It was October 2011, and amid a downward spiral of economic decline, then Argentinean President Cristina Fernández de Kirchner announced stringent restrictions to buy foreign currency and to send money overseas.
For the next four years, the media widely reported how financial repression made some Argentineans to adopt the cryptocurrency as an escape route from government controls. Conventional wisdom held that Bitcoin was thriving due to the pervasive regulations in force.
Financial repression is over
However, five years later, financial repression is mostly part of the past. In December 2015, the conservative candidate Mauricio Macri was elected president and he quickly reversed the monetary restrictions. The new context made most people wonder if the momentum for Bitcoin in the South American country has come.
Despite battling the arrival of Uber in the country and keeping tax rates high, Macri administration presents itself as a business-friendly government and its officials have repeatedly boasted about the important role of entrepreneurs and startups in the economy.
Far from unfounded speculations, Bitcoin entrepreneurs knew the cryptocurrency came to stay. For them, they say, this is just the beginning. “Bitcoin is not a tool to avoid taxes or wage a guerrilla-style, economic war against a corrupt government subjugating” a whole country, Nubis Bruno, managing partner of Bitex.la SRL, a Bitcoin exchange and remittances company, told Cointelegraph: “It’s better to regard it as a solution to the structural problems of the financial system.”
Bruno said the large local Bitcoin community wasn’t born out of economic restrictions, but the Argentineans’ love-story with Bitcoin has more to do with its idiosyncrasy. “Argentina is a large producer of technological early adopters, user communities, and our DNA is bi-monetary,” he explains.
Yet, Bitcoin has a long way to go for Argentineans. Argentina hosts the largest Bitcoin community in Latin America, and is home to dozens of entrepreneurs that have launched diverse startups, but the volume at the exchanges is minimum “especially when compared to other countries without a community of Bitcoin enthusiasts,” Bruno added.
Good health for Bitcoin in Argentina
At SatoshiTango, a Buenos Aires-based Bitcoin exchange, doubts arose over the future of Bitcoin after the government lifted currency controls. However, they quickly realized that their situation was going to improve, SatoshiTango Co-founder Matías Bari said.
For Bari, the removal of currency controls are good news for Bitcoin. “Bitcoin is most used in countries with no financial repression, no controls,” he says. “And having an economy in order is better for business.”
Nine months into Macri presidency, Bari says they “haven’t seen a decline neither in the number of users signing up to our platform nor the volume of transactions”.
“We saw an increase in volume and number of companies operating with Bitcoin after the removal of currency controls,” Bruno confirmed.
Over a hundred shops and professionals accept Bitcoins in Buenos Aires, according to Coinmap, including dentists, law firms, cafes, and bed and breakfasts, but still most of Bitcoin users are independent professionals and companies using the cryptocurrency for international transfers. “This became useful after the government lifted the restrictions,” says Bruno.
“While some people that were attracted to Bitcoin due to the financial repression may have stopped using the currency, most have stuck around,” Bari says. “Even if they initially used it for circumventing restrictions, they have found advantages in other aspects of Bitcoin besides transferring money.”
Both Bruno and Bari concurred that the government has opened its doors to Bitcoin entrepreneurs and are in no way hostile to the digital currency, unlike its colleagues of Ecuador and Bolivia, where Bitcoin is banned.
“They find Bitcoin an interesting technology, and are looking forward to seeing how local businesses can make the most of it,” Bruno said.
SatoshiTango, for their part, were invited to meet officials from the Ministry of Production. “They call us to let them know if we needed anything,” Bari says. “We are already on a more advanced stage, but for someone starting a company is great this kind of attention.”
Last month, Central Bank First Deputy Governor Lucas Liach took part in a Bitcoin panel and expressed mixed opinions on the cryptocurrency, but said they were interested in “adopting the Blockchain technology” for the monetary authority.
In November, Argentina will become once again the epicenter of all things Bitcoin as an all-star roster of international speakers prepares to turn up at the fourth Latin American Bitcoin Conference to be held once again in the country.