07.14.14

The Superhero of Venture Capitalists rides to the rescue of Argentine wealth

Posted in Culture of Lickspittle, Fiat money fear and loathers at 3:00 pm by George Smith

Why did Tim Draper buy up 30,000 Bitcoins from the US government?

So he can set up digital gold stockpile for other wealthy people in Argentina, where the upper tier on the society is distraught that inflation in the country’s crippled economy is devaluing their assets and all the debt they’re owed.

From one business journal:

Boost VC, the company founded by Tim’s son, Adam Draper, yesterday announced it had partnered with Tim to provide bitcoin liquidity to emerging markets, we learned in the press conference that was just the beginning of his plans.

Already, Boost VC has invested in bitcoin payment gateway, Bitpagos, with roots in Argentina, a nation with an average inflation rate of 205 percent between 1944 and 2013, making it a perfect place for bitcoin users, which are forecast to experience 11.1 percent inflation this year.

Argentina’s economy is in rough shape for its average citizen, so bad it has spawned a word — gasoleros, originally the title of a television series — to describe a lifestyle of just getting by.

BitCoins are not for the poor, whether they’re here or in Argentina, Turkey or Mexico.

And in Argentina, one way to avoid having your assets devalued by inflation is to invest in dollars. And there is a blackmarket operation for that in Argentina, which limits exchange of pesos for a maximum of $2,000/month, an amount most of its citizens cannot do because they simply do not earn enough money in the crippled economy.

Enter BitCoin, which doesn’t do anything to fix that, but is like gold.

From the New Yorker:

There is some evidence that very wealthy individuals in economically troubled countries—if not governments themselves—are turning to bitcoin as a more stable investment than their own currencies. Last year, Sergio Ruestes, an Argentine filmmaker, released a brief documentary about some of his countrymen’s enthusiasm for bitcoin as an escape from the rapidly falling peso, and as a means of circumventing capital controls such as restrictions on international money transfers and monthly limits on the purchase of U.S. dollars. The Economist recently reported that Argentina is home to more bitcoin-accepting businesses than any other South American country …

Draper is planning to use his digital wealth, in partnership with a company called Vaurum, to finance bitcoin-exchange services in the developing world. At a press conference, he praised bitcoin’s ability to “provide liquidity and confidence to markets that have been hamstrung by weak currencies.” He singled out Argentina and its out-of-control inflation. “We are all going to be so much better off because of bitcoin,” he said.

From the New York Times, on hedge-fund bond-holders, or as they’re sometimes referred to in Argentinian news, “vultures” circling its economy:

Argentina’s government has 30 days to decide whether it should try to make peace with a group of New York hedge funds that it has bitterly fought for years in a dispute that could change the global market for government bonds.

The hedge funds, after a series of important victories in United States courts, have managed to back Argentina into a daunting legal corner. Judge Thomas P. Griesa of the Federal District Court in Manhattan has told the country that it cannot make payments on its main class of foreign bonds without also paying the defaulted bonds that the hedge funds hold …

Argentina could allow a default at the end of July. The [hedge-fund bond holdouts], seeing that the government has gone to such lengths, might then decide to soften their stance. Alternatively, the holdouts may hold firm until next year to see if the next Argentine government is less combative.


The Hunt for Satoshi Nakamoto BitCoin Elvis, the comic book, is coming.


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