2013-04-16 Bloomberg - Bitcoin Dreams Endure to Savers Crushed by CPI: Argentina

[just1nmc]

http://www.bloomberg.com/news/2013-04-16/bitcoin-dreams-endure-to-savers-crushed-by-cpi-argentina-credit.html

Argentines are trying to preserve the value of their savings in everything from bitcoins to real estate to skirt President Cristina Fernandez de Kirchner’s restrictions on buying dollars, with the peso forecast to weaken the most of any currency in the world this year and local-currency bonds suffering the worst returns in Latin America.

TradeHill Inc., the San Francisco-based bitcoin exchange, plans to open its first Latin American office in Argentina after demand surged the most in the region, founder Jered Kenna said in an interview on April 12.

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[caveden]

Wow, Jared, balls of steel! (or is it insanity/naivety?)
Giving people an easy way to escape capital controls, on the open like this... This is dangerous. I hope he manages to do it without ever needing to step on Argentine soil.

[flix]

I take my hat off!

[ffcitatos]

What's TradeHill going to do with all the Argentine currency that they receive?

One can always sell it for USD in the black market.

[Mike Hearn]

More to the point, how exactly do they plan on opening an Argentinian bank account given what they just said. I'm not convinced this plan is going to work. Bitcoin isn't a solution for capital controls in a country where it didn't already have wide usage.

I'm all for Argentinians using Bitcoin - I just don't see how they can possibly scale it up there.

[nebulus]

More to the point, how exactly do they plan on opening an Argentinian bank account given what they just said. I'm not convinced this plan is going to work. Bitcoin isn't a solution for capital controls in a country where it didn't already have wide usage.

I'm all for Argentinians using Bitcoin - I just don't see how they can possibly scale it up there.

Actually, it can... Because there seems to be a demand for it.

[Mike Hearn]

Scaling only happens if demand meets supply. In Argentina there may be demand, but there's no supply. Heck even obtaining Bitcoins in the UK is hard. Let alone a country with capital controls in place.

[caveden]

Bitcoin isn't a solution for capital controls in a country where it didn't already have wide usage.

Argentina has large borders, particularly with Chile (which happens to be the freest Latin America economy according to Heritage). There are lots of kms of deserts among the two, if I'm not mistaken. Smuggling stuff through it shouldn't be that difficult, and Bitcoin can help on that because then you only need to smuggle in one direction.
Depending on how serious Argentine inflation gets, it might become economically worthy to smuggle. And some people might make it a business, bringing Bitcoins to those in Argentina who can't afford to cross the border themselves.

Anyway, this would be a black market solution, and won't be happening until Bitcoin-awareness is much higher than what it is today. But according to the link in OP, Jared is not searching for black market solutions, he's actually going to play it on the open. As soon as his exchange is noticed by the Argentine government (assuming he actually manages to open it), he'll likely be shut down, if not worse. But perhaps he'll manage to create enough awareness so that the black market can take it from there.

[nebulus]

Scaling only happens if demand meets supply. In Argentina there may be demand, but there's no supply. Heck even obtaining Bitcoins in the UK is hard. Let alone a country with capital controls in place.

Well, Trade Hill will supposedly be the supply.

[justusranvier]

If they are smart the can arrange this such that all their profits are in BTC.

What's needed is a way to balance the demand for BTC with the demand for ARS. That could be done by advertising abroad to the Argentine expat communities to convince them to switch to BTC for remittances. Another thing they could do would be to act as a payment processor for exporters who could accept BTC from foreign buyers and receive ARS.

If they managed to accomplish this then Tradehill could keep all their profits in BTC outside of Argentina and then only their working capital would potentially be at risk of seizure.

[flix]

https://localbitcoins.com/country/ar

[bitcoins5411]

There is a serious supply problem for BTC in Argentina. Bitcoin trades at a premium here. Once there is an exchange here, BTC is probably going to permanently trade much higher than in international markets. If you're a tourist or you are buying something from anyone in Argentina, you should be paying in bitcoin.

I've already seen tourists selling bitcoins here for a 50% premium (in pesos) over international bitcoin prices. The bitcoin here tracks the black market dollar rate, so it sells for a huge markup over what should be the price in pesos.

[thezerg]

what does Argentina export that somebody in the USA wants?  With that kind of markup, identify both sides of an export relationship & you can place yourself in between.  USD->Argentina->Pesos becomes USD->BTC->Argentina->Pesos+50%.  With that kind of markup, everybody involved can be part of the profit...

[marcus_of_augustus]

what does Argentina export that somebody in the USA wants?  With that kind of markup, identify both sides of an export relationship & you can place yourself in between.  USD->Argentina->Pesos becomes USD->BTC->Argentina->Pesos+50%.  With that kind of markup, everybody involved can be part of the profit...

Beef. Also grains are big export ... but beef is high value, smaller volume.

Last time I looked Argies are still big exporter of Ag commodities ... but that is deteriorating as the witch's crazy economic policies devastate their exports and trade in general.

[justusranvier]

Beef. Also grains are big export ... but beef is high value, smaller volume.

Last time I looked Argies are still big exporter of Ag commodities ... but that is deteriorating as the witch's crazy economic policies devastate their exports and trade in general.

That's perfect.

Form a payment processor and an exchange in Argentina, then find importers willing to pay for ag products with BTC. This brings BTC into the country, and provides a destination for the ARS traders are buying BTC with.

The exchange/payment processor can take their profits from the BTC flow so they never have to worry about it being seized or frozen.

[caveden]

I've already seen tourists selling bitcoins here for a 50% premium (in pesos) over international bitcoin prices. The bitcoin here tracks the black market dollar rate, so it sells for a huge markup over what should be the price in pesos.

Wait. The "black market dollar rate" is the real price of the dollar. You should not compare with the official dollar price, because that price is totally bogus. You should use the black market dollar price as comparison. What's the BTC premium when you consider the black market dollar for the comparison?

[rebuilder]

Wait. The "black market dollar rate" is the real price of the dollar. You should not compare with the official dollar price, because that price is totally bogus. You should use the black market dollar price as comparison. What's the BTC premium when you consider the black market dollar for the comparison?

If by "real" you mean "international", that's probably not true. Considering the risks and trouble involved in black market trading, the black market dollar should have a significant markup.

[caveden]

By rea" I mean the actual price, fruit of supply and demand, not an artificial price invented by a government, with no link to reality.

Difficulty to obtain something is a factor naturally embedded in the price of this something. I didn't really understand your point. What do you mean by "international"?