How Bitcoin Is Disrupting Argentina’s Economy(nytimes.com)
nytimes.com
How Bitcoin Is Disrupting Argentina’s Economy
http://www.nytimes.com/2015/05/03/magazine/how-bitcoin-is-disrupting-argentinas-economy.html
42 comments
> I think this article is going to result in a crackdown on Bitcoin here in Argentina.
What surprises me is that the article identified the person with full name and photo - while his activities are clearly illegal (trading black market dollars for BTC, tax evasion most likely too).
It's rather imprudent, IMHO.
What surprises me is that the article identified the person with full name and photo - while his activities are clearly illegal (trading black market dollars for BTC, tax evasion most likely too).
It's rather imprudent, IMHO.
It's not clear that they're illegal, although the article certainly did assert that they are. Buying and selling commodities for pesos is legal. It’s just, as I understand it, dealing in foreign currencies without a license that's illegal (but they daren’t shut that down entirely!), but Bitcoin isn’t a foreign currency. In fact, maybe it isn’t a currency at all; certainly that’s the IRS’s position on the matter. Whether AFIP, or the courts trying the case, will agree, that’s another question — and this article is certainly not going to help the case of the people mentiond in it.
I should have clarified a bit: I live in Argentina, and yes, this sort of ARS for USD trading is illegal. Selling commodities for foreign currency is also illegal (he states he sells BTC for USD too).
Sure, clearly his cueva activities of selling ARS for USD and vice versa are illegal; I was just talking about the Bitcoin trades.
I think you may be mistaken that “selling commodities for foreign currency is illegal”, because every Coto grocery store has a sign at every checkout counter explaining that they accept US dollars and Euros for their groceries, and at what ratio to the peso. And they’re enrolled in Precios Cuidados, so whatever illegal things they do, they pretty much have to do them in secret. There might be something illegal about selling Bitcoin for USD, but I’m pretty sure that it’s not simply that it’s selling a commodity for foreign currency.
I think you may be mistaken that “selling commodities for foreign currency is illegal”, because every Coto grocery store has a sign at every checkout counter explaining that they accept US dollars and Euros for their groceries, and at what ratio to the peso. And they’re enrolled in Precios Cuidados, so whatever illegal things they do, they pretty much have to do them in secret. There might be something illegal about selling Bitcoin for USD, but I’m pretty sure that it’s not simply that it’s selling a commodity for foreign currency.
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The Casa Rosada (the equivalent to the White House, home to the executive branch of the government) tweets ironically about this article:
https://twitter.com/casarosadaar/status/593584932485779457
https://twitter.com/casarosadaar/status/593584932485779457
No. It's not disrupting anything. Yet. And maybe it never would.
Man I wish these articles would just get to the point
Did the NY Times edited the title?
The headline has been changed to the less obviously ridiculous "Can Bitcoin Conquer Argentina?"
To which the answer is, of course, "Betteridge."
To which the answer is, of course, "Betteridge."
And here the Argentinian president's Twitter openly mocks this story: https://twitter.com/CasaRosadaAR/status/593584932485779457
"The number of Bitcoin users in Argentina is relatively small; it barely registers on most charts of global Bitcoin usage."
That's the very definition of not disrupting.
That's the very definition of not disrupting.
Requiring any disruption to take broad effect before saying it's a 'disruption' makes that word useless. That would be like saying a crack in a wall doesn't matter till the wall falls over. The real question is whether this is hairline crack that the rebar of their society will keep in place or if it's a crack that's unchecked and will continue to grow?
Requiring a disruption to at least barely register is pretty fair though. Bitcoin itself barely registers as an economic disruption (though it's got a lot of coverage for its reputational relation to criminals and scams), and this "disruption" barely registers in relation to something that barely registers.
This article is a press release for a book.
This article is a press release for a book.
It may disrupt the traditional way money is moved around in the River Plate: in bags and attached to body in the ferry to Montevideo.
> That would be like saying a crack in a wall doesn't matter till the wall falls over.
If you point at a crack in the wall and say "The wall is falling over!" I'm going to laugh in your face. Then I'll get some spackle.
If you point at a crack in the wall and say "The wall is falling over!" I'm going to laugh in your face. Then I'll get some spackle.
"Threatens to disrupt".
Good call. That would have been wholly correct, enthusiastic, optimistic, and I would have still clicked the link.
How does it make the word useless?
For your wall analogy, let's look at the word "destroy." A crack starts in the wall, and grows until the wall falls over. At this point, the wall is destroyed. But when the crack that eventually destroys the wall is still small, is the wall "destroyed" at that point? Of course not. Does that make the word "destroyed" useless? Not at all.
For your wall analogy, let's look at the word "destroy." A crack starts in the wall, and grows until the wall falls over. At this point, the wall is destroyed. But when the crack that eventually destroys the wall is still small, is the wall "destroyed" at that point? Of course not. Does that make the word "destroyed" useless? Not at all.
SPOILER: it's not.
