill, bitcoin-istas

[HornWumpus]

How would a nation/national bank even implement a bitcoin peg? You _don't_ know what you are talking about.

Re:Chill, bitcoin-istas

[Anonymous Coward]

The travesty is that the conversion from pesos->bitcoin->dollars->bitcoin->pesos, with middlemen taking a cut of profit at every conversion, is *still* less devaluing than just converting dollars to pesos because of the corruption of the government.

Re:Chill, bitcoin-istas

[swb]

How is the dollar or any currency used as a peg currency?

I don't see why a country couldn't just say "Our currency, the fubar is pegged at the rate of 10 fubars to the bitcoin." Anyone needing to conduct transactions in fubars would have to then buy 10 fubars for one bitcoin.

The only way this works, though, is for the government to restrict transactions in other currencies and only allow the national bank under their control buy foreign currencies. I think some get even more draconian, forcing travelers to trade all their foreign currency at entry to the local currency at the official exchange rate and then sell you your own currency back at exit.

Of course this doesn't stop black markets for currency, every country with an official exchange rate has them, more so if the official exchange rate is greatly detached from reality. But these can be dangerous and you may find you detached from your freedom.

Re:Chill, bitcoin-istas

[jodido]

You'd have to be nuts to peg your currency to something as volatile and mysterious as bitcoin.

Re:Chill, bitcoin-istas

[swb]

At the end of the day, it's price fixing and price fixing doesn't really work without some kind of draconian controls.

I'm sure there's a fixed exchange rate for Iranian currency to prop up the local currency. China gets away with it, well, because China.

LOL one failed currency to replace another

[peter303]

Bitcoin advocates getting desperate I see. To gain credence a non-government computer currency should build a big foothold in an established economy first.

Re:LOL one failed currency to replace another

[Canth7]

Yeah, Bitcoin advocates are getting desperate what with Goldman Sachs and IDG investing the majority of $50m in a payments startup running on top of Bitcoin - you got us.

http://www.nytimes.com/2015/04/30/business/dealbook/goldman-and-idg-put-50-million-to-work-in-a-bitcoin-company.html

Obvious Differences

[Anonymous Coward]

It differs in that buying Pesos is not tax evasion or circumvention of the country's currency controls. BitCoin is a feeble attempt at both.

Re:Obvious Differences

[HornWumpus]

feeble does not mean 'completely effective'.

As if...

[slick7]

As if the FRN is completely innocent of economy busting. They did it in 1929, 2008 and there about to do it again. Go BRICS!

Innate Value

[Anonymous Coward]

You are abusing the term Innate Value.
Yes it provides utility as a currency, but outside of its use as a currency it has no value because it cannot be used for anything else. Things that have innate value have other uses than just for currency.

Re:Innate Value

[khallow]

Yes it provides utility as a currency, but outside of its use as a currency it has no value because it cannot be used for anything else. Things that have innate value have other uses than just for currency.

There's no such thing as innate value. Food doesn't have value, if there's no one to eat it. People don't have value, if they're just another mouth to feed, breeding more mouths to feed.

Re:Innate Value

[shaitand]

Other things that have innate value do if they didn't bitcoin wouldn't be unique and my argument would be invalidated. Things have an innate value "to people" (qualifier for the benefit of other dude who replied to you) because they have innate properties which make them useful to us. Short of reverting to a pure barter system we will always have need of a currency and if there is one thing with innate properties that makes it most useful to function as one it becomes innately valuable in that respect.

Re:Innate Value

[shaitand]

Technically true even if deliberately obtuse. I will amend myself. Innate value to people. Suddenly food, shelter, and short of globally reverting to a barter system, currency, qualify.

Re:Innate Value

[khallow]

Technically true even if deliberately obtuse.

Obviously, I don't see it that way. My ultimate point here is that we can do a lot to change what we perceive as innate value. Gold, for example, has long been a store of value, namely, that it has a perceived innate value and some physical properties that make it a nice thing for this purpose. Originally, it was because it looked pretty and was easy for bronze age people to make and handle. Now, it has a bunch of other industrial uses propping up its "innate" value.

And currencies can have value beyond their utility in everyday trade. For example, the US government and its subordinate governments accept only US dollars for tax payments and many other transactions.

While Bitcoin might not have a utility past its use as a currency, there is no reason we couldn't make a currency, using the Bitcoin model, which does. The key reason is that Bitcoin depends on computation to validate currency creation and transactions. Those computations are inherently useless outside of their derived value from Bitcoin transactions.

That needs not be the case. We could make a system where every unit of currency created and every transaction done happens to be done via a measurable unit of useful computation (say it tests a number of possible protein configurations or some other computationally intensive, readily parallelizable problem). Then in addition to the currency's value as medium of exchange, there would be add on value from those computations as well.

Re:Innate Value

[shaitand]

"That needs not be the case."

That's a common misunderstanding. It does need to be the case and has been mathematically proven that it needs to be the case. Bitcoin miners are performing work, specifically, they are validating transactions. If they were doing something else instead the blockchain wouldn't be guaranteed to be valid and bitcoin could be counterfeited.

Today bitcoin would be a perfect choice for exchanging value between two untrusting parties, even governments. You could have an entity set up a mining operation and control all mining of a bitcoin clone and then distribute based on some other work being performed but then you are back to trusting the entity doing the mining.

If you disagree and think the math is flawed you are welcome to dazzle us all and build the solution. People do things that aren't supposed to be possible every day.

