Good omen for Argentina. Strike, the financial app running on Bitcoin rails, officially launched in the country. Argentina joins the USA and El Salvador, and becomes the third market in which the service is available. The previous country that Strike launched its app in ended up making Bitcoin legal tender, but let’s not get ahead of ourselves.
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According to Jack Mallers, Strike’s CEO, Argentina is a “country that faces hyperinflation, predatory payment networks, and unusable cross-border transfers.” And according to an article from November 2021 in The Buenos Aires Times, “Inflation over the last 12 months now totals 52.1 percent, according to official data – one of the highest rates in the world.”
🇦🇷 Welcome, Argentina! 🇦🇷
Today, we launch a superior financial experience to a country that faces hyperinflation, predatory payment networks, and unusable cross-border transfers
Today, we use the world's open monetary network, #Bitcoin, to give hope to the people of Argentina pic.twitter.com/Z2RYLxmKSL
— Jack Mallers (@jackmallers) January 11, 2022
Not only that, according to Mallers, “GDP will contract by 12% this year” and “half the population is already living in poverty.” And then, there’s Argentina’s recent economic history. Like the “corralito” incident in 2001, in which the government froze all bank accounts and limited cash withdrawals to 250 pesos a week, to prevent capital flight.
As such, Argentinians have historically fled to the dollar
An estimated 10%+ of the physical stock of dollars in the world is within the Argentine financial system
There is soaring demand for harder, more stable, money and a monetary policy the people of Argentina can rely on
— Jack Mallers (@jackmallers) January 11, 2022
Since then, practically the whole country doesn’t trust its own currency and prefers to save in dollars. “Argentinians have historically fled to the dollar. An estimated 10%+ of the physical stock of dollars in the world is within the Argentine financial system.”
BTC price chart for 01/12/2022 on Coinbase | Source: BTC/USD on TradingView.com
Argentina’s Current Situation And What Strike Brings To The Table
Nowadays, the situation is such that it has “forced the government to devalue their currency, place restrictions on how much foreign currency citizens can hold, and shut down dollar-denominated payment networks.” Not only that, to keep the exchange price low, the government implemented the “Impuesto País.” A whopping 30% markup in most dollar-denominated operations.
However, this hasn't stopped the Argentine people.
Dollars are now double the official rate in the parallel market and other payment mediums have been born to facilitate transactions between different currencies, peers, businesses, and countries. pic.twitter.com/yGbYzEVknB
— Jack Mallers (@jackmallers) January 11, 2022
This, as it always does, brought forward a black market. Or, as Jack Mallers puts it, “dollars are now double the official rate in the parallel market and other payment mediums have been born to facilitate transactions between different currencies, peers, businesses, and countries.”
This is where Strike comes in. With the app, “the Argentinian people can now hold a stable cash balance that can be spent both instantly and with no fees.” And it all runs using the Lightning Network as rails. That means Bitcoin, “the best monetary asset and the best monetary network in human history.”
This is a superior financial experience that legacy financial institutions and governments have failed to deliver to the people of Argentina.#Bitcoin is a superior monetary system that builds towards financial inclusion and helps re-instill basic human freedoms.
— Jack Mallers (@jackmallers) January 11, 2022
Jack Mallers On CNBC’s Power Lunch
To begin the interview, host Kelly Evans asks Mallers if he thinks the Argentinian government would be as receptive as El Salvador’s. The Strike CEO quickly downgrades expectations and says he’s not a government advisor, he’s just there to offer his app’s service. “We’re giving the people of Argentina a monetary asset, a monetary policy, a monetary network that they can rely on and make free and instant cross-border payments,” Maller says.
Strike CEO @jackmallers explains why the company is expanding into Argentina today and how #Bitcoin is the future of currency regardless of volatility or "noise" in the crypto space $BTC pic.twitter.com/6jE0xnXJZt
— Power Lunch (@PowerLunch) January 11, 2022
Mallers says that the Argentinian economy is cash-based, which is only true regarding the US dollar. And what services does Strike provide, then? “What we allow you to do is hold a dollar-like cash collateral, but then use the Bitcoin network under the hood to escrow the value to make for digital seamless payments, and excuse them for this really monstrous cash-based economy.”
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Near the end, Evans asks him point-blank, “Is Venezuela next?” Mallers gets out of the compromising spot with ease. “Everywhere is next for us,” he says. “The good thing about Strike is that we get to sell them money, not advertising. We are delivering one of the most viral products in human history, and that’s money.”
As Evans rightly recalls, Strike launched in El Salvador and became extremely successful first. Then, the government began to pay attention. You can count on Bitcoinist to keep you posted on how the Argentinian people react to Strike and the app’s level of success. It’s not guaranteed, but this can become a very important story. Let’s see what the future brings.
Featured Image: Jack Mallers screenshot from this video | Charts by TradingView