by Joseph Young
Lucas Llach, Vice President of the Central Bank of Argentina, stated that the organization and the Argentinian government support the use cases of bitcoin and are not afraid of the digital currency.
Zeppelin Studious CTO Manuel Araoz provided a rough translation of the initial statement of Llach:
“Vice-president of Central Bank of Argentina Lucas Llach said ‘we’re not afraid of Bitcoin and like some of its uses.’”
Llach also emphasized in his statement that the Central Bank of Argentina and the country’s government support bitcoin’s ability to process international transactions securely and efficiently, without the necessity and presence of intermediaries and third-party service providers such as banks and financial network operators.
Argentine Central Bank is Not Afraid of Bitcoin
Although the intent of Llach’s statement was ambiguous and unclear, the Central Bank of Argentina is optimistic toward bitcoin and its use cases. Hence, when Llach noted that the organization is not afraid of bitcoin and support its use cases, it likely meant that it plans to embrace and adopt bitcoin as a legitimate payment network and digital currency.
Since early 2017, Japan, South Korea, the Philippines and Australia have recognized bitcoin as a currency and a legal remittance method. For instance, South Korea officially passed a ruling in July that allowed fintech service providers within the country to process bitcoin remittance payments and transactions internationally.
Like South Korea and its financial regulator, Llach and the Central Bank of Argentina are also interested in bitcoin as a remittance method and a digital currency that can be utilized to send money within a peer to peer network effortlessly.
More importantly, the statement of Llach coincided with the finalization of the Bitcoin Core development team’s scaling solution Segregated Witness (SegWit), activated via Bitcoin Improvement Proposal (BIP) 141, which will further decrease transaction fees for bitcoin users and businesses.
At the time of reporting, the activation of SegWit is not fully locked in. In fact, the activation mechanism of BIP 91 and BIP 141 are complex in that they require miners to signal for Bit 1 and BIP 141 after locking in BIP 91 as the initial scaling solution and soft fork.
However, the entire mining community with over 95 percent of hash rate is currently in full support of SegWit, and that will most likely lead to the activation of SegWit within the next few weeks, as noted by BitGo engineer Jameson Lopp.
“SegWit is not activated on Bitcoin yet. It will take several more weeks to lock in SegWit, then a couple more to activate it,” said Lopp.
Why is SegWit Important For Banks, Regulators, Users, and Businesses?
Most banks and governments including the Central Bank of Argentina are interested in the ability of bitcoin to process international and borderless transactions with ease, securely and efficiently. The activation of SegWit will create an infrastructure for two-layer solutions such as the Lightning Network, which will allow businesses and users to send zero-confirmation transactions with extremely low fees.
Such an infrastructure will present opportunities for bitcoin micropayments-based platforms, which banks could potentially utilize to send a number of transactions efficiently.
Rapid Growth of Bitcoin Industry in South America
Already, demand for bitcoin is rapidly rising in South American countries including Argentina and Brazil. On top of the exponential increase in trading volumes of local trading platforms and exchanges, various sources have revealed that the Bitcoin development community is also growing at a rapid rate.
According to the Latin American Private Equity & Venture Capital Association (LAVCA), an increasing number of bitcoin entrepreneurs and startups have migrated to Argentina and started to open businesses. In fact, Xapo, one of the most popular bitcoin wallet and vault services provider, was created and launched by Wences Casares, a well-known technology and banking pioneer in Argentina.
Moreover, in early 2017, Crypto Assets Fund (CAF), the first private investment firm focused on bitcoin launched, with the aim of addressing the rapid increase in demand for the digital currency.