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Argentina’s economy hasn’t had a very good year so far. The country saw one of the most severe droughts in decades, the collapse of the peso and equity markets and a $50 billion IMF bailout.

This has made many investors flee the country, but others are waiting for a once-in-a-lifetime opportunity. The historic opportunity will present itself after investors will be able buy very cheaply, into an economy about the get a strong second wind due to the economic policies presented by the country’s president, Mauricio Macri.

The last 30 years have seen Argentina’s economy try a whole arsenal of mainstream economic solutions. The result was always the same: the country continued to drift into chaos. Maybe it’s time for an innovative, outside-the-box, crypto-positive approach. With Turkey sharing many of Argentina’s issues, maybe the whole world can take a good lesson from the current predicament.

Argentina’s economy suffers from a long time. The country’s broken civil institutions and many corrupt governments have ensured that the economy will fail repeatedly and almost inevitably will grow into monetary crises. These many factors have resulted in a stoked inflation, which makes economic planning incredibly difficult.

This is the place cryptocurrencies come in. The problems with trust can be resolved with crypto and blockchain’s unique, decentralized approach. It’s often that in countries with a huge corruption problem, strong personal bonds are forged between friends and family. These bonds provide the network and social safety to secure your property and well-being against the corrupt system, which cannot be charged to do that for you.

This brings us to fiat. If the government cannot be trusted the stability of the currency will vanish and its value can disappear completely overnight. Unfortunately, this is the usual story in Argentina’s economy and it repeats every 10 or so years. The problem is so huge, that it turned one of the wealthiest countries in the world at the start of the 20th century, to the definition of economic downfall.

President Mauricio Macri has pursued many sensible policies, but it simply is not enough. The rare case of one honest, well-intended politician, is not enough to end the ingrained structure of corruption and mistrust.

Argentina’s economy can use innovative new ideas

Santiago Siri, who is a San Francisco-based blockchain tech enthusiast developed the voting platform Democracy Earth. Siri is heading back to Argentina with a proposal for Luis Caputo, Argentina’s Central Bank President.

Siri proposes that 1% of the country’s natural reserves be kept in bitcoin. This idea seems quite modest, but has very large ramifications. Focusing on reserves to stabilize the currency is something many developing countries resort to. Argentina’s famous “convertibility plan” saw the peso being pegged 1-to-1 for the US dollar. The constitutional commitment required Argentina to hold at least the equivalent value of its money supply in USD. So this worked fine for a few years. Eventually, the Federal Reserve started hiking rates at a “surprisingly” terrible time for Argentina.

This broke the peg, bankrupted the country and set the country on its present day course. Siri’s concept doesn’t hold such serious pegging ramifications behind it. If accepted, his proposal will increase the diversity of the country’s reserves. Shifting the country’s reserves from the USD is not something the Federal Reserve would like. Siri always believes that Argentina’s nuclear power capacity should be used to mine bitcoin and expand the country’s reserves for almost no price at all.

If accepted, this modest proposal could increase the support for such financial innovations in the future. The volatility is limited by the 1% cap and a huge bitcoin rally would be significant when the USD starts being abandoned in the future trade wars.

Of course such a proposal has many questions. The ownership of the private keys is a huge issue, which is tied with the country’s corrupt politicians. This is why Siri proposes some changes to the law, as well as additional tax limitations on crypto.

If accepted, this proposal would be paramount the evolution of cryptocurrencies. Governments from all over the world will be monitoring the situation and preparing their own variants if this strategy succeeds.

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About Ian Karamanov

Based in Sofia, Bulgaria. Writing about cryptocurrency, politics, finance and esports. Keen interest in unedited history, spirituality and freedom.

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