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Bitcoin Government The Almighty Buck

Bitcoin Is Disrupting the Argentine Economy 253

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."
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Bitcoin Is Disrupting the Argentine Economy

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  • Banks (Score:5, Insightful)

    by ArcadeMan ( 2766669 ) on Thursday April 30, 2015 @01:16PM (#49587283)

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

  • Kind of sad, really. (Score:5, Interesting)

    by FooAtWFU ( 699187 ) on Thursday April 30, 2015 @01:18PM (#49587299) Homepage

    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.

    • by ubergeek65536 ( 862868 ) on Thursday April 30, 2015 @01:29PM (#49587419)

      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.

      • 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

  • by gstoddart ( 321705 ) on Thursday April 30, 2015 @01:18PM (#49587303) Homepage

    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.

    • 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.

    • 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 bu
      • by JustNiz ( 692889 )

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

        Thats also true of literally every government in the world.

    • 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...

      • 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.

    • 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

  • by Overzeetop ( 214511 ) on Thursday April 30, 2015 @01:18PM (#49587317) Journal

    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!

    • by shaitand ( 626655 ) on Thursday April 30, 2015 @01:59PM (#49587771) Journal
      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.
  • by VuduID ( 4016939 ) on Thursday April 30, 2015 @01:22PM (#49587335)
    "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.
    • by hjf ( 703092 ) on Thursday April 30, 2015 @02:16PM (#49587937) Homepage

      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.

  • by pla ( 258480 ) on Thursday April 30, 2015 @01:24PM (#49587357) Journal

    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: (Score:2, Informative)

      by 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.

    • by PPH ( 736903 )

      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.

    • 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 want

  • by im_thatoneguy ( 819432 ) on Thursday April 30, 2015 @01:28PM (#49587409)

    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.

    • 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.

  • 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.

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

  • Bitcoin advocates getting desperate I see. To gain credence a non-government computer currency should build a big foothold in an established economy first.
  • 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!
  • 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 (Score:5, Informative)

    by JustNiz ( 692889 ) on Thursday April 30, 2015 @02:17PM (#49587941)

    >> 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.

  • by Nicopa ( 87617 ) <nico.lichtmaier@gma[ ]com ['il.' in gap]> on Thursday April 30, 2015 @02:58PM (#49588289)

    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.

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