While bitcoin advocates point out that Venezuela is a politically charged country as an excellent example of cryptography adoption, they often overlook the more business-friendly center a little further south. Given that Argentina has a sordid history of banks that restrict customer access, plus an inflation rate that reached 47 percent in 2018, bitcoin is not hard to sell these days.
“They raised me and my father told me that I never trusted the Argentine peso and my story was told by many Argentines,” Santiago Siri, founder of the startup blockchain Democracy Earth Foundation and investor in several Argentine cryptography companies, told Criptomonedaeico.
In fact, the Argentine use of the peer-to-peer exchange LocalBitcoins reached a record high of $ 9.4 million in weekly volume in December 2018. Despite broader market declines, this growth has continued to increase in 2019 at a rate that dwarfs everything seen during the 2017 token boom, when the peak was $ 5.7 million. That figure would currently represent a slow week in Argentina’s P2P market in 2019.
None of this means that Argentine companies have not felt the tension of the volatility of cryptograms, but local demand and interest remain stable. In addition, a recent influx of Venezuelan immigrants has infused into Buenos Aires under-banked communities that need financial tools and remittance services.
“The sector is growing, it is growing very well. It is providing many jobs, “said Siri. “People are using these technologies for real survival needs and they are in a better world than if they had to trust the government.”
After all, market declines have hardly reduced the demand for products and services related to bitcoin in Argentina. On the other hand, the bitcoin exchange CMO, Manuel Beaudroit, of Bitex, told CriptomonedaeICO that his company has seen a growing demand in 2019 for services related to bitcoins from Argentine banks and brokerage firms.
As revealed exclusively to Cryptocurrency, Bitex will woo such institutional clients throughout the region by launching bitcoin custody services in March.
Beaudroit said:
“They are interested in offering their clients the ability to make cross-border payments and remittances with Bitex services.”
The start of bitcoin recently helped facilitate the purchase of pesticides and agricultural products by the government of Paraguay to Argentina, establishing itself in bitcoin. With 250 institutional clients already providing the majority of the $ 500,000 daily volume of the exchange, Beaudroit said Bitex plans to expand services in Latin America. The platform is already live in Paraguay and Uruguay.
This is based on the unique role of Argentina in Latin American trade. Brazil is so big that its new companies often focus exclusively on the domestic market, Siri said, while Mexico generally loses top-tier talent in the face of northern migration.
Meanwhile, cryptocurrency mining company Bitpatagonia, located in the extreme cold south of the continent, closed its first agreement in early February to house 1,000 miners in Miami, according to Bitpatagonia co-founder Walter Salama. Latinos around the world are turning to Argentina as a center where new companies with knowledge of bitcoin can contribute user perspectives to the global ecosystem.
Lightning lessons
Given that they generally focus on cases of retail use, a bitcoin scaling solution called Lightning Network has captured the attention of Argentine users.
The startup of the bitcoins portfolio based in Buenos Aires, Muun, will launch enabled payments for Lightning in March, followed by the launch of an iOS application.
“Our main strategy revolves around the ray network,” Muun’s founder, Dario Sneidermanis, told Cryptocurrency. “This will be the launch year of all those products.”
The bootstrapped startup with 10 employees has at least four people fully dedicated to Lightning, although the entire team works with this escalation solution in some aspect. To learn more about how nearly 1,000 Android downloads translate into real transactions, Muun’s Director of Operations, Florencia Ravenna, spent several weeks this winter conducting market research in Barrio 31, one of the largest slums in Argentina.
“Merchants are the key to this type of experiment,” Ravenna told Cryptocurrency. “If you want people to be able to spend bitcoin, you need to work with merchants.”
One way in which Ravenna discovered that merchants in Barrio 31 have been able to work with bitcoin without relying on custody services or payment processors is by adding a profit margin for products paid for with cryptography. In this way, traders can protect themselves against volatility and liquidity problems. The residents of Barrio 31 of Underbanked also used bitcoin for remittances as well.
“I was surprised at how interested people were in learning new solutions,” he said.
Global ties
Beyond local demand, another reason why Argentine companies are thriving in this bear market is because they have mastered the art of taking advantage of global networks.
For example, the digital signature firm Signatura has operated with only $ 450,000 in venture capital since it was founded in 2015. Now, with 3,000 monthly users and 5 percent of its customers pay in bitcoin, the CEO of Signatura, Gonzalo Blouson , told CriptomonedaeICO that the startup is generating another A modest round of $ 400,000 to expand its services in Latin America.
“We have a couple of investors [abroad] who have invested in the company using bitcoin,” said Blouson. “And we’re also looking for local VCs.”
Unlike the previous dot-com boom, in 2019 Argentines are equipped with digital infrastructure for remote work and fundraising. Such was the case of RSK Labs and RIF Labs, two new blockchain companies that recently merged to form IOV Labs, which raised 22,000 bitcoins in 2018. IOV Labs CEO, Diego Gutiérrez, told Cryptocurrency that most of the The company’s funds and half of its taxpayers now come from abroad.
Similarly, the CEO of the Kleros arbitration firm, Federico Ast, based in Buenos Aires, told Cryptocurrency in previous years that it was difficult for cryptographic entrepreneurs to raise funds from Silicon Valley if the project came from a country like Argentina, with a history of banks in default. debts
These days, he said, many Argentines work remotely and obtain direct investments from abroad. In this sense, the newly created company MakerDAO has up to seven workers based in Buenos Aires who contribute to the project.
“In Argentina, we have had more than 100 years of really high inflation, so we are always looking for solutions,” Nadia Álvarez, MakerDAO’s commercial development partner for Latin America, told Crypto-Currency. “And it’s easier to do something here than in Venezuela.”
Through partnerships with companies such as the encryption data exchange company Ripio, among others, Álvarez has developed fiduciary access ramps for bankless banking users with almost any Latin American currency.
Given that more and more companies are comfortable investing bitcoin in new companies with small but growing user bases in Latin America, the history of banking difficulties has become an opportunity.
Speaking of more than a decade of experience working with new Argentine companies, Siri of Democracy Earth added:
“The pace of innovation we are seeing, for the Latin American context, is unprecedented.”