Previous article: "Crecimiento & Aleph: Argentina's Crypto Moment"
By David Hoffman, Founding Partner, Bankless Ventures
Compiled by: TechFlow
Dear Bankless Nation readers, I spent the entire month of August in Argentina, attending the cryptocurrency event ‘Aleph’ in downtown Buenos Aires.
Aleph is a combination of Zuzalu and Devconnect. Protocol Labs provided critical support and coordination, uniting hundreds of volunteers, community leaders, and ecosystem partners to build an environment that fosters the next generation of crypto startups in Argentina.
In Aleph Hub, a collaborative office space that can accommodate 1,000 people, crypto startups, venture capitalists and the Argentine government gathered together for a month of cooperation and exchange to promote common development.
Although Aleph is a month-long event, the spark it ignites is expected to spread across Argentina and throughout Latin America, forming a wave of growth called ‘Crecimiento’.
Why choose Argentina?
Argentina is a pioneer in the development of cryptocurrency.
While venture capitalists and crypto-Twitter enthusiasts in developed countries are still discussing use cases, adoption, and how to “attract retail investors,” in Argentina, cryptocurrencies have been adopted by millions of people who have a pressing need for the value and services of cryptocurrencies.
Argentina is an ideal place to develop the crypto economy. Easy internet access, high currency inflation, capital controls, and friction in traditional commerce have combined to create an environment where cryptocurrencies can flourish.
One of Gwart’s recent tweets made me smile, but the irony is that in Argentina, millions of “adults living 9-to-5 lives with monthly expenses and responsibilities” have discovered that cryptocurrency is a way to make their lives better.
Wart：
Retail investors are coming. Adults who work 9-to-5 jobs, have monthly expenses and responsibilities, are ready to trade digital commodities with us. Be patient, retail investors are on their way.
Argentina’s crypto economy differs significantly from the “use cases” and “trends” often assumed on crypto Twitter. In Argentina, locals don’t always have the means to bet on the next hot alternative, L1, or participate in memecoin speculation; their currency might lose 1% today and another 1% tomorrow.
Sure, there are some crypto enthusiasts in Argentina, but the activity pales in comparison to the millions of Argentines who pay little attention to cryptocurrencies. These people may not be interested in the virtual world of enthusiasts on crypto Twitter, but they still use their favorite crypto apps (such as Lemon, Belo, BuenBit or Ripio) to fight inflation, buy coffee and protect their wealth.
DavidHoffman.eth
After talking to startups in Argentina, it really makes the game of crypto Twitter and venture capital seem so ridiculous.
The 15th re-staked super-enhanced AltVM L2?
The 5,000th political memecoin?
This DePIN, that encryption AI
No, what we have here is a real cash flow business serving millions of local Argentinians.
In Argentina, cryptocurrencies are real.
Bottom-up power: Create 100 more startups
While the Salvadoran government has been praised by Bitcoin enthusiasts for its support for Bitcoin, the citizens of El Salvador are not thrilled with the government’s top-down Bitcoin investment.
In contrast, citizens of Argentina are enthusiastic about cryptocurrencies, or at least neutral. While not every Argentine uses cryptocurrencies, their use has become widely accepted and part of the culture. The average Argentine has either directly improved their lives due to cryptocurrencies, enjoying easy access to U.S. dollars, payment services, and financial services for the unbanked, or they know someone who has.
Bottom-up cryptocurrency support and acceptance is stronger in Argentina than anywhere else in the world.
The core belief of Crecimiento and Aleph’s temporary city is that Argentina only needs “100 great startups” to spark the economic growth and prosperity brought by cryptocurrency to spread rapidly across the country.
Just 100 or so more startups, creating about 5,000 crypto-related jobs, bringing the value of crypto to Argentina… Argentina could become the first country to reach cryptocurrency “escape velocity” and become the first country in the world to be driven entirely by crypto.
At Aleph, 67 crypto startups from seed to Series A work together in a shared office space, collaborating on problem solving and supporting each other as they grow. There are 22 mentors from venture capital firms, crypto teams and successful entrepreneurs who offer their time, advice and perspective at the hub, passing on their wisdom to the younger generation of startups.
Every day, Aleph hosts a host of high-profile speakers and experts who meet with startups face-to-face — from Seba Serrano (Ripio) to Alec Oxenford (OLX) to Nico Berman (Kaszek) and Marta Cruz (NXTP Ventures). Every day, university-level classes at the Aleph Center showcase the skills needed to work in the Web3 space. There are workshops, lectures, and mentoring that highlight some of the most technologically advanced areas in the industry.
