Buenos Aires And The Bitcoin II: SatoshiTango
By Chris Sorrentino.
It’s clear the noisy first floor of the chain cafe is for patrons looking for a cup of coffee with friends. The second floor is full of silent headphone wearing, smart phone tapping Porteños avoiding the paperwork they’ve brought there to finish. We’re in a strategically placed, windowed off meeting room in the back where Matias and Mariano have done interviews before. As far as the procrastinators are concerned, we’re likely debating the World Cup. Matias gesticulates and Mariano nods emphatically, but not over the Argentine lineup. They’re bitcoin fans, and clearly think they’re on the winning team. Against what? Well, the status quo.
Within the first 10 minutes we’ve already hit the most common themes when talking crypto currencies and Argentina: inflation and the history of Argentine currencies, high costs of transactions, diverse talent base for supporting the ecosystem of programmers, speculators and the curious. Their startup, satoshitango.com, is designed for buying and selling bitcoin in pesos. The cofounders see Argentina’s unique cultural, business and legal landscape as an opportunity rather than a barrier, and they’re already working with an eager and growing client base.
Matias smiles while recounting how (according to contemporary crypto folklore) another startup recently closed their first round for millions. The founder had ten potential investors send $500,000 from one, to the next, to the next using bitcoin, until the original sum returned “unscathed” by the nearly nonexistent transaction fees. If the same transaction were done with MercadoPago (the standard local online payment platform in Argentina and many parts of Latin America), a whopping 54% transaction fee would’ve been deducted by the tollbooth operator.
With nearly free transactions, it’s clear why both think Western Union, Amazon, and Visa will go the way of Blockbuster Videos. Many bitcoiners have in mind the 430 billion USD (2013) remittances market. Could this be why the most recent bitcoin meetup in Buenos Aires attracted the interest of a NY Times business reporter? Crypto currencies are clearly on Wall Street’s radar, but few are making much noise over, as he put it, “a market the size of Urban Outfitters.” Yet the real action may be happening far from NY or London, in Kenya, Argentina and other developing countries where individuals have the most to gain, and where a market the size of Urban Outfitters can mean millions of individual participants.
The greater bitcoin community takes quite seriously these reduced transaction costs, for practical and philosophical reasons. One of SatoshiTango’s niche markets is the tourism industry. Tourists and expats who currently use all sorts of methods for getting the best rate possible for their foreign currencies might soon wake up to a world where Euros can leave a smartphone in Spain and Pesos arrive at a money changer’s booth in Buenos Aires, for pennies. When this happens Bitcoin may finally prove that it’s as worthy as gold is for long term investors. Definitions matter, and for many economists gold’s inherent worth exists because it enjoys “durability, portability, fungibility, scarcity, divisibility, and recognizability.” If you can be those six things, for many you’re a currency. If the world remittance market proves bitcoin meets this definition, it could be investment worthy for all sorts of orthodox institutions like sovereign nation, charity, university and retirement funds. Considering many were burned by the even more fantastical than bitcoin CDOs and rehypothicated gold, bitcoin could instill much more confidence than investment bankers who’ve called these fund managers “unsophisticated muppets”.
The Bitcoin Embassy is clearly going long on bitcoin and crypto currencies. The organization, which hosted the most recent meetup, is the result of diverse interests converging around a space for crypto currency development and diffusion. It’s already attracted tenants like the US based Bitpay, a company servicing payments for large enterprises. At the bustling meetup I learned of another Argentine startup that’s decided the 10+ minute bitcoin verification time is an opportunity for innovation. Their solution is an altcoin for retailers (think itunes or supermarkets) called Nimble Coin which offers a “20 seconds confirmation time.” Oscar Guindzberg, a project co-founder, explained that while at first people think it’s a “Bitcoin for Argentina” it’s actually “for everyone.” On face the explosion of other crypto currencies may seem like a direct attack on Bitcoin, but they’re more like confirmations of it’s value or whole new innovations designed to answer different problems. Local developers are thinking internationally, even as they begin providing solutions to the local market.
Perhaps Oscar or Mariano will be a few of the first programmers using the four new beds at the Bitcoin Embassy, designed for crashing after late night hackathons. What’s clear is that the BA’s Bitcoin scene has grown from a few dozen in 2012 to thousands of people and hundreds of companies from all backgrounds. Today the community is working hard to nurture itself and reach outside of the city’s comp sci/programming circles. So far, they’re off to a great start. A crypto embassy isn’t too surprising for a city with both a Museum for Ham and a Museum for Hunger, along with as many niche cultural centers as you could possibly imagine. Smack in the middle of BA’s soul searching Centro, a building with a bitcoin flag on it fits seamlessly with the H Stern jewelry shop, arbolito money changers, and trotskyite party offices. The only difference is it could actually be a destination for anyone coming from an expensive jewelry shop, illegal money changer, or left wing group’s political office. This in itself is a revolutionary development for a country eager to move beyond “la grieta” (the current deep political division) and start focusing on real solutions to real problems.