Growth and Innovation: Argentina's Crypto Moment
In Argentina, cryptocurrency is a tangible reality.Original Title: “Crecimiento & Aleph: Argentina's Crypto Moment”
Author: David Hoffman, Founding Partner of Bankless Ventures
Translated by: ShenChao TechFlow
Dear Bankless Nation readers, I spent the entire month of August in Argentina, participating in the cryptocurrency event 'Aleph' held in downtown Buenos Aires.
Aleph is an event that combines the features of Zuzalu and Devconnect. Protocol Labs provided significant support and coordination, uniting hundreds of volunteers, community leaders, and ecosystem partners to create an environment that fosters the development of the next generation of crypto startups in Argentina.
At Aleph Hub, a collaborative workspace that accommodates 1,000 people, crypto startups, venture capitalists, and the Argentine government gathered for a month of collaboration and exchange, promoting mutual growth.
Although Aleph is a month-long event, the sparks it ignited are expected to spread throughout Argentina and Latin America, forming a growth wave called 'Crecimiento'.
Why Choose Argentina?
Argentina is a pioneer in cryptocurrency development.
In developed countries, venture capitalists and crypto Twitter enthusiasts are still discussing use cases, adoption, and how to "attract retail investors." In Argentina, cryptocurrency has already been embraced by millions of people who have an urgent need for its value and services.
Argentina is an ideal place for developing a crypto economy. Convenient internet access, high inflation of the currency, capital controls, and friction in traditional business create an environment where cryptocurrency can shine.
A recent tweet from Gwart made me smile, but ironically, in Argentina, millions of "adults living a 9-to-5 life with monthly expenses and responsibilities" have found that cryptocurrency is a way to improve their lives.
Retail is coming. Those adults living a 9-to-5 life with monthly expenses and responsibilities are getting ready to trade digital goods with us. Please be patient; retail is on the way.
Argentina's crypto economy is significantly different from the "use cases" and "trends" often assumed on crypto Twitter. In Argentina, locals do not always have the ability to bet on the next hot alternative L1 or participate in memecoin speculation; their currency may devalue by 1% today and another 1% tomorrow.
Of course, Argentina also has its share of crypto enthusiasts, but these activities seem trivial compared to the millions of Argentinians who are less focused on cryptocurrency. These individuals may not be interested in the virtual world of crypto Twitter enthusiasts, but they still use their favorite crypto apps (like Lemon, Belo, BuenBit, or Ripio) to combat inflation, buy coffee, and protect their wealth.
After interacting with startups in Argentina, it truly feels like the games of crypto Twitter and venture capital seem so absurd.
The 15th re-staked super-enhanced AltVM L2?
The 5000th political memecoin?
This DePIN, that crypto AI
No, what exists here are real cash flow businesses serving millions of local Argentinians.
In Argentina, cryptocurrency is very much a reality.
Bottom-Up Power: Recreating 100 Startups
While the Salvadoran government has been praised by Bitcoin enthusiasts for its support of Bitcoin, Salvadorans are not excited about the government's top-down Bitcoin investments.
In contrast, citizens of Argentina are enthusiastic about cryptocurrency, or at least remain neutral. While not every Argentine uses cryptocurrency, its use has been widely accepted and has become part of the culture. Ordinary Argentinians have either directly improved their lives through cryptocurrency, enjoying convenient access to dollars, payment services, and unbanked financial services, or they know someone who has had such experiences.
In Argentina, the grassroots support and acceptance of cryptocurrency are stronger than anywhere else in the world.
The core belief of Crecimiento and the temporary city of Aleph is that Argentina only needs "100 excellent startups" to trigger the economic growth and prosperity brought by cryptocurrency to spread rapidly across the nation.
With just about 100 more startups creating around 5,000 crypto-related jobs and bringing the value of cryptocurrency into Argentina… Argentina could become the first country to reach "escape velocity" for cryptocurrency, becoming the world's first fully crypto-driven nation.
At Aleph, 67 crypto startups from seed to Series A are working together in a shared workspace, collaborating to solve problems and supporting each other in their development. There are 22 mentors from venture capital firms, crypto teams, and successful entrepreneurs who provide time, advice, and perspectives at this center, passing their wisdom to the younger generation of startups.
Every day, many renowned speakers and experts engage in face-to-face interactions with startups at Aleph—from Seba Serrano (Ripio) to Alec Oxenford (OLX), to Nico Berman (Kaszek) and Marta Cruz (NXTP Ventures). At the Aleph center, university-level courses are presented daily, showcasing the skills needed in the Web3 space. There are workshops, lectures, and mentorships highlighting some of the most cutting-edge areas in the industry.
Special thanks to ZKsync—startup builders and hackathon participants commonly mention the support and assistance provided by the ZKsync team for Aleph. The third week at Aleph was "ZK Week," where the ZKsync LATAM developer relations team provided builders here with exceptional education in both English and Spanish.
