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Comment by ppierald | Hacker News Reader

Argentina is a great example. I am an American and have been there many times. They have extreme inflation and regressive policies against USD or foreign currency. Take a look at https://bluedollar.net. Official rates are buy at 89.98 and sell at 94.98 (ARS). Unofficial rates are buy at 138 and sell at 143. That's a massive spread saying that the people on the street are willing to spend 35% more because they know the Peso will eventually blow up and the USD is more stable which they can sell down the line for more ARS. This is sketchy in country. You might be walking a slightly illegal line. Possessing cash makes you a target for theft. Owning bitcoin makes this money transfer and storage of equivalent money easier.

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I’m always surprised when my tiny (in population) and insignificant country shows up in HN. I’m now in the US and the power of going there with dollars in your pocket is incredible.

I’m not an economist or even a very well versed person in the matter, but it is my understanding that Argentina is always almost out of dollars in its reserves and the local currency has been devaluated steadily since 2001. People figured out rather quickly that holding dollars is the only way to save money, but if let free, the demand would make the exchange rate skyrocket. So the Government (who put us there in the first place) has put limits on how much people can acquire per month.

This of course has implications for the whole economy I’m not equipped to answer or understand, but by “faking ” a lower official rate, most legal business happens at the official rate, while the street market dictates what the real value should be close to.

If you do business internationally and it’s bank to bank and all legal, you exchange at the official rate.

If it’s cash business then you exchange at the blue rate. Or if it’s in Pesos but it’s an imported good, calculate pesos value based on blue value.

#31 by population is not “tiny”. It has more population than California.

Comparing a country to a state makes it look even smaller to me lol

That was mostly for the benefit of people who may be more familiar with US geography. Most people don't consider California or Texas tiny.

But you can also compare Argentina to the 150+ countries with less population.

Including four of its five neighbouring countries.

Most countries with capital controls have this spread. There is a reason that they have these capital control in place. Most people in the western world don't have any idea how bad it is. Here is how much bad it is: https://tradingeconomics.com/country-list/inflation-rate

There's a bit more nuance to it, in that you're not even allowed to buy at the official rate, and buying something in USD with a credit card gets you slapped with a 65% tax, so it's more like the 140-160 rate actually reflects the current real value of the currency. Having an 'official' rate nowadays is more of a performance to pretend that the already high inflation rate is actually a lot higher, and incredibly it works.

I believe the USD transaction tax is 35% not 65% (not that I think it makes sense in any way).

Yeah there's a 30% 'solidarity' tax and then another 35% tax once we're at it, but the second one you can discount from income tax or get a rebate if you go through some bureaucratic processes.

TransferWise Borderless accounts are permitted there for you to hold whatever currencies you want. [1]

Currencies that don't fall checks notes 26% in 4 days.

Generally folks look to switch from one problem into a solution, not into a different problem.

[1] https://wise.com/gb/multi-currency-account/

Awesome comment!

Can you elaborate on this? If you can't do so in public, then I'd like to have a conversation about this. I'd like to know more about inflation issues and unbanked issues with regards to cryptocurrencies. To me, it always feels like "crypto marketing" (for lack of a better term), but I am also realizing that I'm living in a far removed bubble and find it hard to get out of it.

My email is in my profile if you feel it's handier to have a private conversation instead.

I think crypto is fulfilling one need at the moment which is: if you happen to have a super crazy inflationary national currency and you don't have access to actual dollars, then there's always cryptocurrencies that are most likely less crazy (in the inflationary sense).

Yeah that's exactly it. If your coin loses value by the second, you end up turning to whatever other asset you can find. If you can't acquire a state-based currency from a more stable country, real estate, or any other stable asset like stocks or index funds, you turn to crypto. There's lots of people with no tech background investing in stablecoins.

How do you get your ARS income into BTC though? Surely the government tries to put controls on that too? Or is there a black market for btc too with a similar high spread? Genuinely curious

There's a lot of legal exchanges, and also a booming black market and p2p, all of them with a similar spread. And there's a lot of legal projects aiming to control crypto trading going on at the moment, but it's uncertain what'll end up as law.

money transfer with BTC is almost comical right now. Fees are incredibly high if you want to get confirmations anytime soon. The average transaction fee is $26 right now. Try buying groceries or clothes with those kinds of fees. Bitcoin has become a good way to store and move money when you have a lot of it, but terrible for an everyday use case. You're better off using something like Nano or a stablecoin.

Lightning Network

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