Blockchain, Bitcoin & Stablecoin Adoption in Argentina | Lucas Marincovich (DeFi Chat Ep 01)

DeFi Chat is a series of educational & informative interviews with world professionals in the Crypto / Blockchain / DeFi / Web3 communities. We aim to provide digestible content in multiple mediums such as video, audio (podcast), and written (blog) form!

Episode 01
Lucas Marincovich told stories about how Argentinian people have fought the high inflation in their country by using US dollars, especially stablecoins. Moreover, Argentina has become a favorable market in which many blockchain projects launched or entered.

Note: This transcript was automatically generated by artificial intelligence (AI) and therefore typos and grammatical errors may be present.

00:00 – 1:40: Introduction 

Lachlan: Hey, Lucas, thanks for joining us and to everyone who is joining us, my name is Lachlan. I’m a Sales engineer at Stably, and this is a stablecoin chat where we cover relevant news going on around the world, in relation to stablecoins. Today, we’ll be talking with Lucas, who is based in Argentina and we’ll be going over the recent news in Argentina. And as well as the real life applications of cryptocurrencies in that country and how it’s solving real world problems. Lucas, do you mind telling us a little bit about yourself? 

Lucas: Hey, Lachlan, how are you? Thanks for the invite. My name is Lucas Marincovich. I’ve been in cryptocurrencies since 2015. Used to work in some broker services here in Argentina that provides buy and sell operations for different users. We work with the main cryptocurrencies in the market. We work a lot of stablecoins because here the adoption of scale consists quite massive.

Lucas: And right now I’m working at blockchain.com. I’m working as a researcher. I provide different research about the market, new different applications, new blockchains, and new stablecoins. I’m always trying to find some insights for my team and provide use for research for different types of applications or developments.

1:41 – 12:10: Argentina’s Inflation Rate

Lachlan: Awesome. Thanks for that. Now, I believe Argentina’s inflation rate it it’s changing fast, but it’s about over 60% right now.  And people in the US are concerned enough as is with 8.5%.

Lachlan: So, you know, a lot of people in Argentina are looking for alternative investments in ways to store value better. And that’s often turning to the US dollar. But as we saw last week with the resignation of the economy minister of Argentina, the exchange rate dipped even more, and a lot of people turned to stablecoins.

Lachlan: Do you mind sort of just walking us through what the process is in Argentina for buying US dollars and why people would even consider going to stablecoins or cryptocurrencies? 

Lucas: Yes, for sure. We are seeing right now, the United States with an 8% annual inflation and all the people are quite concerned about that for this month for July, the projected inflation for Argentina is 8%.

Lucas: So in one month, we have the inflation rate of all the year in the United States. So this is not something new in Argentina. We have had this problem since I have a memory. So is for a lot of fears, new governments come, and the problem is always the same. It’s always the high inflation and the evaluation of our local currency, the Argentina pesos.

Lucas: And yes, as you said, in terms of dollars here in Argentina, we have lots of restrictions here. Argentina is called the “cepo”, that is a restriction to get dollars. And we have like many different dollars. We have about five different exchange rates for getting dollars in Argentina. The main focus or the main dollar that is referenced for all the citizens are the informal dollar and the financial dollars.

Lucas: Now we will explain all the different dollars that we have. We have the official dollar. The cheapest is about 135 Argentina pesos, but the citizens can go to the bank for example, and buy the dollar, the official dollar at that exchange rate. That’s why, because the government and the central bank put a lot of restrictions to get this, this dollar because people are not trusting in their local currency, in the Argentina pesos.

Lucas: And they’re moving to dollars. So the way to buy dollars in Argentina is through the informal market. That is, it has a spread between the official rate of a hundred percent, roughly 268 Argentina pesos to get $1 in the informal market. And the other option that is through capital markets is the financial dollars that provide a financial dollar, you have to buy a bond in Argentina pesos and sell that bond in dollars.

Lucas: So we have like four or five different dollars. These are some examples of the different dollars that we have and the restrictions for the citizens  to get dollars. That’s why Argentina has been, very, very good ecosystem for stablecoins options since two or so years ago. The first crypto, the first stablecoin that got massive adoption in Argentina, was DAI.

Lucas: That is a decentralized stablecoins. So then the people start knowing a little bit about USDC and USDT. All the broker services in Argentina let the users buy stablecoins with Argentina pesos without any restrictions. So the volume of this kind of stablecoins has grown a lot in the last two years. 

Lucas: For example, another very good example is 10 days ago, the economy minister in Argentina resigned. So it was on the weekend that he resigned. So on Saturday, anyone cannot go to the financial dollars or to the informal dollars because they can only buy them during the week. That’s why the volume of stablecoins on that weekend has grown like three or four X.

