New York or Miami have their own digital currency: Can Argentina’s Buenos Aires have its own “CABA coin”?

RIO DE JANEIRO, BRAZIL – The word “cryptocurrency” today is known by almost everyone, and Bitcoin, the one with the highest market capitalization, is adopted every day by more and more people as a method of saving and payment. Thus, transactions that were previously unthinkable, such as purchasing homes or canceling services, are now a reality for millions of users.

Read also: Check out our coverage on Argentina

But this was not always the case. Bitcoin, Ethereum, and even the “crypto dollar” USDT, to name a few of the most famous cryptos, had to overcome different resistances when taking their first steps and thus reach the place they currently occupy.

Although they have come a long way in recent years, specialists agree that they still have a long way to go to realize their enormous potential and that they are far from their ceiling. This excites the community. For this reason, the emergence of new projects can be observed almost daily, with high chances of becoming tokens that will be the talk of the town.

BOOM AND NEWS PLAYERS

The growth of these assets also generated that the same countries began to issue their digital currencies (CBDC or central bank digital currency) to attract their citizens back to the sovereign monetary economy.

The first to take the step in this field was China, which with its e-yuan took the lead over another power that had the issue on its agenda: the United States and its digital dollar.

However, the city of Miami surprised the world by announcing that it would launch its currency “MiamiCoin”, a cryptocurrency that, according to the company in charge of its issuance (CityCoins), aims to support the projects of the “Magic City”, while benefiting its holders.

According to the project papers, it is stipulated that the greater the acceptance of the MiamiCoin protocol, the more contributions the city will receive, to the point that Miami can collect up to 30% of the income generated by the currency and use the funds as it sees fit.

In November, it was the turn of New York, which debuted its NYC Coin, which is also backed by the firm CityCoins and has the backing of the mayor, Eric Adams. The cryptocurrency debuted on November 9 and hit its record high (u$s0.00023). Then its price began to fall, and it could not return to the top. These two examples of cities are not the only ones:

ARGENTINA

At the local level, some initiatives are on the horizon. For example, the Minister of Finance of Misiones, Adolfo Safrán, reported that “the House of Representatives of the province approved the ‘Misiones Program of Financial Innovation with Blockchain Technology and Cryptocurrency”. Thus, it kicked off the development of a stablecoin backed by financial assets.

This process is by no means simple since, in addition to forging the necessary technological foundations, it must also generate the conditions of reliability that this digital asset needs.

Another case is that of the Buenos Aires city of Marcos Paz, which issued a token that works through a digital wallet and is intended to encourage specific actions, such as paying taxes on time and promoting recycling. As explained by the municipality, these digital assets can then be used to make purchases in local businesses.

In an interview with iProUP, Marcos Zocaro, an accountant and expert in cryptocurrencies, explains that this type of token is not a legal tender but a digital asset and, for this reason, it would not violate any regulation.

CAN BUENOS AIRES JOIN?

Given the diversity of cities that have or plan to launch their cryptocurrencies and the high degree of penetration of these assets in Argentina, the question arises as to whether such an initiative is possible in the City of Buenos Aires.

In a dialogue with iProUP, Nahuel Burbach, Community Lead of Pool Together for Latin America, emphasizes that a cryptocurrency’s design can be realized in minutes. Still, it also takes months to develop a serious project.

“Creating a digital currency for the City of Buenos Aires is feasible. The success will depend on the mechanisms to encourage its use, such as advantages for the citizens or the holders and if these benefits are sustainable over time,” explains the specialist.

In this regard, Federico Goldberg, CEO of Tienda Crypto, says that we should not lose sight of the fact that everything related to crypto is booming, “so we will see many projects that want to include this technology”.

Matías Bari, the co-founder of the exchange SatoshiTango, stressed to iProUP that although the City of Buenos Aires does not have the power to issue its own money, it is vital to see what use will be given to this innovation.

“Will it be that of transfer of value or registration of a real estate property? We all know the most famous one, which is the transfer of value, but multiple uses can be given to a decentralized database,” the specialist told iProUP.

After laying the foundations for this first stage mentioned by the experts, Burbach adds that discussions begin in terms of security, level of decentralization, networks in which it will operate, transaction costs, and facilities for exchanging them for other currencies.

UTOPIA OR REAL POSSIBILITY?

Within Argentina’s crypto ecosystem, more and more companies operate every day. The professionals working in this industry are recognized worldwide, so a severe project in this aspect should not have any problems in developing.

But the experts consulted highlight a pivotal aspect to consider when evaluating the future of any proposal: the local context. Goldberg warns that if an Argentine city creates its currency, it will always have the same problem: trust.

“We know the difficulties that the Argentine peso has, and that is why we see more and more individuals and companies turning to cryptos to preserve their savings”, remarks the CEO of Tienda Crypto.

The specialist stresses that if a project to create a virtual currency for Buenos Aires prospers, it must be linked to a stable currency to increase its chances of success. “The most viable option is a stablecoin. since the price does not vary. Implementing volatile crypto is a headache. Particularly for those who are going to turn to this market,” Goldberg tells iProUP.

Bari agrees with his colleague regarding the currency’s stability if its primary function is the transfer of value: “The purpose for which it will be used is key to determine it”.

In this regard, Burbach adds that there are projects to make digital assets tied to asset baskets, resources, among other alternatives, “but undoubtedly the creation of a variable quote currency would be a major challenge, although if the incentives are aligned, it would probably work”.

Finally, the specialist highlights as a point in favor that an essential part of the population is looking for investment tools related to crypto, a context that helps to start seeing the appearance of this type of project more frequently.

With information from iProUP

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