Decades ago when the Rupee was much more tightly controlled, a black market flourished for currency exchange. Since I was mostly visiting family I didn't spend much. At one point I did some traveling on my own and had plenty of rupees in my pocket.<p>In a foreigners' hotel lobby I ran into a kid who was eager to do a currency exchange. He was really good at it too: he had a reflexive response for any objection ("I have enough rupees" "But the bank will only give you 20 for a dollar -- I can give you 50").<p>Finally he asked, "Don't you have a exchange market for dollars in your country?" I answered "In my country dollars are just money" "Yes, same here, so you don't need to go to a bank to change them for rupees".<p>I replied, "In my country I go to the shop to buy a drink and give dollars to the shopkeeper. He gives me my change in dollars. There is no exchange rate into any other currency"<p><i>Finally</i> he didn't have an immediate response. He looked a bit shocked that there might be a place where people simply transacted business in dollars. And why shouldn't be be surprised? He didn't live in such a place and in his experience all foreigners seemed to use these "dollar" things to buy or sell rupees.<p>Anyway that pause gave me a way to jump out of the conversation and make my escape.
In 1982, I went to Czechoslovakia (this was before the divorce and before the fall of the Wall), and walking around the streets of Prague, people constantly whispered to me, a visibly foreign person, "Change money? Change money?" Dollars or German marks were what they wanted, and I could have gotten a much better exchange rate than the official one, if that was what I wanted.<p>Now? The author's comment that most people use a <i>cueva</i> to handle the crypto for them, rather than managing it themselves, is a real-world datapoint. It means that <i>cuevas</i> are vulnerable to surveillance and control.<p>> The way I explain this to myself, it seems that the key characteristic that draws Argentinians to these relatively centralized cryptocurrencies is that the government doesn't control them, rather than being completely decentralized in a way that no one controls them.<p>The government doesn't control them <i>now</i>. What do you bet there are armies of programmers working for the government, figuring out how they can?<p>So if I lived there, I'd probably be using crypto, too, but I'd always be afraid it's going to vanish someday. Not by the government devaluing the peso, which Argentines are used to, but by some unforeseen technical snafu.<p>So I'd probably spread my bets around, having some US $100's, some bricks, and some of other coins, making sure not to have all my eggs in one basket.
> For example, crypto enthusiasts often imagine a world where individuals control their own wallets directly — storing the cryptographic code on their local computers or phones, not using a third party, like MetaMask.<p>MetaMask is a local self-managed wallet though, not a third party in the sense that the MetaMask service company manages your keys.
Why does the author think they should be able to get USD out of an ATM in a non-US country? Does this happen in any country?<p>I can't think of any country I've been to other than the US which let me withdrawal USD from an ATM.<p>When telling friends about some of the benefits of Crypto, I often use Argentina as an example, but this one comment regarding ATM -> USD I think is hurting the credibility of this author.
Am I the only one puzzled by the 100% average inflation over the last century figure? That's 2^100, which would mean a single peso in 1922 had the purchasing power of 1.26 * 10^30 ARS today, or roughly a trillion times the total value of the world's assets.
I am so sick of this strange take on decentralization that, because some people happen to use an exchange to store their money, somehow that means decentralization is worthless. :/ E-mail is decentralized even if most people don't host their own e-mail servers and even if most people use the same third-party host, and it simply wouldn't be the same product or anywhere near as powerful or <i>valuable</i> to its users if it were fully centralized on exactly one provider.<p>The reality is that there are a number of exchanges--I don't even have access to Binance in the US! (I can use Binance.US, but that's an entirely separate product from a technically separate company)... I have been mostly using Kraken recently, but I used to use Coinbase--that are all able to cater to different markets under different regulatory schemes and yet can interoperate because of the decentralized blockchain protocol, <i>and that's why the tokens stored on Binance have value in the first place</i>.<p>So, no: I assure you that these people value "decentralization" even if they are using a custodial wallet of some kind, in the same way that I hope we can all agree that the people who use e-mail or telephone numbers or domain names all value decentralization even if almost no one runs their own fully vertical stacks of servers, carriers, and registrars, because without that decentralization you would be trapped into a walled garden and forced to deal with a single jurisdiction: that you even can use Binance and interoperate with Coinbase is decentralization at work.
