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Latin America Treads Carefully Into Bitcoin Storm

Bitcoin has had its ups and downs, in both value and public trust. But some recent deals in Latin America offer signs that the online currency may be here to stay.

Latin America Treads Carefully Into Bitcoin Storm
Damián Kantor
BUENOS AIRES — Latin American networking site Taringa! reported last month that it had struck a deal with Xapo, a "bitcoin wallet" service, that allows users to be paid in the Internet currency for goods and services. While the deal was valued at no more than $750,000, it has sparked a new round of debate over bitcoin's true nature. Some have warned that the new form of digital currency is entirely speculative and legally invalid, while others see it as the world's the most "trustworthy" and stable monetary unit.
Taringa! aims to use bitcoin to pay users generating advertising revenue with their "quality content," says Hernán Botbol, a co-founder of Taringa!, which has about 75 million monthly users. How much content can qualify as "quality," and how many people are ready to pay for it, is itself an open question.
But the deal comes as bitcoin is itself facing fundamental questions about its viability. It is "more a curiosity than a practical thing," says the economist Pedro H. Rabasa of Empiria, a consulting firm. Yet its scarce use does not remove risks of volatility. Between late 2013 and February 2014, its value soared from $100 to $1,000, before dropping to $625. Today it is worth around $240, amid constant oscillations.
Miguel Boggiano, CEO of Carta Financiera, an investment firm, says on average there are some 200,000 transactions a day worth around $50 million. "Clearly this is no threat," he says to the stability of the world economy. Still, several countries (China, Estonia, Lithuania and Indonesia, among others) have issued warnings on bitcoin's lack of legal backing. Russia has banned its use outright.
The founders consider the alarms unjustified. They agree the "crypto-currency" is volatile, but insist that it will eventually stabilize. Its volatility comes with being a "new currency," says Boggiano. "In 1992 connecting to the Internet was also difficult, and bitcoin is steadily rising. In five to 10 years' time, it will be worth between $500,000 and one million U.S. dollars."
Online bank to bitcoin
Before launching the bitcoin wallet service Xapo, Wenceslao Casares was involved most famously in Patagon, a putative online bank created in the 1990s. In 2000, Casares and his Patagon partner Constancio Larguía sold 75% of their online firm to Spain's Santander banking group, for $476 million. Much of that money disappeared when the firm crashed. Casares lives in California today, and two years ago founded Xapo, which some have dubbed a bitcoin "vault."
Bitcoin was born in 2009. Its promoters says it is an inviolable technology or code that does not need, or have, the backing of a government, which is cited as an advantage. For others, that is the risk. The currency is traded on specific websites. In February 2014, the Mt. Gox site, which operated in Japan, suddenly blocked fund withdrawals by users before going bankrupt. Its owners were taken to court.
The idea of bitcoin "is good," says Boggiano, though he notes that it remains difficult to get enough people to use it in payments. "I am not saying it is nonsense, just that it's early to say whether or not it will finally be accepted."
In Argentina, Ripio.com is one platform where bitcoins can be traded. Its founder, Sebastián Serrano, says the website has 20 operations a day on average, and 1,000 registered users. He tells us he is certain "it is the money of the future," observing that already 100 businesses in the country accept it for payments. Yet his website cautions users: "Buying and selling bitcoins entails risks. Please use your best judgment."
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Geopolitics

The Train Wreck That Is Poland Right Now

Everything is collapsing: The zloty is sinking, a virus is spreading, diplomacy has disappeared, and so has the rule of law. And the government claims everything is going just fine.

Police forces on the Poland-Belarus border.

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-OpEd-

WARSAW — Everywhere we look, there is a disaster.

The zloty is sinking because of inflation, which we owe to the head of Poland's central bank Adam Glapinski, a political ally of ruling PiS party leader Jaroslaw Kaczynski since the early 1990s when the pair demonstrated against then President Lech Wałęsa and joined in burning his effigy.

At the same time, we also have a COVID-19 catastrophe. As we've witnessed, 25,000 daily cases and hundreds of deaths are not enough for the government to introduce any kind of restrictions. The Prime Minister is afraid of demonstrations that could lead to deaths from COVID-19, while tens of thousands of people recently attended the National Stadium without masks and nobody checked whether anyone was vaccinated.

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