Lucas: That was a very, very good explanation of how stablecoins can solve some citizen’s problems and restrictions about dollars here in Argentina

Lachlan: I’m curious, you mentioned that the informal rate is about 268, which is double the formal rate of 135. What about when you do the bond route, what would be the rate on that for users and what is the typical method that the average household uses to buy US dollars? Which one would be most common? 

Lucas: Well, the financial dollars have a rate. A little bit higher right now than the informal order, because in this case, you don’t have to go to the informal markets to buy. You can buy through your bank account and, uh, capital markets, a brokers capital market. So that’s why right now it’s a little bit higher. Let me check it in one second. It is 284 Argentina pesos to get one financial dollar , but yes you can send money from your bank and buy it. That’s why it’s a little bit higher than the informal dollars. 

Lachlan: So basically anyone that keeps the money in the Argentinian peso is losing 8% per month. Right? But if they convert to the US dollar, they’re losing 50% right away over the official exchange rate.

Lucas: That’s correct. So Argentina has a very, very big valuation of their local currency right now. And since the last four or five years.

Lucas: So, right now, no one trusts Argentina pesos. So. All the brokerage services of cryptocurrencies here in Argentina have a very, very good offer of stablecoins that even buying stablecoins is easier than going to buy bonds than sell it in dollars. Most of the people don’t understand how to buy a bond then sell the bond. However, buying stablecoins is quite easy. You send our Argentina pesos, you buy the stablecoins and then you convert them to dollars or you withdraw those stablecoins to a wallet. 

Lachlan: And I also read that during that surge and stablecoin volume last weekend that, you know, buying a tether, uh, stablecoin was actually about 240 Argentine pesos to dollar, which isn’t quite as bad, uh, as the informal rate.

Lachlan: But I’m surprised that they weren’t getting the official exchange rate. Is this something that you’ve seen or can you often get the official exchange rate through stablecoin? I’m surprised that either was that expensive for locals during that time? 

Lucas: No, it’s impossible to get the official rate even for stablecoin you will be getting a rate quite similar to the financial dollars.

Lucas: Why? Because also for companies, companies can’t get dollars in Argentina. So for companies to get dollars for our broker services, for example, they have to buy a volume Argentina and sell them in the United States. Then with those dollars, yes, go into a broker’s services or go to any exchange outside Argentina that provides stablecoins for Argentina users. So when a user, a citizen comes to buy stablecoins they will have our rate. Very similar to the financial dollar.

Lachlan: Okay. So I would’ve thought that Argentinian would’ve been able to access the exchange rates of the rest of the world, which would be closer to the official exchange rate, but that’s not true is what you’re saying. They still need to buy at the financial exchange rate. 

Lucas: That’s correct. Yes. They have to buy the financial exchange rate on the weekend of the resignation of the academy minister. It was between a range of 240 and 300 pesos because even the broker services have to get covered because they don’t even know what will be happening on demand on Monday when the markets are. 

Lachlan: So people are losing about 50% of the money even converting just to stablecoins. Which seems like a lot. So, this is more when they’re saving for the long term, because even if they lose 50%, if they’re saving them money for five years, it benefits them. Is that the sort of logic of people doing that?

Lucas: Yes. Well, the logic is they are losing like 50% by buying dollars or stablecoins or financial dollars. But if they keep Argentina pesos, they will lose every week. I mean, before the resignation of the minister, the dollar was 220 Argentina pesos. And right now is in 284, the financial dollar. So if you keep Argentina pesos, you will continue losing money. Even if you are losing 50% by buying dollars, it is safer to keep dollars or even stablecoins in Argentina. 

12:12:26 – 15:16:52: Blockchain adoption in Argentina 

Lachlan: That’s crazy. I also read that Argentina, I think is number 10 right now, according to chain analysis, in terms of worldwide, blockchain adoption was quite interesting. So is this sort of something that even students in high school are starting to talk about? Your friends and family talking about? Is cryptocurrency really something that is just, you know, really being talked about as an alternative, right? 

Lucas: Yes. Well, the Argentina ecosystem is very, very huge. We have lots of very interesting projects. I don’t, for example, RSK is, uh, a launch from Argentina that is secured with Bitcoin and lets smart contracts inside the network.

Lucas: So it’s a mix between Ethereum and, and Bitcoin, the central, and is an Argentina project. Um, Sandbox also has lots of Argentina in their team. The ecosystem proof of humanity is another big, um, project from Argentina. The ecosystem is quite huge. Lot of people are building here. Some universities are starting to, to get classes, to teach stablecoins; DeFi;  cryptocurrencies. So the adoption here in Argentina is quite huge. I think that part, because of all the restrictions that we have and part, because Argentina is also have very good professionals. I mean, we are builders. We build community, we build applications, we build companies even in this situation. 

