If you're forbidden to do that, what happens when your government forbids you to use crypto for the reasons you just stated?
China already did, what's to stop yours?
China already did, what's to stop yours?
And it's mainly freelancers, IT workers, designers, etc. But the number of people who work this way is increasing every year since we are running out of options as well (no jobs besides delivery apps, working for the state doing basically nothing, etc.).
Kinda related: IT companies from our country are already complaining that there is an "unfair" competition because we get paid, for example 2000 USD, which is a very low sum for IT workers abroad but is a huge number for us while these companies can't even compete with that number for the same employee.
So I believe sooner or later the government will take advantage of their complains to try, somehow, to control the money inflow from people who work for companies abroad.
Do you know how much a talented computer programmer gets paid in Argentina (or is that what you mean by IT)?
I'm thinking that Argentina seems like a good place to go to start a startup. What do you think? What problems would I run into aside from language?
Most probably, the average salary here is about 5000-6000USD/year if you're lucky and have a legally registered job(about 5-10% of the population). Most people have informal jobs and make less than that.
> Do you know how much a talented computer programmer gets paid in Argentina (or is that what you mean by IT)?
I have a friend working for MercadoLibre at a senior engineer position and last time we talked he was making almost 1000USD/month. I work remotely for a foreign company and make 4000USD/month having half of his experience.
> I'm thinking that Argentina seems like a good place to go to start a startup. What do you think? What problems would I run into aside from language?
As much as I'd love for this country to move forward, companies are leaving more than coming to the country, it's a TERRIBLE place for startups due to:
1. Aggressive taxing that gets worse and worse every year that passes
2. Terribly slow times for legal processes, like getting your paperwork done to start your company
3. We have a track record of the state wanting to confiscate bank funds
4. Depending on the trade you choose, you might face heavy opposition from the current monopolies, like it already happened with taxi unions against Uber, or MercadoLibre putting pressure to prevent Ebay from coming to the country.
Maybe if you come from a wealthy country it may not seem like too much of an issue as it might look cheap, but I personally tried to have small business multiple times and time and time again some new government measure or tax or government change made it unsustainable.
A government that wants tight control over currency exchange will treat crypto the same way it treats other foreign currency: limit exchange, or ban it, etc.
A ban doesn't mean that something stops, a ban means that it becomes extremely difficult, a punishable crime, and the risk-to-reward ratio becomes significantly diminished.
Likewise, the inverse is also true. CB radio was illegal in the UK, but it was hugely popular, then, overnight, upon it being made legal, it died. Most people lost interest because it was no longer exciting. You see the same thing with legalizing cannabis. Sure, you'll get hardcore consumers and enthusiasts, and people using it for medical reasons, but it's no longer cool/edgy/interesting, and when it is so accessible.
Could really go either way, but when it comes to money, people don't tend to fuck around.
Argentina isn't the US or UK. There was a video an Argentinian pointed out to me of a vendor selling black-market goods right in front of the tax office. No one gives a fuck. Violating Argentina's insane tax code is sport for their populace. Once you become big enough corruption and ol boy network with the tax authorities will negotiate what percent of your income you lie about, usually you keep like 70% off the books by the account of one accountant from a large construction company I interacted with.
"A ban doesn't mean that something stops, a ban means that it becomes extremely difficult, a punishable crime, and the risk-to-reward ratio becomes significantly diminished."
I think I was crystal clear.
It definitely is not extremely difficult. Even tangible stuff like pot that doesn't have nearly the value density (you can fit billions of USD crypto on a wallet stored on memory smaller than 1/8th bag of pot) was extraordinarily easy to obtain for me as a kid in a place where it was illegal both by state and federal government's law. And there's no drug dog to sniff it out.
A chinese citizen could laughably easily obtain crypto.
I know ex-military folks that can survive in the wilderness just fine, but your average person wouldn't, and this is about the 99%, not the 1%.
What next? The phones available in the country have a specific ROM that doesn't offer VPNs? Already happening. Not even accounting for leaks in VPNs, and whether someone can trust a VPN provider. We already know that the major providers sell netflow data.
Learning to read takes way more time and energy than learning to use crypto behind a VPN, but we do it in part because it makes us successful. Basically every child learns this complex task. It actually turns out that just spending time to practice a procedural task is a perfect substitute for intelligence, for many many tasks. I think obfuscating traffic is one of those where maybe some people will take a lot longer than others but almost everyone could learn. If VPN or tor becomes a critical component to someones livelihood they will learn to do it or someone will profit from dumbing it down enough that they're able to.
