Global Observer

Coin flip? How Buenos Aires caught the bitcoin bug

Coin flip? How Buenos Aires caught the bitcoin bug

Posting in Finance | From issue 05 December 16 & 23, 2014

BUENOS AIRES -- Argentina's volatile economy has the country embracing bitcoin more than just virtually.

If not quite all evil, money is certainly the root of frequent migraines for the Argentine citizenry. From irritations such as coin shortages and ATM-incompatible commemorative banknotes to life-shaping downers like double-digit inflation and foreign exchange controls, there’s always some reason to shun the peso.

Sound like an environment in which bitcoin might thrive? If so, that’s fine by Diego Gutiérrez Zaldívar, a startup veteran whose involvement with the digital currency dates back to early 2011. “Argentines are very aware of how the financial system can fail,” the 38-year-old digital entrepreneur told SmartPlanet over cortados and churros in his Buenos Aires office. “You name it, we've suffered it.”

Thanks to Gutiérrez Zaldívar and other local bitcoin boosters, Argentines -- or at least those interested in alternative currencies -- need no longer suffer in silence. Attracting just a hardcore handful when they launched in mid 2012, Buenos Aires bitcoin meetups then grew like a virus, with the third meeting drawing 25 people and the fourth hitting triple figures.

Placed in context, these numbers are impressive. According to a May report by the Genesis Block, a kind of shop paper for bitcoiners, Argentina’s meetups are the world’s fourth best attended, trailing only those of the United States, Canada and Israel. Most crucially, these events have acted as a kind of seedbed out of which have grown several startups, a foundation and, most recently, an international conference.

IMG_7209.JPG

One early attendee of the bitcoin meetups In May 2013 Serrano launched was Sebastián Serrano, a programmer with a background in e-commerce and a gift for laconic appraisals of Latin American payment aggregators (they're “pretty awful”). As a 17-year-old in the late 1990s, Serrano essentially “wired” his small Patagonian hometown by setting up its first ISP -- so he has first-hand knowledge of how technology can change people’s lives.

In May 2013 Serrano launched BitPagos, a (non-awful) payment aggregator that allows hotels in Latin America to accept payment in bitcoin from both local and international customers. The system, which is still in beta but already being used by a bunch of hotels and hostels in Buenos Aires and beyond, can also process credit card transactions -- not that Serrano is a fan. “Credit card technology is very old and totally unsuited for online use,” he says. “When you make a payment with a credit card you are exposing all your personal information. One of the cool things about bitcoin is that it’s much more akin to a cash transaction: consumers can send money without exposing themselves to any further liabilities.”

Although bitcoin is clearly a global phenomenon, what excites Argentines like Serrano and Gutiérrez Zaldívar is the way in which the digital currency’s use cases seem to mesh precisely with the needs of consumers and merchants in their own country. “In places like San Francisco, interest in bitcoin is more speculative,” Serrano says. “But here it provides many opportunities, and addresses some of the seemingly intractable problems of current payment systems.”

In a country whose government recently levied a 35-percent tax on all foreign credit card transactions, “frictionless wealth transfer” (to use the jargon) may be an idea whose time has come. “This will change how humanity relates to money, that’s for sure,” says a confident Gutiérrez Zaldívar. “It will allow everybody to bypass the banking system -- and that’s a game changer in itself.”

Note that when Gutiérrez Zaldívar talks about everybody, he doesn’t mean everybody in the tech or hacking communities; he means everybody, period. “The key difference between the bitcoin scene in Argentina and the one in the United States is that here it’s a grassroots movement,” he says. “Go to a Silicon Valley meetup and you’ll find entrepreneurs, finance whizzes, tech people and so on. Here, you're as likely to rub shoulders with students, small business owners or the just plain curious.”

The success of the meetups led Gutiérrez Zaldívar and fellow enthusiasts Franco Amati and Rodolfo Andragnes to establish the Argentine Bitcoin Foundation in late 2012. Its mission is to promote the currency not only in Argentina but throughout Latin America. Associate “chapters” have already sprung up in Uruguay, Chile and Colombia, with Brazil next in line.

 
bitcoinconference.jpg
Latin American Bitcoin Conference
As interest grew in Buenos Aires, so did the scale of events. At a "bitcoin fair" organized by the Foundation this October, punters could use their online wallets to order everything from organic veg boxes to bike locks, and chow down on traditional snacks (0.01 bitcoins -- nine US dollars and rising at time of writing -- got them three empanadas and a soda).

This and similar meetups laid the groundwork for the Foundation’s biggest event so far: the inaugural Latin American Bitcoin Conference, which drew over 30 international speakers and close to 400 delegates to Buenos Aires the first weekend in December. Most of the speakers paid their own airfares. “The bitcoin community has a lot of solidarity,” Gutiérrez Zaldívar says. “Some anonymous donors helped out -- paying in bitcoin, of course!”

One of the speakers was New Jersey native Elizabeth Ploshay, a former congressional aide who first heard about bitcoin in early 2013 and is now on the board of directors of the United States Bitcoin Foundation. “Argentina is becoming a hotspot for bitcoin activity as the country’s inflation rate rises and many Argentine citizens have a hard time securing US dollars and/or other fiat currencies,” she says. “Argentines are seeking a currency that holds greater stored value and promise, and provides a stronger global financial future.”

Ploshay’s passion and idealism is shared by most bitcoiners, which may help explain the digital currency’s vogue status: nobody ever got this excited about PayPal. It was striking, then, to note just how strongly the conference program leant toward real-world, here-and-now applications for bitcoin, with only the merest whiff of the anarcho-utopianism many still associate with alternative currencies.

“The ultimate proof of bitcoin’s success will be its acceptance in real-life situations,” Gutiérrez Zaldívar explains. “Bitcoin has no intrinsic ethical value, and no political point of view. It’s a tool -- and what counts is what you do with it.”

Photos: BTC Keychain (main), Luciana G, Matt Chesterton

Share this

Matt Chesterton

Correspondent (Buenos Aires)

Matt Chesterton is a freelance writer, editor, translator and project manager. He has written books and/or articles for, among others, Time Out, Wallpaper*, Michelin, Departures and Monocle. He holds a degree from the Open University and is based in Buenos Aires, Argentina. Disclosure