Article says “$40 billion in net shipments of U.S. currency”[0] total over many years (mostly $100 notes from article) yet Argentina only imports $5B[1] to $6B[2] billion of goods from the USA per year!<p>That is one very very sweet deal for the USA. Especially considering the USA dollar inflation depreciates the value of the physical bills over time.<p>[0] 1993 <a href="https://www.federalreserve.gov/pubs/ifdp/1993/460/ifdp460.pdf" rel="nofollow">https://www.federalreserve.gov/pubs/ifdp/1993/460/ifdp460.pd...</a><p>[1] <a href="https://oec.world/en/profile/country/arg" rel="nofollow">https://oec.world/en/profile/country/arg</a><p>[2] <a href="https://wits.worldbank.org/CountryProfile/en/Country/ARG/Year/LTST/TradeFlow/Import/Partner/all/" rel="nofollow">https://wits.worldbank.org/CountryProfile/en/Country/ARG/Yea...</a><p>Edit: $5B looks like hex and makes me double double the B billion making the text unreadable, however I am guessing too many readers here don’t like the metric 5G$, which I would otherwise prefer to use. I guess I could write the billion in full, but then this footnote would be pointless.
This essay was previously published elsewhere on 8/13: <a href="https://www.freethink.com/technology/crypto-argentina-black-market-cash" rel="nofollow">https://www.freethink.com/technology/crypto-argentina-black-...</a>
I know some US startups that hire Argentinians (Scale AI, etc) and pay them in USD-T or USD-C. Not sure if they pay any taxes in the US, but they certainly don't pay the income tax or take the currency conversion haircut in Argentina. Pretty good deal.<p>Still, these people want USD, not really a crypto. I figure some lost their shirts in UST.
In Myanmar it’s best to change currency at the airport and not at any currency exchange place.<p>When in the country currency exchange places will exchange based on the quality of the notes you give them.<p>If your note has a little crease, fold, discolouration. Expect it to be devalued. A lot.
This is quite common in countries that have regulated exchange rates. From some I've visited, Angola and Iran even had websites with the black market rate, while in Turkmenistan I had to rely on public wisdom.
> Argentinians have also learned to not trust banks, even with accounts denominated in other currencies. In 2001-2002, the government enacted something called "el corralito", shutting Argentinians' access to their bank accounts for almost a year. When they could finally extract money again, they found that (a) their USD deposits had to be exchanged for pesos and (b) pesos had lost 2/3 of their value.<p>That couldn't possibly happen in the West. Its only those silly Argentinians that have to worry about this sort of stuff... right?
Argentina is the poster child for what happens when a country's leaders insist on "a strong currency" above all else. In Argentina's case, by pegging to the US dollar.<p>If the Argentinian peso had been floating for the last six decades, Argentina's trade deficit and inflation problems would be distant memories.<p>The difficulty is that politically you can't get there from here any more. A sudden shock like floating the currency would seriously impoverish the politically connected elite, for a while.
How to understand central banking and the fiat currency system:<p>All money is a coin created by a national government. USD is America Coin, Sterling is UK coin, Yen is Japan coin, etc.<p>Within the boundaries of the nation, everyone uses the national coin.<p>All goods and services are produced somewhere. If produced and consumed in the same nation, the same coin is used.<p>Things get interesting with international trade. All countries cannot produce every single last thing they want. So they have to purchase from other countries. And the other countries require the use of their own coin when buying their goods and services.<p>Exporters get paid in their nation’s coin, which becomes an important source of foreign currency for the central bank / government. More exports = more conversion into the nation’s coin = more forex. If a car exporter sells cars, the central bank will facilitate payment to them in local coin, but the central bank will take and store the forex.<p>Things get very interesting (and corrupt) with imports. In any given nation, there is only so much forex. If you try to acquire more forex (like USD) by printing more local coin and then trading it for USD, you will get inflation. So countries with well managed central banks try and avoid this. So who can use the limited USD to import what they want becomes subject to political will. Often politically favored firms get access to the USD to buy the goods and materials they need, which they then sell locally. If there simply isn’t any more USD to buy stuff, competitors can’t enter to be an importer.<p>As the most important good in the entire world - oil - is traded almost exclusively in USD, every country has an everlasting and unquenching thirst for USD. This gives the US enormous power, as it can print more money with way less risk of inflation than other countries can. It also lets the US get ever cheaper goods and services from abroad with such demand for a good that takes a mouse click to produce (USD).<p>Bitcoin (and other cryptos if they can be successful) is extremely dangerous to this model because it is not controlled by any government. It is exactly like the old gold system, except way better because you don’t need to protect the gold with soldiers and vaults, move it with huge ships, and so on. It’s gold on the internet.<p>If goods start being priced in Bitcoin directly, it will be akin to the old global system of everything being priced in gold.<p>But in general, think of fiat money like coins and central banks as a single centralized validator node that has sole authority to mint new coins.
Argentina has trade deficit problems. Black markets and cryptocurrencies don’t fix these problems just push the burdens of them onto other people who can’t as easily get around the legal currency framework.
This article is pro-cryptocurrency but they fail to see that in some spans of time (recently) Bitcoin or other cryptocurrencies lost more value than Argentine Peso.<p>Again, cryptocurrencies are not solving anything.