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I'm buying the crypto with foreign currency, e.g USD or EUR. For example, since I have a U.S company, I effectively make dollars with my work, but to be able to

I'm buying the crypto with foreign currency, e.g USD or EUR. For example, since I have a U.S company, I effectively make dollars with my work, but to be able to live here I need pesos. And the same would be the case if you work for one of the local companies that pay you in USD, since you still need pesos for day to day stuff. Now, I can of course convert my foreign currency to ARS via a central bank, or a regular bank transfer. But here's the thing: official central bank rate for 1 USD is around 100 ARS. The unofficial rate (Western Union, Xoom, Crypto P2P) gives me 200 ARS for 1 USD. Quite literally double the money. That's a very big deal. And yes, you're right that there is no inherent need for the blockchain or crypto at all, but the lack of oversight is probably the only reason why it is so convenient, and the lack of alternatives, because Western Union and Xoom serve the same purpose, but are much slower (days instead of minutes) and are bombarded with government restrictions. I could, of course, try to find people here directly who want to buy my USD for ARS, and it would function the same way, but Binance P2P offers a marketplace website for that without me needing to find any of the people myself, equipped with escrow functionality so I won't get scammed.

wpietri 5y ago
Got it. Thanks, that's helpful. I definitely agree that evading governmental controls on currency exchange can be beneficial, especially if one's income isn't local. And reasonable when the controls are used to cover up other problems. I also agree that in the short term using centralized digital services can help there, especially ones that don't worry much about fraud prevention or remediation, as they can be very quick. Doubly so if they're tuned for financial crime. But by the same token, the centrality and convenience are major points of weakness if they are going to last. Binance is under regulatory threat the world over, and keeps withdrawing from markets one step ahead of regulators. I'd be very surprised if they are able to do that for you a decade from now. Especially as digital forensics and AML tooling will be a decade better. Instead, I'd guess people in your situation will be doing what they've always done: building informal networks of collaborators so that the regulatory evasion happens offline in ways that are hard to track or limit. Perhaps it will be more like what I saw in Ecuador: friends of friends swapping envelopes of cash when it suits them both. So to me this story isn't about the power of crypto, which is incidental here, or the magic of decentralization, which isn't much in play either. Instead it's about another temporary window where technology has gotten ahead of regulation.

wpietri 5y ago

Got it. Thanks, that's helpful. I definitely agree that evading governmental controls on currency exchange can be beneficial, especially if one's income isn't local. And reasonable when the controls are used to cover up other problems. I also agree that in the short term using centralized digital services can help there, especially ones that don't worry much about fraud prevention or remediation, as they can be very quick. Doubly so if they're tuned for financial crime. But by the same token, the centrality and convenience are major points of weakness if they are going to last. Binance is under regulatory threat the world over, and keeps withdrawing from markets one step ahead of regulators. I'd be very surprised if they are able to do that for you a decade from now. Especially as digital forensics and AML tooling will be a decade better. Instead, I'd guess people in your situation will be doing what they've always done: building informal networks of collaborators so that the regulatory evasion happens offline in ways that are hard to track or limit. Perhaps it will be more like what I saw in Ecuador: friends of friends swapping envelopes of cash when it suits them both. So to me this story isn't about the power of crypto, which is incidental here, or the magic of decentralization, which isn't much in play either. Instead it's about another temporary window where technology has gotten ahead of regulation.