> The number of Bitcoin users in Argentina is relatively small; it barely registers on most charts of global Bitcoin usage.
This article is hype: "This article was adapted from 'Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money'". It reads like a press release because it is one.
> This is the street-smart economics. Not the complex Ph.D. economics.
The phrase "I'm not book-smart, I'm street-smart" can be rephrased "I'm not real-credible, I'm fake-credible." It's the sort of thing expert beginners say, particularly when they've reached the stage of recognising and disparaging actual expertise in their subject. And hoo boy, Bitcoiners are at the far end of expert beginner.
There is no reason to expect anything good or useful from this article.
> The number of Bitcoin users in Argentina is relatively small; it barely registers on most charts of global Bitcoin usage.
This article is hype: "This article was adapted from 'Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money'". It reads like a press release because it is one.
> This is the street-smart economics. Not the complex Ph.D. economics.
The phrase "I'm not book-smart, I'm street-smart" can be rephrased "I'm not real-credible, I'm fake-credible." It's the sort of thing expert beginners say, particularly when they've reached the stage of recognising and disparaging actual expertise in their subject. And hoo boy, Bitcoiners are at the far end of expert beginner.
There is no reason to expect anything good or useful from this article.
"See, Bitcoin isn't just for illegal drug purposes. It's also for illegally circuventing currency controls!"
Psychic prediction. In ten years, there will be some jurisdictions where possesion of a copy of the bitcoin ledger will be a criminal offense.
Psychic prediction. In ten years, there will be some jurisdictions where possesion of a copy of the bitcoin ledger will be a criminal offense.
Well, Argentina's currency controls are legendary for how awful they are. If you want a lesson in how NOT to manage monetary policy, look at Argentina since about 1900. The country was the richest in the world at the time, but since then has alternated between boom and bust thanks to its disastrous monetary policy. Evading the government's currency controls is a way of life for Argentinians.
The Economist published an interesting report about that some months ago. The main takeaways were that (1) Argentine was rich, but lagged behind its money-peers in human development indexes such as literacy rates and (2) The elite from Argentina benefited from high food prices, so the rest of the country resented them, a brewing pot for populism.
But your point stands, monetary (or fiscal) policy was awful.
But your point stands, monetary (or fiscal) policy was awful.
I suspect the only reason this hasn't happened already is because some very wealthy & connected people are profiting and avoiding taxes with bitcoin. Thus it's important that the masses use it too otherwise it'll just be them standing out like a sore thumb. IIRC, they kept trying to make bitcoin illegal in China but for some reason they couldn't. I think it's because of the aforementioned reason.
Two parties privately trading currencies in Argentina is already illegal. You need a special permit to make a purchase (which isn't easy to get).
So, we consider bitcoin a legally-accepted currency, then it's already illegal to trade for them.
One of the main problems is that legally trading ARS to USD has a huge overhead:
* You have to use the "official" price, which is ~60-70% the street price. * You have to pay 30-40% taxes on the exchange.
So, we consider bitcoin a legally-accepted currency, then it's already illegal to trade for them.
One of the main problems is that legally trading ARS to USD has a huge overhead:
* You have to use the "official" price, which is ~60-70% the street price. * You have to pay 30-40% taxes on the exchange.
There are already links to child porn in the blockchain.
The ferry from Argentina to Uruguay everyday full of people taking money out of the country to deposit it in banks that won't be skimmed by the government is much more disruptive than a handful of bitcoin traders.
Bitcoin however is great for avoiding the official fake exchange rate and getting the real rate, which is often 2x the amount of the official rate. If you're travelling to BA you want to avoid those sketchy blackmarket moneychangers floating around. If you're a tourist there's good odds you'll be receiving counterfeit Argentinian Pesos or end up getting jacked by a guy on a motorbike after he watches you exchanging money in the streets whereas with Bitcoin you can safely meet somebody in a coffee shop, do the trade and they usually have some kind of localbitcoins.com or other online reputation they want to keep so won't be handing over counterfeits.
Bitcoin hasn't replaced the mass exodus of Argentinians who deposit money outside the country in Uruguay yet. http://en.mercopress.com/2013/03/05/an-estimated-one-million...
Bitcoin however is great for avoiding the official fake exchange rate and getting the real rate, which is often 2x the amount of the official rate. If you're travelling to BA you want to avoid those sketchy blackmarket moneychangers floating around. If you're a tourist there's good odds you'll be receiving counterfeit Argentinian Pesos or end up getting jacked by a guy on a motorbike after he watches you exchanging money in the streets whereas with Bitcoin you can safely meet somebody in a coffee shop, do the trade and they usually have some kind of localbitcoins.com or other online reputation they want to keep so won't be handing over counterfeits.
Bitcoin hasn't replaced the mass exodus of Argentinians who deposit money outside the country in Uruguay yet. http://en.mercopress.com/2013/03/05/an-estimated-one-million...
