Argentinian fintech believes in cryptocurrency to beat currency volatility

cryptocurrency Image: André Chiavassi/ The Brazilian Report

With an increasingly volatile Peso, Argentinian citizens are beginning to look toward cryptocurrency as a way to protect themselves from exchange rate fluctuations. This, in turn, has led to a wave of fintechs leveraging their businesses with digital assets, as is the case of startup Ripio, which builds financial products using blockchain and proudly describes itself as a “promoter of the new digital economy.” 

The economic tension caused by the Covid-19 crisis has aggravated Argentina‘s already fragile fiscal situation, leading to a further drop in the Peso against the U.S. Dollar. After years of crisis, mounting inflation, and high foreign debt, greenbacks are the only currency Argentinians rely on for important transactions, such as buying or selling property.

</p> <p>It is in this dollar-dominant system that cryptocurrency may find a foothold as another solution for Argentinian citizens to protect themselves from the volatility of their national currency. At least, that is the view of Ripio CFO Matías Dajcz, who is on a mission to convince the country that digital assets can be as reliable as U.S. Dollars.</p> <p>The startup is one of many in Latin America that are <a href="">banking on cryptocurrency</a>, but it claims to be the fastest-growing. Beyond Argentina, Ripio also operates in Brazil, Mexico, Uruguay, and Spain.</p> <p><em>Ripio </em>is the Spanish word for gravel, and the company claims that &#8220;like gravel, we open new paths.&#8221; The goal is to provide financial inclusion to Argentinians who do not have a bank account — almost half of the country, according to data from World Bank Global Findex in 2017.&nbsp;</p> <p>After 22 years in the traditional banking industry, Mr. Dajcz has been working at Ripio for two and a half years. The startup has already made four funding rounds, raising a total of USD 4.6 million.</p> <p>The startup was born seven years ago as the first bitcoin payment processor in Latin America, under the name Bitpagos. Today, Ripio offers a digital wallet, in addition to exchange and credit services.</p> <p>The digital wallet allows the user to buy, sell, store, and transfer Bitcoin and other cryptocurrencies. Users can open a free account and make a deposit by bank transfer or payment system MercadoPago in order to buy digital assets. “Our main product is a digital wallet designed for users who want to buy and store crypto but don’t necessarily know how to read the market or trade crypto assets. The main options are simple: deposit and withdraw funds (in local currency) and buy or sell crypto at market price,” explains the CFO.</p> <p>The exchange platform is made for real-time cryptocurrency trading. It is built for crypto-savvy users, who can place buy and sell orders at their preferred price and also choose between different types of orders.Last month, the World Economic Forum released the <a href="">20th edition of its cohort of Technology Pioneers</a>, a selection of 100 early to growth-stage companies from all over the globe that are pioneering new technologies and innovations. On this latest list, four companies in the group are Latin American: CargoX, Descomplica, NotCo, and Ripio.</p> <figure class="wp-block-image size-large"><img loading="lazy" width="1024" height="371" src="" alt="cryptocurrency argentina peso" class="wp-image-45748" srcset=" 1024w, 300w, 768w, 610w, 1160w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Ripio CFO Matías Dajcz. Photo: Ripio</figcaption></figure> <h2>How can cryptocurrency be a way in Argentina’s current economic situation?</h2> <p>The problem of <a href="">currency devaluation in Argentina</a> has become a breeding ground for cryptocurrencies in the country. Ripio currently has 500,000 users and counting. “We have been experiencing a huge increase in users on our platforms since the beginning of the pandemic,” said Mr. Dajcz.&nbsp;</p> <p>During the second quarter of this year, Ripio saw an immediate boost in its operations and volume of transactions tripled. “People are looking for new financial alternatives, mainly in Latin America, and we see how cryptocurrency is slowly approaching mass adoption due to the current situation,” he explains.&nbsp;</p> <p>For the CFO, now is the right time to gamble on crypto in the country and in Latin America as a whole.</p> <p>Argentina has one of the largest crypto communities in the world and is also a hub for blockchain development, says Mr. Dajcz, adding that this is related to the aforementioned historical economic crisis, the significant devaluations of the Peso, and high rates of inflation. “This has resulted in younger people, aged between 18 and 30, moving towards cryptocurrency, instead of traditional investment options.”</p> <p>According to Mr. Dajcz, most Argentines who entered the cryptocurrency market to protect themselves from deflation used to buy foreign currency every month. Instead of purchasing U.S. Dollars, they began buying crypto assets. “The huge increase in demand for dollar-linked stablecoins is a clear sign of this scenario,” he says.&nbsp;</p> <p>As buying foreign currency is currently limited in the country, crypto-savvy users turn to stablecoins such as USDC or Dai as an alternative. In addition to the well-known Bitcoin, Dai and the USD Coin entered Ripio’s portfolio with the proposal to remain pegged to the greenback.</p> <p>In the case of USD Coin, for each coin issued, there is one USD stored in a bank account that is constantly monitored and audited by different agents, such as financial entities and other companies in the sector.</p> <p>“These crypto-assets gained a lot of popularity because stablecoin holders don’t need to expose themselves to more volatile assets such as Bitcoin or Ethereum. Most stablecoins peg their price to the U.S. Dollar, as it is the most widely adopted fiat currency worldwide,” he says.</p> <p>In turn, Dai is backed by other digital assets but also seeks to guarantee parity with the greenback, using other cryptocurrencies — mainly Ethereum or ETH — as a backup, through a decentralized collateral system. That is why it also goes by the name ‘crypto-dollars.’</p> <hr class="wp-block-separator"/> <p class="has-text-align-center"><em><a href="">This article was originally published on LABS – Latin America Business Stories, a news platform covering business, technology, and society in the region for an English-speaking audience.</a></em></p> <figure class="wp-block-image size-large"><a href=""><img loading="lazy" width="1024" height="124" src="" alt="" class="wp-image-41934" srcset=" 1024w, 300w, 768w, 610w, 1320w" sizes="(max-width: 1024px) 100vw, 1024px" /></a></figure> <p class="has-text-align-center">

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Isabela Fleischmann do Amaral

Isabela Fleischmann do Amaral is a junior content analyst at LABS.

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