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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."
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."
seriously guys, you missed the boat and you're angry, we get it!
now have a rational discussion for once!
Business owners in Argentina are using bitcoin to break the law.
As usual, if you can't understand that you can't screw your users without losing them, you merit losing ground to new technologies.
Get free satoshi (Bitcoin) and Dogecoins
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.
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.
The World Wide Web is dying. Soon, we shall have only the Internet.
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.
Lost at C:>. Found at C.
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!
Is it just my observation, or are there way too many stupid people in the world?
"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.
"I'm from Buenos Aires, and I say kill 'em all!"
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!
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.
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.
Seven puppies were harmed during the making of this post.
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.
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.
Bitcoin advocates getting desperate I see. To gain credence a non-government computer currency should build a big foothold in an established economy first.
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.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
You don't understand bitcoin. It was designed to route around government interference.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
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!
The mind conceives, the body achieves, the spirit manifests.
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*
The preceding post was not a Slashvertisement.
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.
Seven puppies were harmed during the making of this post.
>> 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.
They're replacing their volatile and dysfunctional currency with.... another volatile and dysfunctional currency.
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%.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
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.
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.
But the black market dealer is taking a much smaller cut than the official banks.
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.
Digital information is very traceable.
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.
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?
Seven puppies were harmed during the making of this post.
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.
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.
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.
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.
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.
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.
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.
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.
Let the market decide?
That's what BTC is all about, letting the market decide and keeping the government out of money matters.
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.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
What?
How?
Start with the 'drinking from a fire hose' problem.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
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.
"File to fit, pound to insert, paint to match" - Aircraft Maintenance 101
Oh no you don't.. It's not the year of bitcon until AFTER the year Linux takes over the desktop..
"File to fit, pound to insert, paint to match" - Aircraft Maintenance 101
Well, that and the block chains... About the only thing holding up values is the cost of mining hardware.... Wait, is that possible?
"File to fit, pound to insert, paint to match" - Aircraft Maintenance 101
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?
"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.
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.
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.
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.
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.