Bitcoin. Don’t leave home without it.
Crypto-currency is more than just a speculative commodity. In many parts of the world it is being used to buy and sell things - just like real money.
During a break in Argentina over the new year, I discovered to my great surprise that Bitcoin is a practical and relatively cheap way for an Australian traveller to exchange cash while avoiding heavy charges.
At least it is in Argentina, which is somewhat challenged, to put it mildly, in the fiscal and monetary departments. (Inflation hit 23.6 per cent last year and the local peso is worth less than half its value in $US two years ago.)
The visitor to Buenos Aires quickly discovers that the Argentine automatic teller machine is a tight-fisted and temperamental beast. After watching it spit out a perfectly respectable Australian debit card for the seventh time it finally deigned to take American Express and, after some negotiation, agreed to the hand over the princely sum of 2000 pesos - around $138 at the official exchange rate - before adding a local bank charge of 198 pesos ($13.65). Once fees were added on at the Australian end, around 18 per cent disappeared in fees and commission.
Which leaves you to wonder why we put up with this sort of treatment from banks.
Fortunately, in a country with currency as fickle as the Argentine peso, there is a choice: the black market, or the blue market as it’s known in Argentina for reasons that are not entirely clear.
Australian banks will allow you to buy Bitcoin with a credit card these days, but they just won’t let you change it back. On the Buenos Aires blue market, however, there are no such restrictions. Agents who will trade bitcoins for cash are not hard to find on the internet on websites like localbitcoin.com.
An agent called CoinAsap came with a 20/20 rating, and after making contact through WhatsApp - the preferred means of communication in the Bitcoin caper - I made an appointment.
The office, as chance would have it, was just a few doors down from the Santander Bank which had given me the workover a few days before. CoinAsap’s well-signed shopfront is on the third floor of a shopping centre, I was welcomed by a geeky looking bloke called Pedro.
Having agreed on the terms - the Bitcoin/Argentine peso exchange rate less 5% - I bought 0.05 Bitcoins using an Australian Visa card which were immediately credited to my online Bitcoin account.
Transferring the crypto coinage to Pedro should have been just as simple, but here we hit a snag. The blockchain, I discovered, sometimes get blocked if a dealer becomes overloaded with transactions, which is happening more these days largely because of speculative trading.
I sat and watched the screen on and off for 20 minutes unsuccessfully trying to teach Pedro the English phrase “a watched pot never boils,” wondering what to do next.
I’d despatched half a Bitcoin - around $900 - to Pedro and there was no way of calling it back. And the Bitcoin bloggers say this tends to happen a lot these days; payments can sometimes take several days to clear.
Trading, however, as Adam Smith noted, is a matter of trust, and by now I had come to recognise Pedro was a decent sort of geek. I would have happily trusted him with my MacBook Pro if it needed fixing, which is more than you can say for the clerk at the Santander Bank.
What’s more he worked for a company with a shopfront that relies on its 20/20 customer rating for business on the internet giving me the power to reap revenge by giving Pedro and his mates the dreaded nil stars. That is more power than I would have over the the Santander Bank.
So Pedro said he’d text me when the Bitcoin landed, which it did around 5pm, giving me time to pop back before he put the shutters up at 6pm.
I counted out 13,325 pesos in crisp new notes which had cost me a little under 0.05 Bitcoins, for which I’d paid $951.10 - an exchange rate of 14.01 pesos to the Aussie Dollar, a little less than the official rate but far better than the skinflints at Santander could offer.
Cryptocurrency, it turns out, is not nearly as scary as the moniker suggests. In the right circumstances it has all the advantages over banks that Uber does over taxis; you can do it all from an iPhone; the rate is transparent; it is relatively safe, not because its regulated, but because you know who their digital identity.
The Bitcoin price is highly volatile - it shifted up and down over a 5 per cent range the day I traded. But if you are simply exchanging one non-crypto currency for another with minimal day, the speculative risks hardly matter.
Is it risky? Not as risky as travelling with $US2000 in your wallet, which I did as a foreign correspondent in Asia in the early 1990s and lost it when I accidentally left my wallet in a Bangkok taxi.
The risk with Bitcoin, it seemed to me, is considerably lower than that. At least it did seem so, until I emerged from the shopping centre triumphantly with a fat wallet, turned to give the digit to the Santander Bank, and then turned round to an empty lamp-post to which, 20 minutes earlier, my bicycle had been attached.
That’s a risk we’ll have to put up with, until someone comes up with the crypto bike.
Nick Cater was in Buenos Aires in a personal capacity.