Special thanks to ZKsync - The ZKsync team was widely mentioned by startup builders and hackathon participants for their support and help with Aleph. The third week of Aleph was “ZK Week” and the ZKsync LATAM Developer Relations team went above and beyond to educate builders here in English and Spanish.
From the 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 top to bottom.
This is the potential that Crecimiento seeks to unlock.
Argentina’s new leader, Javier Milei, has shown a deep interest in cryptocurrencies in many ways. As the new government makes sweeping reforms to Argentina, the country’s crypto leaders see an opportunity to make cryptocurrencies a permanent part of Argentina’s growth plans for the next decade and beyond.
Milei supports technology, investment, and rapid development. He even has a “blockchain advisor” in his cabinet, Sergio Morales. Milei’s interest in Bitcoin and cryptocurrencies is part of his broader economic philosophy, which includes pushing for dollarization of the economy (stablecoins are one option) and reducing government intervention.
Milei drafts regulations that balance crypto innovation with investor protection, and works with the crypto industry to provide clear regulatory guidance. Milei’s initial “Great Economic Decree” includes removing fiat currency laws, allowing contracts to be denominated in any currency.
These measures are a positive step toward legalizing cryptocurrencies in Argentina, but more work needs to be done.
The real challenge facing the crypto industry in Argentina is this: Can Argentina establish a solid regulatory framework that supports cryptocurrencies, provides long-term legal protections for crypto entrepreneurs, and ensures the legitimacy and protection of cryptocurrencies for decades to come? Can it develop crypto protections that go beyond the current government? What if a new government comes to power and tries to undo the progress made by the Milei government in supporting cryptocurrencies? This situation has been seen many times in other industries in Argentina.
DavidHoffman.eth ：
Roberto Silva, known as Argentina’s answer to Gary Gensler, said at the @crecimientoar Regulatory Day:
“We fully support the standardization of encryption technology.”
“The SEC’s model is to sue and claim that cryptocurrencies are not compliant. We don’t follow that 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 what crypto businesses and startups expect and need from the Milei government.
It’s not just Milei. The former president of Argentina has also visited Aleph coworking space.
ZKsync ：
@zksync’s ELI5 (Popular Science) zero-knowledge proof reading is suitable for everyone.
Whether you’re the founder of @lemonapp_ar, the President of Argentina or the Secretary of Innovation in Buenos Aires.
This is as surprising as Bill Clinton attending the ETH Denver hackathon.
Unlike the United States, Argentina’s crypto industry is highly appreciated and encouraged by state officials.
Aleph: Network Nation
Aleph is leading the development of crypto-native technologies that are already widely used by over 2,300 Aleph citizens.
QuarkID, an application incubated by the City of Buenos Aires, leverages verifiable credentials, decentralized identifiers, and zero-knowledge cryptography to create a user-sovereign identity system for all citizens of Aleph.
After I purchased my Aleph ticket (i.e. citizenship), I was given a verifiable credential that allowed my iPhone to open the door to the Aleph Center and enter the coworking space. As a citizen of Aleph, I am entitled to a weekly stipend of 100 MORFI tokens.
The MORFI token is an ERC20 token running on ZKsync Era and can be redeemed for 1000 Argentine pesos at local merchants that accept MORFI as payment, which can be used to buy food, coffee, or other services around the Aleph Center. 1000 pesos is roughly equivalent to 1 US dollar (depending on when you read this article). This is all running on the ZKsync Era mainnet, showing a real prototype of a crypto-powered Baljian cyber state.
You might be wondering: “How did they get over 50 local merchants to accept crypto payments?” It’s not that difficult until you realize that accepting regular peso payments through fintech channels takes 2-3 months to settle… which means the merchant may have lost a significant portion of the value before they even receive the pesos.
Last month, Argentina experienced its lowest monthly inflation rate in five years, at 4%. Note that we are talking about 4% for a month, not a year. Do you think a 2.9% credit card fee is high? Imagine losing 10% to a devalued currency just because the banking system takes months to get the money to the merchant. When merchants in Argentina learn that they can get paid instantly, it becomes an easy deal.
Later this year, QuarkID will build its own 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. It can be said that this will become Argentina's L2.
If you want to learn more about this topic, you can check out my interview with Diego Fernandez, Buenos Aires Secretary of Innovation, from January this year.
in conclusion
With the Aleph event over, those expats, VCs, and mentors will have to leave. We all have our own homes to return to. Aleph’s coworking space has signed a three-year lease and will remain open, providing a common hub for crypto startups. Support networks have been built, and many connections, friendships, and investments have been made.
Will Aleph become a key force in promoting the development of Argentina's crypto industry?
