- By Christine Ro
- Buenos Aires
Photo credit, Jeronimo Ferrer
Jerónimo Ferrer is behind the walking tours called “Our crazy tour of the local economy and bitcoin in Buenos Aires”
In Argentina, there are everywhere traces of mistrust, even trauma, linked to the economy.
For Jerónimo Ferrer, one of the most vivid memories is of the financial crisis that hit Argentina in the late 1990s, when bank accounts were frozen and almost overnight the savings of people have evaporated.
He’s not the only one who remembers it. One engineering student I spoke to keeps all of his savings, in US dollars, at home because he fears the banks will devalue their holdings again overnight.
A matter of trust
While many Argentines are, by necessity, experts on the state of the economy – from the dizzying level of inflation to the current unofficial exchange rate between the peso and the US dollar – Ferrer went further. than most of them.
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Since 2019, he has launched the walking tours called “Our crazy tour of the local economy and bitcoin in Buenos Aires”, during which he explains to tourists the level of restrictions that Argentines face, such as the limits imposed on online transactions. foreign currencies or the prohibition of installment payments for international flights.
He also provides an introduction to cryptocurrencies, in particular bitcoin, and explains why he thinks it is a valid alternative to the volatile and highly controlled Argentinian peso.
“When you have restrictions, you need tools for freedom,” says Ferrer.
For many cryptocurrency enthusiasts around the world, decentralized and digital currency is first and foremost about ideology or profit. But for many Argentines, it meets more basic needs.
“I trust math and software more than politicians. I think bitcoin for Argentines should be a no-brainer,” Ferrer says.
Photo credit, Christine Ro
Ads for bitcoin products are everywhere in Buenos Aires.
Crypto-currencies, a solution to inflation?
The strong government intervention in the economy facilitates the establishment of cryptocurrencies in Argentina, and in many other ways. For example, it is relatively cheap to run an energy-intensive bitcoin mining operation because the cost of electricity is kept relatively low.
Mining is the process that creates new bitcoins. It involves computers solving complicated mathematical problems. Solve the problem and you will receive bitcoins. It sounds simple, but the process involves elaborate computer systems, which require a lot of electricity to run and cool.
The University of Cambridge’s Center for Alternative Finance estimates that globally, the electricity used to mine bitcoins is around 137 terawatt hours per year. This is roughly the same as the annual consumption of some countries, such as Norway or Poland.
The generation of this electricity will contribute to global carbon dioxide emissions, but it is difficult to assess the extent.
However, in Argentina, these environmental issues are often overshadowed by financial concerns.
For some cryptocurrency enthusiasts in Argentina, even a relatively young and unpredictable currency is preferable to the wildly fluctuating peso.
Bitcoin, the most popular cryptocurrency, can also help hedge against high inflation, as the amount of money that can be created is limited.
Inflation, which measures changes in the cost of living over time, is a constant concern in Argentina. The year-on-year inflation rate is staggering, it can exceed 50%.
“During the pandemic, people noticed this situation. And to protect their money, they chose to look for an asset that limited”, explains María Mercedes Etchegoyen.
Etchegoyen is a lawyer specializing in intellectual property. She is a member of the executive committee of the NGO Bitcoin Argentina and helped create the Cryptogirls community to capitalize on the increased interest in cryptocurrencies during the pandemic.
So far, the government has taken a soft stance following the cryptocurrency boom. “In Argentina, there are no specific regulations on cryptocurrencies,” explains Etchegoyen.
However, the Central Bank has issued warnings about cases of scams related to cryptocurrencies.
She acknowledged that the level of cryptocurrency usage was not yet very high, but was increasing rapidly and needed to be addressed.
Photo credit, Martin Xavier Alonso
María Mercedes Etchegoyen wants bitcoin to go beyond the stage of young men.
Access to cryptocurrencies
Etchegoyen worries about unequal access to cryptocurrencies.
So far, they have been the preserve of a minority – mostly a young, male, tech-savvy and relatively affluent population. It is the tech workers, not the farmers, who get paid in bitcoins.
“Today, it is not a technology accessible to everyone,” recognizes Lucia Lizardo, a blockchain consultant.
Yet efforts are being made to expand the reach of cryptocurrency – in part through financial products that provide a stepping stone between traditional currency and cryptocurrency.
Three Argentinian start-ups now offer debit cards for cryptocurrency transactions. One such company, Lemon, was founded in a town in Patagonia where 40% of stores accept bitcoin.
Some Argentinians are also turning to “stablecoins”, which are pegged to the US dollar and are therefore less subject to fluctuations in value.
Photo credit, Christine Ro
The Central Bank of Argentina has warned against cryptocurrency scams.
Of course, cryptocurrencies will not be a one-size-fits-all solution to Argentina’s economic problems. And they come with issues of currency speculation, fraud and environmental impact.
But overall, “I think it’s like a revolution for young people,” comments Lizardo.
For Ferrer, the need is clear: “It’s our money, and it’s the only one that politicians can’t destroy.”