China outlawed crypto mining early last year, resulting in a two-thirds drop in the hashrate within a month. Even then, the order of magnitude was wrong for it to be "the best way of exporting coal," which by the way China is a large net importer of; https://ccaf.io/cbeci/index estimates the whole Bitcoin network at 14 GW, but China's electrical production averages 850 GW, and overall energy consumption is some 4500 GW, 2500 of which is still coal.
So, at best, China could only have been exporting about 1% of its coal consumption in the form of Bitcoin (though in fact much of its Bitcoin mining was renewables-powered), and now it has mostly stopped doing even that.
The hashrate fell 53%, hitting bottom in July, didn't finish recovering until December, and still isn't consistently above its pre-prohibition peak, so "much of the drop in the hashrate" wasn't picked up by anybody.
prohibit any business to accept crypto as payment, ban crypto exchanges from operating in your country, ban banks of your country to accept transaction that they suspect coming from cryptocurrency exchanges
You can still have your crypto wallet, but what use is it if you can't exchange it in your local currency? You can always meet someone in an ally or travel outside the country and bring cash back in but these are solutions that don't scale.
Also just because crypto can't be spent by most local vendors doesn't mean it's not valuable. Stocks can't be spent either but if you had a traditional bearer certificate like in the old days (paper stock with no owner except by merely holding the paper) it was just fine for trade and people did just that in the Weimar Republic when they had hyperinflation.
Worst case you can just spend the crypto in foreign location, import the goods and sell them locally.
As for your trade example I would like to see the details of that. There are not a lot of vendors that accept crypto and those who do, use 3rd parties which then usually require some amount of KYC (even if it's is minimal). Combine that with how many vendors are actually able/willing to ship to the country in question and you are left with a very small set of online stores. Add shipping costs and custom fees that will eat in your margin. So yes in theory you can setup an import/export company empire in order to exchange your crypto into local currency but that is pretty much the definition of "not scaling".
My point is: if a country wants to make cryptocurrency useless they can totally do it.
I can't imagine it would be a warm feeling for someone with tax liabilities in Argentina to have a white-market bank account in a friendly country nearby.
Is there a reason why no one banks in Paraguay? There is a dude standing by the bank with a shotgun waiting to blow the head off of any robber, I felt very safe there and their service was quite professional and honest. More so than the street exchangers. I wouldn't have hesitated to open an account there if I needed to.
There may be other reasons. Here in Argentina 21 years ago the government confiscated all dollar-denominated bank deposits and replaced them 1-to-1 with pesos, which you weren't allowed to withdraw more than a few at a time, so you had to watch helplessly as your money lost 75% of its value overnight. If I had to guess which South American countries something like that would happen in next, I'd pick Venezuela, Bolivia, Paraguay, and Argentina again, in that order. But that's not because I have deep knowledge of Paraguayan politics, so I could be wrong.
Cryptocurrency, fiat currencies, and arguably even metal coins derive their value from the existence of a market which will take them. Bring a bitcoin (as in a wallet private key, not the concept) to 1990 and nobody will pay you for it. Therefore, a government doesn't need to ban you owning cryptocurrency - it just needs to crack down on the businesses you would spend it at accepting your cryptocurrency. And it doesn't really even need to ban that, it just needs to crack down on their suppliers, and so forth.
Your local pizza place that takes Bitcoin only accepts it because that money is in turn spendable by them to buy flour and oil and cheese - either directly, or by giving it to someone who will give them local currency with which they can buy flour and oil and cheese. If the government presses hard enough on those links, your local pizza place will stop taking Bitcoin, and then they won't have to ban you from owning Bitcoin at all, you won't be able to do anything with it.
Their ban has the effect of preventing centralized exchanges from providing services in China. But there's no practical way for them to crack down on decentralized exchanges and/or people trading them in-person.
In the above hypothetical case, if his government were to ban use of crypto, he'd still be better off in the sense that the government isn't going to be able to just find the coins hidden in a mattress the way they might with physical money. It'd be illegal either way, but one way would be much harder to trace.
This is of course ignoring the volatility involved in holding crypto, which somewhat weakens the stated benefit given that the goal seems to be to avoid volatility of the local currency.
I believe history will show cryptocurrency to be even more resilient than cash as an international, sometimes private, means of transferring value between individuals.
People will do what it takes to survive. Regulations can slow but never stop “illegal” workers.