Bankless Co-Founder: Argentina’s Crypto Moment

Author: David Hoffman, Co-founder of Bankless; Translation: Golden Finance xiaozou

I was in Argentina throughout August, participating in the crypto pop-up city  “Aleph” in the center of Buenos Aires. Aleph is part of Zuzalu

and  Devconnect. The top-down support and coordination of Protocol Labs was highly praised by hundreds of volunteers, community leaders, and ecosystem partners who came together to create a good environment for the next generation of crypto startups in Argentina.  In the  Aleph Hub, a co-working space that can accommodate  1,000 people, crypto startups, venture capitalists, and the Argentine government came together for a month of collaboration, support, and growth.  While  Aleph is a one-month event that will soon be over, the spark it ignited is expected to grow into a wildfire across Argentina and the entire Latin American region. That wildfire is “Crecimiento” — Growth.

1Why Argentina?

Argentina is a crypto pioneer.

While VCs and Crypto Twitter degens in developed countries make all sorts of assumptions about crypto use cases, adoption, and “attracting retail investors,” in Argentina, cryptocurrencies are already being adopted by millions of people who are desperately in need of crypto value and services.

Argentina is the perfect hotbed for the crypto economy. Easy internet access, monetary inflation, capital controls, and traditional business frictions have combined to create an environment where the power of crypto can really shine.

But the irony is that in Argentina, millions of “well-adjusted adults who work 9-5, diligently meet their monthly expenses” have discovered cryptocurrencies as a means to a better life.

There is a clear difference between the crypto economy in Argentina and the "use cases" and "meta" often discussed on Crypto Twitter. Not all Argentines can afford to bet on the next shiny alt-L1, nor can they jump into the trenches of meme coins. The money in their pockets may be worth 1% tomorrow and the day after tomorrow.

Of course, Argentina has its own crypto natives who are also playing the degen game, but these degen activities are insignificant compared to the millions of Argentine citizens who don't care about cryptocurrencies or the fake world created by the degens on Crypto Twitter, but they are still using their favorite crypto apps (Lemon, Belo, BuenBit or Ripio) to escape inflation, buy coffee, and keep their wealth safe.

2Bottom-up: Hundreds of Startups

While the Salvadoran government has been praised by Bitcoin users for its forward-thinking approach to Bitcoin, Salvadoran citizens are not excited about the country's top-down Bitcoin investment.

In contrast, Argentine citizens are either genuinely excited about cryptocurrencies or - at worst - indifferent. Of course, not every Argentine uses cryptocurrencies, but the use of cryptocurrencies is normalized and culturally accepted. Ordinary Argentines have either directly improved their lives through cryptocurrencies because they can easily access US dollars, payment services, and banking services for the unbanked, or they are close to people who have experienced this.

There is more bottom-up support and acceptance for crypto in Argentina than anywhere else in the world.

Crecimiento and Aleph are both led by the belief that Argentina is just “100 great startups” away from crypto-driven economic growth and national prosperity.

It only takes a hundred plus startups, 5,000+ crypto jobs, to bring crypto value to Argentina… Argentina could be the first country to reach cryptocurrency escape velocity, and the first end-to-end crypto-driven country in the world.

At Aleph, 67 crypto startups from pre-seed to Series A are working together in the coworking space, collaborating to solve problems and supporting each other. There, 22 experts and successful entrepreneurs from venture capital firms and crypto teams gathered at the Aleph Hub to carve out time to offer their advice and perspectives, passing on wisdom to the younger generation of startups.

A group of well-known speakers and experts spoke to startups every day at Aleph, from Seba Serrano (Ripio) to Alec Oxenford (OLX) to Nico Berman (Kaszek) to Marta Cruz (NXTP Ventures). At the Aleph Hub, there was a college-level class every day, showcasing the skills needed to build in Web3. A variety of workshops, talks, and mentoring advice highlighted some of the most technical areas of the industry.

A big shout out to ZKsync - startup builders and hackathon attendees overwhelmingly mentioned the great support the ZKsync team provided to Aleph. Week 3 of Aleph was “ZK Week” and the ZKsync LATAM Devrel team provided education in both English and Spanish to builders there.

Above is a snapshot of a day in the life of Aleph bUILDER 

3. Top-down: Milei's digital transformation

Argentina is the only country in the world with a strong grassroots crypto industry that has a strong, top-down pro-crypto government.

This is the potential that Crecimiento is trying to tap.

Argentina's new president, Javier Milei, is deeply crypto-spiritual in many ways. With the new administration overhauling Argentina’s government, the country’s crypto leaders see a path to permanently embedding cryptocurrency into Argentina’s growth plans for the next decade and beyond.

