Argentine entrepreneurs find in bitcoin a solution to hard currency hurdles

Argentine companies, especially a new breed of start-ups that export high-technology services, are finding in bitcoin a solution to government controls that limit most access to American dollars and to a parallel market with an unfavorable exchange rate, said Lisa Besserman, founder and CEO of Startup Buenos Aires.

¨Bitcoin is universal and Argentines like it. They are very open to accept bitcoin because of the problems with their currency and it is worth a lot more than the peso,¨ Besserman said.

The local Peso currency ¨is constantly depreciating¨ and the local government´s policy of keeping an official rate at a lower value than what the market is willing to pay has created a black market and other problems including inflation, she said.

As of late July, the official exchange rate was about nine pesos to one dollar, which compares with the black market rate of well over 14 pesos to the dollar, she said. When Argentine exporters receive wire transfer payments, their dollars are converted to pesos at the official rate, but with bitcoin there is no such problem.

One alternative that Argentine companies have been using is to set up dollar-denominated bank accounts outside of Argentina, usually in the United States or nearby Uruguay, she added.

Buying the U.S. greenback is also a hassle as it is only available for purchase at the official rate and through special permits, which are hard to obtain. There are also costly fees, she added.

As a result, it is not uncommon for businesses, like restaurants and bars in Buenos Aires, to accept bitcoin. The view is that bitcoin is popular and easier to get than U.S. dollars and more stable than the local currency.

The group that is perhaps benefiting the most from bitcoin is the Argentine high-technology startups, including those helped by Startup Buenos Aires, which are selling their services to companies in the U.S. or Europe.

These Argentine companies are taking business away from Asian or Indian companies, which have been in past decades traditional locations for lower priced technological outsourcing, she said.

¨We are starting to see a trend in which companies in the U.S. are outsourcing their information technology like web development projects, mobile applications or web design” to Argentina-based organizations due in part to time zone advantages. The Argentine time zone is only about an hour apart from the U.S. East Coast and there are no big cultural barriers, she said.

According to statistics that Besserman shared, most new start-ups in Argentina are in the information technology services, e-commerce and software development. The number of startups is expanding from 10,000 companies created in 2012 at a rate of about 10 percent annually, she estimated.

Startup Buenos Aires helps provide development support for start-up organizations in Argentina at no cost but it does charge a commission when it helps them find clients abroad, Besserman added.