Re:Innate Value

[khallow]

Bitcoin miners are performing work, specifically, they are validating transactions. If they were doing something else instead the blockchain wouldn't be guaranteed to be valid and bitcoin could be counterfeited.

You aren't arguing what you think you're arguing. There's no reason that performing work means that the work can't be useful in its own right.

Re:Innate Value

[shaitand]

No, you don't understand what work they are performing now and how it breaks things if they are not doing it. Bitcoin would no longer solve the double spending problem which would defeat the point.

Re:Innate Value

[khallow]

No, you don't understand what work they are performing now and how it breaks things if they are not doing it

I do understand what they are doing now. It doesn't significantly change the system, if the computation work has outside utility.

Bitcoin would no longer solve the double spending problem which would defeat the point.

That is incorrect.

Re:Innate Value

[khallow]

And to emphasize my point, what is the computation that actually is being performed? It's not "solving the double spending problem" or the other related problems. It's a computation which allows BitCoin issues to be addressed by attaching important BitCoin features, particularly bitcoin creation and transactions to the proof of work of the computations. As a result, we can substitute any other computation which has similar enough features to generate a proof of work and requires significant computation to perform.

So you kill the currency monopoly,

[pecosdave]

and the power goes back to the people disrupting the old-guard but stabilizing and empowering the individual who no longer deals with run-away inflation.

Gosh, who could have ever guessed that would happen?

*cough*Ron Paul*cough*

Apples to apples

[JustNiz]

>> At the end of 2014, for example, the peso was worth 25 percent less than it was at the beginning of the year.

Even as someone who believed in Bitcoin enough to spend significant $ on mining hardware, I know bitcoin has been far more volatile and has devalued far more than that in the same period.

So....

[Yunzil]

They're replacing their volatile and dysfunctional currency with.... another volatile and dysfunctional currency.

Re:So....

[bobbied]

BUT... BUT... It's not GOVERNMENT CONTROLLED!

Oh, wait... Might that actually end up being a problem too?

Don't I recall a bunch of folks up in arms at all the BitCoin exchanges "loosing" (I mean stealing) the depositor's funds.... There should be a law...

may be they need to use PLEX

[Anonymous Coward]

anyway who needs food and shoes in our technological time

Bitcoin is not disrupting anything here

[Anonymous Coward]

Is ./ becoming more right-wing or is it just me noticing it more?

This must be an ad for something!

[Nicopa]

I live in Argentina and I haven't heard of any of this. Neiher BitPagos, nor any of the other things mentioned above. Here in Argentina bitcoins are, like most enywhere else, a marginal things only some nerds know.

Re:This must be an ad for something!

[Nicopa]

I've read the linked news. The 8000 convenience stores is a fake number. They say that somebody intended to partner with an existing paying network (for paying cell phone prepaid schemes). I assure you there are no 8000 stores here selling bitcoin. I bet there aren't 8000 people here knowing about bitcoin either. =)

Re:This must be an ad for something!

[Anonymous Coward]

I live in Argentina too, and many of us are using bitcoin to send money to our bank accounts abroad. Or to receive payments from other countries. I use Coinapult when I need to lock de amount in USD.

I do not use BitPagos since I do not process credit cards from tourists, but many hotels are using this since they get 30% more money with it.

Re:This must be an ad for something!

[Anonymous Coward]

I'm a nerd and I haven't heard any of this. Here in mom's basement Argentina is a marginal thing only some soccer players know. :P

In 3...2...1....

[Anonymous Coward]

Argentina passes a law making it a capital offense to accept bit-coin as payment without going through official government channels.

Currency needs a basis for being

[ITRambo]

A currency is backed by the value of the goods and services of the nation producing it. Bitcoin is backed by magic.

Re:Currency needs a basis for being

[bobbied]

Well, that and the block chains... About the only thing holding up values is the cost of mining hardware.... Wait, is that possible?

It has little to do with bitcoin.

[mbkennel]

The Argentinian government, being a master of sense and competency, pre-emptively taxes white-market transactions on the normal banking system. They have power to enforce this on the credit card acquirers & merchant processors, and do it especially with foreign currency transactions.

Presumably there is some way to get 'refunded' some of the taxes back if you can prove to some idiot's satisfaction that you earned the money in a 'legal way' whatever that may mean.

So, doing it with bitcoin is basically a payment processor operating illegally and not collecting withholded taxes. It doesn't have much to do with bitcoin and everything about evading regulation.

Free market

[Anonymous Coward]

Let the market decide?

That's what BTC is all about, letting the market decide and keeping the government out of money matters.

I'm asking for a friend

[Anonymous Coward]

Is it legal for a US citizen to scam gullible Argentinian people?!

Lol

[MichalInator]

Erm, I believe that it's primarily the Argentinian government that's messing up their economy...over and over again. Say, aren't they the "nation" that believes all neighbouring islands are belong to them?

it is clear ./ hasn't used bitcoin

[Anonymous Coward]

Go and actually put some money into bitcoin, use a bit of it, and try to get it back out. You'll quickly see why it is a bad idea. Not because of the concept, but because the actual implementation is surrounded by con artists and lying exchanges.

I dunno...

[Anonymous Coward]

Can you fund a second Falklands war with Bitcoins?

This is a plot against the Argentinian government

[Anonymous Coward]

This is a plot to destabilize the current Argentinian government who is the target of Israel because of claims of Argentinian cooperation with Iran and the target of Bond Traders who have been trying to force Argentina to pay full price on bonds the traders paid pennies on the dollar for.