Can you explain how a large amount of bitcoin end up getting sold into Argentina?
I don't see why anybody (in country) with dollars would bother selling them for bitcoin, and I don't see why anybody with bitcoin is going to be excited about pesos.
It's nearly impossible if you think about it in depth.
Argentina does not allow money (in significant amounts) to leave their borders.
Bitcoin is a world-currency.
In order for an argentinian to acquire a Bitcoin, he must pay taxes in excess of 50%, be limited to a few hundred USD in purchases per month, and find somebody who owns bitcoin to take argentine pesos which are in an inflationary spiral at the moment: http://www.xe.com/currencycharts/?from=USD&to=ARS&view=10Y
The value of Bitcoin is doing the exact opposite of argentine pesos.
Anybody holding Bitcoin would have to be insane to exchange them for argentine pesos.
That's only true if they want to convert pesos into Bitcoins. However, if they can sell their services directly outside Argentina (say, a web developer for hire), they can get paid directly in Bitcoin.
Well, it would be possible if the Argentinians adopted a "South American" Bitcoin variant with their own Genesis block: restarting the BTC valuation process based on their local economy would capture the actual local value.
You'd be in a competition at some point with the larger "Western" Bitcoin variant, but that's not an issue in the short term.
If a "South American Bitcoin variant" was created, purely for south americans, why would anyone holding a world currency (Bitcoin) trade it for currency only recognized in south america?
Maybe I shouldn't have said BTC and that's confusing. Let's say "tamper-proof pips" winkwink.
The global BTC currency is irrelevant to this use-case which is to provide a local people group with a currency option that cannot be manipulated by the same people that screwed up their original currency option but which is calibrated to the economic output of the local people group (e.g. it's not too expensive relative to the per-capita GDP of local Argentinians).
It doesn't matter that BTC exists globally, or at all. The reason I even mentioned or suggested BTC was because (a) it exists, (b) it has certain properties that make it good at avoiding manipulation, (c) that it can be repurposed.
If you replaced Bitcoin's genesis block with a new one, and got a bunch of people to agree that this was for valuation wrt a particular economy (e.g. because Argentinian BTC miners mine on the chain beginning with this block, and few people in the global community do because there isn't an incentive for them to), then what would happen is that the value of that entirely different and distinct economy ought to come to represent the value gained by that group of miners. Who, hopefully, are in Argentina and who trade with other Argentinians. Does that make sense?
Because they wish to do business in South America, or with South American companies.
Economic unity is very attractive, especially considering the financial/legal hurdles that come with reaching customers in a dozen different currencies in a dozen different national jurisdictions.
Who's going to offer bitcoin? Nobody living in Argentina has any to offer. American and European tourists? Why wouldn't they keep their (appreciating) bitcoins at home and just offer to pay in Dollars or Euros?
They can bootstrap a Bitcoin-variant on a new block chain, and have plenty and plenty which are calibrated to the local economy rather than the Western economy.
Remember, money doesn't have intrinsic value. There's no reason a bunch of pissed off middle class educated people can't en masse adopt a new way of trading resources.
There's a market exchange rate (different from the official exchange rate), and if you could buy the pesos for less than that market rate, you could make money.
If you (a bitcoin seller) were to acquire pesos and hold them, it wouldn't work too well, as your money would get inflated away, eliminating and reversing any profit. However, you could instead (i) use them for transactions, or (ii) sell them to somebody else who has, say, dollars, but needs to buy assets in Argentina.
Maybe from turists? I don't know about Argentina - but in cases like this turists are often forced to buy the local currency by using the official exchange rate.
Martin, you have to understand that many people from other countries do not use cash most of the time and are used to be able to get a fair exchange when using their Credit/Debit cards in other countries.
These people, not having found out the state of Argentina (keep in mind that find out about all these in english is even harder than in spanish) will not arrive with much cash to exchange. And this is not a hypothetical, I've seen this a couple of times already.
Argentina economic potential is high and there are many companies that provide state of the art products and services.
The problem is the economic environment making impossible to survive for a standard business. The tax pressure is incredible high and there are not incentives for doing fair businesses.
Imagine this simple case: a company exports for ~7 pesos per dollar while imports its components for ~11. And we are not talking yet about the paperwork and bribery involved in commercial transactions.
100 years ago there was a common saying, as rich as an Argentine, like we might say as rich as an oligarch today. Argentina's problems are entirely down to mismanagement and corruption.
"100 years ago there was a common saying, as rich as an Argentine, like we might say as rich as an oligarch today."
You can say the same today. The problem with Argentina is that while it got a GDP equal to Canada in last century, the money was never good distributed, like in Canada, Germany or France.
So just a couple of people will own more than half Texas(Argentina is big) while the rest of the population could only live as servants.
Today big latifundistas still own most of Argentina, and they buy the gobertment like in the past.
I don't see why anybody (in country) with dollars would bother selling them for bitcoin, and I don't see why anybody with bitcoin is going to be excited about pesos.
So you get a little trickle.