LeapRate's Daily Forex Industry Newsletter
Join now to receive first access to our EXCLUSIVE reports and updates.
Screenshot of a breaking news alert e-mail from Q2 2017
Necessity is the mother of invention.
Argentina has become so hampered by the fiscally paralyzing combination of spiraling peso inflation and stringent capital control laws which prohibit the nation’s citizens from not only utilizing any foreign currency or holding it, but also from traveling abroad without government approval and issuance of dollars specifically for overseas use, which must be handed in upon return.
This draconian policy by President Cristina Kirchner has had a devastating effect on industry in Argentina, a nation of vast natural resources and a highly educated population, which is becoming increasingly impoverished since the dozens of laws implemented to outlaw US dollars by the Kirchner administration and the restrictions on business with other nations without paying 15% transfer charges to the government.
Farming in Argentina has traditionally been a hugely successful enterprise, however, with capital control laws in place, business is being affected tremendously.
The grassroots pioneers who left Europe to settle Argentina’s vast farmlands in the 1800s may never have envisaged it, but there is an ultra modern solution to an age old problem under development,
in the form of a method designed by Argentinian web developer Nubis Bruno which intends to assist organic farmers to sell their goods online using Bitcoin.
According to CoinTelegraph, Mr. Bruno, along with associate Santiago Zaz have formed an alliance which combines Mr. Bruno’s technological expertise as a Bitcoin entrepreneur and co-founder of a Bitcoin exchange in Buenos Aires, and Mr. Zaz’s influence as a member of the city’s community of organic farmers.
“We became friends when I rented an apartment from Santiago, and a few months ago he told me that he was selling organic vegetables in Buenos Aires area, and he was selling also other people’s products” explained Mr. Bruno.
The site took a week to set up, and since then they have been selling organic vegetables on a daily basis and accepting bitcoin online. The union of a Bitcoin website with organic farmers in the area is a good combination because, like the cryptocurrency, the community is decentralized. Experiments like this could be successful throughout much of Latin American and extend to other local businesses.
Bitcoin has been rapidly and widely embraced by Argentina’s business community, with many proponents viewing it as the savior from the inflation which has swung from 20,000% in the 1980s and is expected to be as high as 38% this year. The difference is that in the 1980s, the use of dollars was widespread, compared to today’s fiscal ecosystem in which the use of dollars has been outlawed and if Argentinian citizens who keep dollars abroad want to use them in Argentina, they must exchange them to peso first, which would be a very costly business.
Credit card transactions also generate a 35% surcharge, which has had a disastrous effect on companies which do business with overseas clients. There are now about 130 businesses in the country that already accept Bitcoin, and an exchange called Bitex.la which was launched in May of 2014. The Argentine Bitcoin Foundation estimates that between 15,000 and 20,000 people hold bitcoins in the country, and regular meet ups are held at the fashionable Bar Duarte in Buenos Aires’ upmarket Palermo district.
Indeed, it may be be more than just a pipe dream that Argentina could be the first nation to utilize Bitcoin as a national currency in place of that issued by the central bank.