Milei is pro-tech, pro-investment, and pro-acceleration. He has a bona fide “blockchain advisor” in his cabinet, Sergio Morales. Milei’s interest in Bitcoin and cryptocurrencies is part of his broader economic philosophy, which includes dollarizing the economy and reducing government intervention.

Milei drafts bills to balance crypto innovation and investor protection, and works with the crypto industry to provide regulatory clarity. Part of Milei’s initial “Grand Decree on the Economy” included the elimination of the legal tender law, allowing contracts to be denominated in any currency.

These are good steps for crypto legitimacy in Argentina, but there’s still a long way to go.

The real challenge facing the crypto industry is whether Argentina can establish a strong pro-crypto regulatory framework that allows crypto entrepreneurs to ensure that cryptocurrencies are legally protected for decades. Can crypto protections be established that transcend the current government? What if a new government comes to power and tries to erase the crypto progress made by Milei's government, as has happened many times in the past in other industries in Argentina?

On August 22, Aleph hosted a "Regulatory Day" where leaders of the Milei government came to the Aleph Hub for a day of discussions, all focused on what crypto companies and startups need from the Milei government.

It's not just Milei. Below is the former president of Argentina walking in Aleph's makerspace.

It's like Bill Clinton attending the ETH Denver hackathon.

Unlike the United States, Argentina's crypto industry is highly appreciated and supported by government officials.

4、Aleph：NetworkNation

Aleph is groundbreaking crypto-native technology, supported by over 2,300 Aleph members!

QuarkID is an app incubated by the City of Buenos Aires that uses verifiable credentials, decentralized IDs, and zero-knowledge cryptography to create a user-sovereign identity system for all members of Aleph.

After purchasing my ticket to Aleph (membership), I was given a verifiable credential that allowed my iPhone to open the door to the Aleph Hub, the makerspace. As an Aleph member, my rights and privileges allow me to earn 100 MORFI tokens each week.

MORFI tokens are ERC20 tokens on ZKsync Era that can be redeemed for 1000 Argentine pesos at local businesses that have signed up to accept MORFI, which can be used to purchase food, coffee, or other services on the Aleph Hub. 1000 pesos is roughly equivalent to $1 USD at the time of writing. All of this is running on the ZKsync Era mainnet, a real-world prototype of the Baljian Network Nation running on crypto rails.

Perhaps you’re thinking, “How did they get 50+ local businesses to accept crypto payments?” The sales pitch becomes pretty easy when you learn that it takes 2-3 months to settle to receive regular peso payments through the fintech route…which means businesses aren’t waiting for the peso to drop significantly before getting paid.

Last month, Argentina experienced its lowest inflation rate in five years at 4%. That’s 4% in a month, not a year. You think 2.9% credit card fees are bad? Imagine a business losing 10% due to currency devaluation simply because the bank held the money for months before giving it to the business. Argentinian businesses were of course happy when they were told they could get their funds immediately.

Later this year, QuarkID will build its own independent Elastic Chain on the ZK Stack and become part of the ZKsync Hyperchain. QuarkID plans to add more traditional services to their application, ranging from driver's licenses and other government-issued certificates to user-controlled wallets. In any case, this will become the Argentinian L2.

5Conclusion

With the end of Aleph, VCs, experts, and foreigners will have to leave. We all have homes to go back to and things to do. The Aleph co-working space has a three-year lease and will continue to be open to crypto startups as a common hub to support the crypto industry moving forward. Supportive networks have been established, with all kinds of connections, friendships, and investments.

Will Aleph be the final push for Argentina's crypto industry?

Certainly, Argentina has more problems to deal with than it should. Even regulators know that a labyrinthine tax system means rampant tax evasion. There are restrictions on business registration. Not to mention decades of entrenched pseudo-communism that has left millions of voters impoverished and on government handouts.

But if there's one thing that's agreed on in Argentina, it's that the local grassroots crypto industry is one of the brightest stars on the horizon. While many Argentinians I know have become very wealthy from crypto wealth, many of them are sticking around. They love Argentina and its people. This is not a place to escape to, but a culture to experience, a country to try to become worth reinvesting in.

I don't know if cryptocurrencies can improve quality of life in Argentina on their own, but we've seen it lift millions of Argentines out of poverty and save them from the risk of currency devaluation.

Perhaps modern governments are just too rigid to rebuild productively. That's sad, but that's okay.

Cryptocurrencies can help people help themselves, no matter their country. If their country can support crypto, so much the better.