How Argentina’s first cryptocurrency financial services ecosystem works

The progress of crypto technology has reached a new milestone in Argentina with the launch of the first ecosystem for decentralized financial services in crypto-pesos (nuARS).

It is an alternative created by local companies. It allows users to pay, borrow and receive repayments in cryptocurrencies through the blockchain and without the intermediation of traditional financial institutions.

The development was made possible through a partnership between “Buenbit”, one of Argentina’s leading cryptocurrency brokers, “Num Finance”, a company that offers nuARS, a stable cryptocurrency that replicates the value of the Argentine peso on a 1:1 basis, and the fintech company “Pomelo”, which provides the infrastructure for crypto payments that can be executed instantly at any merchant.

Specifically, “Buenbit” has launched an update of its application that allows paying with the Mastercard that each user has linked to his account with all cryptocurrencies from its portfolio, from bitcoin and ether to dollars (DAI, USDC, and USDT) and peso (nuARS) stablecoins, and in return to receive a refund of two percent in bitcoin, ether or DAI for each payment.

However, the real novelty of this proposal is its combination with two other products.

The first of these is the use of nuARS, a crypto version of the remunerated accounts in pesos, which makes it possible to receive a daily reward of 70% of the Annual Effective Rate (AER) with nuARS, very similar to what the main fintechs in the country, such as Mercado Pago or Ualá, pay today.

The advantage of this cryptocurrency is that its buying and selling price is exactly one US dollar, which means its users do not lose money through commissions.

And secondly, there is the possibility of taking out a loan of up to seven million NuARS immediately, with the only condition of depositing one hundred and twenty percent of the value of the loan in DAI as collateral, which can be canceled at any time, and with total financing costs (CFT) of seventy-seven percent per year, less than half the interest charged by any commercial bank for a personal loan.

The combination of the three services creates Argentina’s first decentralized financial ecosystem in cryptocurrencies, supported by blockchain technology and smart contracts, without the intervention of banking institutions or the stock exchange.

“We partnered with Num Finance and Pomelo to offer an international contactless Mastercard that can be used to pay with cryptocurrencies in any store and to enable the use of nuARS, the leading cryptocurrency on the market, at seventy percent, with the proceeds credited daily.

“It’s basically like a crypto-MercadoPago,” explained Federico Ogue, CEO of ‘Buenbit’, during a presentation to the press.

In this sense, he assured that the goal of this product line is “to use cryptocurrencies to solve people’s everyday problems” through “a secure and easy-to-use platform that not only facilitates access to the crypto world but also makes cryptocurrencies a useful tool in daily life with secure and convenient benefits for our users.”

“We are working to ensure that as we grow and add new circle runners and partners, we will have new use cases such as remittances, international payments, and higher volume loans so that in five or ten years, when many more assets are tokenized, there will be a unit of value in blockchain that is not the dollar and that can be used to conduct transactions,” said Santiago Migone, chief operating officer of Num Finance.

Num’s stablecoin issuance model ensures that for every cryptocurrency in circulation (nuARS), there is at least one other cryptocurrency backed by stable currencies pegged to the dollar, such as “USDC” and “DAI,” two of the three largest stablecoins in the global market.

“The fact that today you can go to a gas station or a supermarket and in three or four clicks you can apply for a loan and pay with a cryptocurrency and the store will receive Argentine pesos, without bank hours or bureaucracy, shows all the technology behind it, with the infrastructure provided by Num, Buenbit and Pomelo.

It was unthinkable three or four years ago,” said Gastón Irigoyen, CEO and co-founder of “Pomelo.”

THE EVOLUTION OF THESE SERVICES

Virtually nonexistent five years ago, companies offering financial services using blockchain technology and cryptocurrencies have grown rapidly in Argentina since then and have consolidated today as an alternative that millions of users in the South American country are opting for.

Various private studies estimate that around 2.5 million Argentines save or invest in cryptocurrencies, while Argentina ranks thirteenth in the intensity of crypto usage worldwide, according to a study by “Chainalysis”.

Currently, several Argentine companies offer cards (Visa and Mastercard) that can be used to pay for purchases with balances in cryptocurrencies anywhere in the world and, in return, receive a refund of between 2% and 21% in cryptocurrencies, as in the case of “Lemon”, “Belo”, and “Decrypto”, even though there are other international companies such as “Binance” that have already launched a similar product in the country.

However, the possibility of using stable currencies linked to the fiat money of each country – and no longer only to the dollar – makes it possible to think of new services that expand the horizons of this technology in terms of providing financial services.

With information from Latina Press