The Buquebus and Sea-Cat ferries (and the cuevas, etc.) are the incumbent. As I understand Christensen’s idea, a disruption is new, worse than the incumbent (for the incumbent's customers), cheaper, and adequate for some new customers. Without opining on whether Christensen’s ideas are accurate or valuable in any kind of predictive or analytic sense, I will say that Bitcoin in Argentina certainly seems like a textbook case.
The ferries are the incumbent disruptor of Argentina's economy. Bitcoin is disrupting the Argentinian economy-disrupting industry.
It's a multilayered disruption machine: http://www.newyorker.com/magazine/2014/06/23/the-disruption-...
Your comment disrupted my comment, Colin. But I think I need to go disrupt a bed, because right now my thinking processes are too disrupted by fatigue to properly disrupt HN. Disrupt you very much!
I know of money going the other way arround. When Argentinians need the US dollars they have in Uruguay people cross in the ferry with tipicaly 50~100k, charging 2,5~3,5% fee for this "service".
Maybe there is room to provide this service with Bitcoin, selling bitcoin to this people in Montevideo and buying Argentinian pesos with that Bitcoin in Argentina.
Is it possible to make this work with a 1~2% commission using Bitcoin?
Maybe there is room to provide this service with Bitcoin, selling bitcoin to this people in Montevideo and buying Argentinian pesos with that Bitcoin in Argentina.
Is it possible to make this work with a 1~2% commission using Bitcoin?
Problem is unstable rate of bitcoin so you wouldn't want to hang on to them in storage, you'd need a way to buy them on demand by either leaving USD on Coinbase account or having #bitcoin-otc IRC trade open, Stellar might be more suited for this you could create UruUSD coin when it gains more adoption https://stripe.com/blog/stellar
Argentinian here, nope, no disruption at all, I actually will argue that due our history and high volatility of pesos people only trust in-hand hard cash dollars, anything else is smoke & mirrors :D
Just wondering, since you're argentinian... Since there are so many complications for argentinians wanting to buy dollars, and since the purpose is to store wealth, why don't we hear much about argentinians buy silver or gold coins (say, Krugerrands or Sovereigns) instead?
I'm living in Peru, where there were two hyperinflations in the late 80s and early 90s. The Sol has been very stable ever since, so a lot of people trust their savings in Soles accounts now, but a few people I've met from older generations have their savings in silver coins.
I'm living in Peru, where there were two hyperinflations in the late 80s and early 90s. The Sol has been very stable ever since, so a lot of people trust their savings in Soles accounts now, but a few people I've met from older generations have their savings in silver coins.
When I visited Argentina a few months ago, I saw remarkably many gold and silver shops in BA and elsewhere around the country.
Anyone have a non-paywalled source? NYTimes won't let me read the article unless I'm a subscriber, apparently.
Open an incognito window and google the article title. Usually cookies and referrers trip the paywall.
While I might have some doubts about the ultimate thrust of this article, my gut tells me that ignoring Bitcoin as a technology and an ecosystem is a mistake.
I've been present for three big revolutions in technology (personal computing, the Internet, and mobile data/smartphones) and with each there were detractors that dismissed the ultimate effect and utility of these new arrivals. I'm not so sure we aren't repeating that mistake.
I'm hedging my bets. It might be the case that Bitcoin the currency never makes it, but the technology that underpins it might live on in some useful construct when applied to a problem where the utility is more apparent, even if that connection isn't at all clear now.
I've been present for three big revolutions in technology (personal computing, the Internet, and mobile data/smartphones) and with each there were detractors that dismissed the ultimate effect and utility of these new arrivals. I'm not so sure we aren't repeating that mistake.
I'm hedging my bets. It might be the case that Bitcoin the currency never makes it, but the technology that underpins it might live on in some useful construct when applied to a problem where the utility is more apparent, even if that connection isn't at all clear now.
It’s interesting that it mentions “The American company Coinbase” but doesn’t mention Coinbase’s Argentine origins. Maybe Brian wouldn’t give an interview to the author?
This is a good example of why I haven’t been willing to get involved in Bitcoin so far, despite finding it fascinating: we’ve known since May presented the Crypto-Anarchist Manifesto at Hackers (1989?) that a likely endgame of anonymous digital currencies was that governments would lose their ability to impose capital controls and indeed taxes. While I’m skeptical about the ontological status or moral value of the State, I also don’t want public education, policing, and public healthcare to disappear overnight without a chance to construct alternatives; racism and other hateful ideologies promoted by States over the centuries to keep their subjects divided can simply explode into violence.
(I’m not worried about “terrorists and organized crime” — those are of course terrible but nothing we haven’t dealt with before. I’m worried about the collapse of governments leading to a collapse of civilization, which is a thing that has happened before, with disastrous results — the Bronze Age collapse, the Maya collapse, the fall of Rome, and so on.)
If it catches on, though, continuing to abstain might become as difficult as Stallman’s continued abstention from using the internet, or the abstention of the Amish from driving cars. And I will yield.