South America is becoming a hotbed of crypto activity, with acceptance growing faster than anywhere else on the planet. In an amazing turn of events, Paraguay decided to pay Argentina in Bitcoin for a shipment of pesticides and fumigation products. The Bitcoin transaction was processed using Bitex, who converted the Bitcoin from Paraguay guaraní into Argentine pesos automatically. This is the first time a country has paid another in cryptocurrency in a trade deal and it marks the beginning of what could be the future of international trade deals.
Reducing the Cost of Trade Deals
When making a cross-border payment, you’re always subjected to huge bank fees – unless you’re making a SEPA payment. For nations who trade with one another, these fees can quickly add up into the hundreds of thousands per transaction, resulting in fewer deals and lower economic growth. Bitcoin transactions on the other hand have an ultra-low fee, making them perfect for transactions of this nature.
Not only are the fees associated with crypto transactions lower than fiat transactions, they are also completed quicker, meaning countries have their money quicker and can invest it into developing infrastructure. By removing banks from trade deals, countries can save millions annually, helping them to reinvest the money in developing their own economies.
Argentina is in Love with Crypto
Argentina is having a love affair with Bitcoin at the moment, and it’s not showing any signs of letting up. Last week, the Sistema Único de Boleto Electrónico (SUBE) announced that it was now allowing users of its travel card to top up their accounts using Bitcoin. This meant that more than 7 million commuters in Argentina can now get access to public transport by using their Bitcoin.
G20 Meetings Influencing Argentina
Back in December 2018, Argentina held the annual G20 summit in Buenos Aires where Bitcoin, cryptocurrencies and blockchain was discussed in great detail. Since it hosted this event and high-level crypto talks, Argentina has gone on to make huge steps in the crypto world and is rumored to be working on creating its very own crypto related bills.
This groundbreaking cross-border payment for a trade deal is the first of its kind and is likely to spark a new trend, especially amongst countries facing inflation or hyperinflation. Crypto payments could also be on the cards for the UK post-Brexit, as it looks to forge trade deals with nations by offering attractive low costs. For now, Argentina and Paraguay both lead the way when it comes to international innovation in crypto payments.