Lucas: Even next month on the 11th of August, the Ethereum LATAM will be here, Argentina, and it will be a conference of about 50,000 people. And, Stan will be here, people from Curve Georgias from Paradigm, and some people are flash bots, synthetics. We have, like this conference LIC was here like some month ago.

Lucas: Gavin Wood from Polkadot was here last week. So I think that all the people on the, the crypto ecosystem and industry have seen that we are a, a big deal inside the, the community, the ecosystem and the industry 

Lachlan: 50,000 people. That’s incredible. Cuz I was at Consensus in Austin a few weeks ago, which is one of the biggest events that happens in the US annually. And that was about 17,000 people. 50,000 people and Buenos Aires is quite a big deal. It’s quite interesting.

Lucas: Sorry. It’s not 50,000. It was 5,000. Sorry about that. 

Lachlan: Oh, 5,000.Yeah, that’d be crazy 50,000 people. Yes. Okay. That’s still quite big though. Because Consensus is massive.

Lucas: Um, yeah, it’s quite. I mean the last four rounds of tickets, they were getting some minutes. It’s massive.

15:30:96 – 20:43:46: Bitcoin adoption in Argentina 

Lachlan: The last thing I wanted to sort of touch on is Bitcoin adoption in Argentina. Because you know, San Salvador’s president has been in the news a lot for his investments into blockchain and into Bitcoin.

Lachlan: In my opinion, a lot of that was at times sort of publicity stunts. For example, Bitcoin might have dropped a little bit. And then he tweets that he bought more, which gets all over the news. But if you look into it, he bought maybe $15 million in Bitcoin, which is really quite insignificant compared to San Salvador’s annual GDP.

Lachlan: But in a sense, he’s also bringing publicity to Bitcoin. Now, in May he met with 44 different country representatives of developing nations facing issues that can be solved by Bitcoin so that’s a lot of countries in Africa, Eastern Europe, South America, et cetera. This is really something that is being considered by different countries as a solution, but at the same time, Bitcoin has now dropped to 20,000, which might be affecting people, negatively, who sort of trusted this or looked into Bitcoin.

Lachlan: How is Argentina sort of seeing Bitcoin adoption and what are your views on developing nations sort of adopting it in the future? 

Lucas: Well, I think that the case of El Salvador was very, very interesting, not only about buying Bitcoins as a reserve, but also how quick they develop, like all the commerce and shops, developing Lighting network to pay, for example, a coffee or to pay in supermarkets like the development of Lighting network in most of the time that they spend like doing that only in some weeks, it was massive. 

Lucas: I have some colleagues that went to Salvador and they say that the implementation and development of the Lightning network in most of the country was massive and very, very good. In the case of Argentina, I think that Bitcoin, it will not be a solution. I think that we have to change our minds to change our government, our economy, the changes are like macro changes. Not simply vibe it when a reserve or change in the currency, the inflation and the valuation comes every year. So I think that, for example, in Argentina, the change needs to be at a higher level, not only by buying Bitcoin as a reserve or, or letting Bitcoin as a legal tender. I think that the change will be, will need to be massive, 

Lachlan: Basically systemic change rather than just the adoption of Bitcoin is what’s needed. 

Lucas: Yeah, that’s right. I mean, the adoption is already here. Lot of people buying stablecoins a lot of people buying Bitcoin, a lot of people building into DeFi, crypto companies, a lot of industries, big industries coming in Argentina and well, the problem needs to be systemic.  Change into our government and our community. 

Lachlan: Cool. Thanks for that. Well, Lucas, I think we’re sort of coming up on time, but, I just wanna say thanks so much for joining us today. I hope this is really informative to people watching this sort of learning more about the issues going on in countries faced by inflation, and poor decisions by monetary, decision makers, is sort of also an application of how cryptocurrencies are being adopted in these countries.

Lachlan:  Because a lot of the time, people in Canada, the US might not really directly be involved with them. And they sort of see this as speculative investment by people, but there are actually real world use cases nowadays. So thanks so much for joining us, I really appreciate it. And it was a pleasure chatting.

Lucas: Thank you alot Lachlan. I think that in these world markets and in countries like El Salvador, Argentina, there’s a lot of potential. There are a lot of good professionals, a lot of builders and we are a great community. So that’s the main point. All the people are helping each other to grow, and we are always looking for alternatives as stablecoins to move forward.

Lucas: So we will always find a solution. And I hope that the cryptocurrencies will be a very big tool in our near future. Most of them for, for this type of country. 

Lachlan: I’ll be following along. It’s super interesting to myself and I’m sure there’s a lot of people out there seeing what’s going on in the news in Argentina.

Lachlan: So yeah, once again, thanks so much for joining us and it was a really big pleasure to chat and thank you to everyone who joined us. Uh, we’ll be back in the near future. Take care, Lucas. 

Lucas: Bye.