Beyond Bitcoin: How to use stablecoins to save dollars despite exchange controls

In Argentina, the most common stablecoins are DAI, USD Coin and Tether

The crypto world attracts attention for the dramatic and spectacular movements of the prices, the enormous gains that some precursors managed to make and the losses that, at least so far, suffered those who rode that wave at a bad time, because Usually it is recommended to buy low and sell high, although it is not so easy to know.

However, not only does the investment universe not end with Bitcoin, but also not all cryptocurrencies are a one-way ticket to a financial roller coaster. There are also alternatives to safeguard value that, in countries with exchange controls like Argentina, are gaining followers.

These are stablecoins, or stablecoins in the English language jargon. A stable cryptocurrency is an asset such as Bitcoin, Ether or others that, unlike the latter, does not aspire to find its own market value. What they aim at is to remain stable with respect to some given reference. For example, the most common, without price changes with respect to the international value of the dollar.

DAI, USD Coin (or USDC) and Tether (or USDT) are the three most relevant stable cryptocurrencies that can be accessed with a couple of clicks from Argentina

With more than 8,000 cryptocurrencies in the world and more adding year after year, taking an inventory of existing stablecoins would take a long time. But if you choose to mention stable currencies that are easily accessible from Argentina, through platforms -exchanges, to put it in jargon as well- you can reduce the universe to three: DAI, USD Coin (or USDC) and Tether (or USDT) are the most common that can be accessed with a couple of clicks from Argentina. These are tokens designed to mimic the international value of the dollar.

This stability, which each one of them achieves in a different way, is with respect to the international value of the dollar. As is logical, in pesos its price does vary: as much as the price of the currency in the local market.

Unlike Bitcoin, stable currencies always maintain a reference value: for example, the dollar, although in pesos its price does vary: as much as the price of the currency in the local market (Reuters)

Unlike Bitcoin, stable currencies always maintain a reference value: for example, the dollar, although in pesos its price does vary: as much as the price of the currency in the local market (Reuters)

And in an economy subject to exchange controls since September 2019, which has just recorded 36.1% annual inflation in 2020 and 53.8% a year earlier, the obsession with the dollar causes these assets to attract the crypto world to savers not as adventurous as those who go for Bitcoin.

USD Coin works in a very simple, almost traditional way. For each token of USDC worth USD 1 there is a deposit of USD 1 in a bank. A 1 to 1 endorsement. That endorsement of the coin created by the Circle firm, in the particular case of this coin, is audited by Grant Thornton, an audit, consulting and tax advisory firm from the world of atoms, not bits. .

The principle behind Tether is the same, backs every dollar with a real dollar. Of the three, it is the stablecoin with the highest market capitalization, probably the most important in the world in those terms. It is also true that in recent months its audits regarding the support in US currency are being somewhat debated.

The only precautions to be taken are to always operate with recognized exchanges that have good user reviews and take care of passwords (Scaliter)

Third, DAI, is if you want the most typical of the crypto world of three. In that case there is no audit or centralized control of any kind. In his own design, for each token that is created worth a dollar a support equivalent to USD 1 is generated at the same time but not in US currency, but in Ether, the second cryptocurrency in terms of market capitalization.

The value of Ether does fluctuate, but the equivalent of the dollars needed to support the issuance of DAI – according to Coinmarketcap there are USD 1,426 million of DAI – is generated automatically as a result of the algorithm that supports it. No audit, human intervention or any centralized body is needed. The very process that sustains the currency guarantees it.

“The DAI if you want is the most advanced, because the relationship with the dollar is fixed by an algorithm, and it is backed by Ether. And the risk of the stablecoin depends on the collateral, of the backrest. Since you can’t see the dollar saved in the bank, you are relying on the audit. But in the case of DAI, being decentralized it is an algorithm and that risk disappears ”, he explains. Ariel Scaliter, director of the executive program of Cryptocurrencies, blockchain and smart contracts of Ucema.

Ether, the cryptocurrency of Ethereum, is used to support the value of DAI, one of the stablecoins that are bought in Argentina

Ether, the cryptocurrency of Ethereum, is used to support the value of DAI, one of the stablecoins that are bought in Argentina

The three options are gaining followers in the country, although Tether has been losing some of the favor of the exchanges that allow operating in pesos.

How do you buy?

In Argentina there are several platforms that sell these three stable cryptocurrencies.

They work in a way similar to a stock company or a bank platform, except for the fact that they are not regulated by the National Securities Commission or the Central Bank.

Through an electronic transfer from an account in pesos – you can also make transfers in dollars, but that is another use, it would not imply placing pesos – to the exchange’s bank account, the user funds his personal account.

The stablecoins are a great alternative for savings in countries where there are limitations on the purchase of dollars (Hinz)

With the pesos already on the trading platform, you simply choose your currency and buy it. Although if the amounts are large, it is convenient to think of other ways to save that money, at first it can be temporarily stored on the platform itself. For longer periods, it is probably advisable to use a cold wallet cold wallet– which allows to independently manage holdings.

Argentine savers who are taking their first steps in crypto or who are not up for the surprises of Bitcoin, choose them as a way to dollarize, even if they never touch a physical dollar. Also, as some platforms allow, many users sell their stablecoins for dollars, as a kind of cash settlement.

When it comes to paying taxes, they can declare them as any other asset for their value in pesos.

The price in pesos of stable currencies that follow the dollar is usually between the value of the cash with settlement and that of the free dollar (REUTERS / Agustín Marcarian / File Photo)

The price in pesos of stable currencies that follow the dollar is usually between the value of the cash with settlement and that of the free dollar (REUTERS / Agustín Marcarian / File Photo)

“The stablecoins are a great savings alternative in countries where there are limitations on the purchase of dollars. On the one hand, they are the easiest way to enter the crypto ecosystem, since 1 crypto dollar is worth the same as 1 dollar, which means that the holder of the funds does not suffer the anxiety that volatile cryptocurrencies usually generate, ”he told Infobae Maximiliano hinz de Binance.

Today, the bulk of customers choose to enter the crypto world through stablecoins. Once they have them, some decide to maintain their position in these stable currencies, while those looking for higher returns tend to switch to volatile cryptocurrencies, “added the executive of the company that markets two of the aforementioned currencies and one more, his own, Binance USD.

Although there are alternatives to invest them in exchange for a rate paid in the cryptocurrency, the use that local savers give it is usually to hedge against jumps in the dollar.

The use that local savers give to it is usually to hedge against dollar jumps

According to the exchange that is used and the cryptocurrency that is bought, the price usually moves between the price of the dollar counted with settlement and the price of the blue. This Friday, for example, DAI was obtained at between $ 156.70 and $ 161.20 for the purchase in Buenbit, Let’s Bit, SatoshiTango and Decrypto, some of the quotes that the iFinanzasArgy panel follows.

“It is the best way to be in dollars, because it is more efficient than buying tickets, much cheaper than storing them in a safe deposit box and it has different possible financial applications,” said Scaliter. “The only care to be taken is to always operate with recognized exchanges, which have good user reviews and take care of passwordsadded.

I kept reading:

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