Top-Down: Milei's Digital Transformation
Argentina is the only country in the world with a strong grassroots crypto industry and a government that supports cryptocurrency from the top down.
This is precisely the potential that Crecimiento aims to unleash.
Argentina's new leader, Javier Milei, has shown a profound interest in cryptocurrency in many ways. As the new government implements sweeping reforms in Argentina, leaders in the country's crypto sector see an opportunity to permanently incorporate cryptocurrency into Argentina's growth plans for the next decade and beyond.
Milei supports technology, investment, and rapid development. His cabinet even includes a "blockchain advisor," Sergio Morales. Milei's interest in Bitcoin and cryptocurrency is part of his broader economic philosophy, which includes promoting dollarization of the economy (stablecoins being one option) and reducing government intervention.
Milei has drafted regulations that balance crypto innovation with investor protection and collaborates with the crypto industry to provide clear regulatory guidance. Milei's initial "Economic Grand Decree" includes the repeal of legal tender laws, allowing contracts to be denominated in any currency.
These measures represent a positive step toward the legalization of cryptocurrency in Argentina, but further efforts are still needed.
The real challenge facing the crypto industry in Argentina is whether the country can establish a solid regulatory framework that supports cryptocurrency, providing long-term legal protections for crypto entrepreneurs and ensuring the legitimacy and protection of cryptocurrency for decades to come. Can protective measures for cryptocurrency be formulated that transcend the current government? What if a new government comes to power and attempts to roll back the progress made by the Milei administration in supporting cryptocurrency? This scenario has already occurred multiple times in other sectors in Argentina.
Roberto Silva, known as Argentina's Gary Gensler, stated at the @crecimientoar Regulatory Day:
"We fully support the normalization of crypto technology."
"The model of the U.S. Securities and Exchange Commission (SEC) is to claim that cryptocurrencies are non-compliant through lawsuits. We do not adopt this model."
On August 22, Aleph hosted a "Regulatory Day" event, where leaders from the Milei government came to the Aleph center for a full day of discussions and workshops focused on the expectations and needs of crypto businesses and startups from the Milei administration.
Not just Milei. Former presidents of Argentina have also visited the Aleph shared workspace.
@zksync has an ELI5 (Explain Like I'm 5) zero-knowledge proof reading material suitable for everyone.
Whether you are the founder of @lemonapp_ar, the President of Argentina, or the Secretary of Innovation in Buenos Aires.
It's as surprising as Bill Clinton attending the ETH Denver hackathon.
Unlike in the U.S., Argentina's crypto industry has received high praise and encouragement from national officials.
Aleph: The Network Nation
Aleph is leading the development of crypto-native technologies that have been widely adopted by over 2,300 Aleph citizens.
++QuarkID++ is an application incubated in Buenos Aires that utilizes verifiable credentials, decentralized identifiers, and zero-knowledge encryption to create a user-controlled identity system for all Aleph citizens.
After purchasing my Aleph ticket (i.e., citizenship), I received a verifiable credential that allows my iPhone to unlock the doors of the Aleph center and access the shared workspace. As an Aleph citizen, I am entitled to a weekly allowance of 100 MORFI tokens.
MORFI tokens are ERC20 tokens operating on the ZKsync Era, which can be exchanged for 1,000 Argentine pesos at local merchants that accept MORFI as a payment method, for purchasing food, coffee, or enjoying other services around the Aleph center. 1,000 pesos is approximately equivalent to 1 dollar (depending on when you read this). All of this operates on the ZKsync Era mainnet, showcasing a real prototype of a Baljian network nation based on crypto technology.
You might wonder, "How did they get over 50 local merchants to accept cryptocurrency payments?" When you realize that accepting regular peso payments through fintech channels requires a settlement time of 2-3 months, it becomes clear that this is not difficult… This means that merchants may have already lost a significant portion of value before receiving pesos.
Last month, Argentina experienced its lowest monthly inflation rate in five years, reaching 4%. Note that this is 4% for one month, not a year. Do you think a 2.9% credit card fee is high? Imagine that just because the banking system takes months to deliver money to merchants, they lose 10% due to currency devaluation. When Argentine merchants learned they could receive payments immediately, it became an easy deal to accept.
Later this year, QuarkID will build its independent Elastic Chain on the ZK Stack and join the ZKsync Hyperchain. QuarkID plans to add more traditional services to its application, including driver's licenses and other government-issued credentials, as well as user-controlled wallets. This could be considered Argentina's L2.
If you want to delve deeper into this topic, you can check out my interview with Buenos Aires' Secretary of Innovation, Diego Fernandez, from this January here.
Conclusion
As the Aleph event comes to a close, those foreigners, venture capitalists, and mentors will have to leave. We all have our homes to return to. The shared workspace at Aleph has signed a three-year lease and will continue to operate as a common exchange center for crypto startups. The support network has been established, and many connections, friendships, and investments have already formed.
Will Aleph become a key force driving the development of Argentina's crypto industry?
