By David Drake
Binance Labs has gotten a major endorsement from the Argentinian government when the Ministry of Production and Labor decided to co-invest in 40 of its blockchain-related projects. The government has agreed to match up to $50,000 for each project financed by Binance Labs for a maximum of 10 projects per year over four years.
The extent of the services Binance plans to cover include assistance with regulatory drafts, recruitment, technical execution, and marketing and fundraising. Speculations are rife that this move is meant to tackle the growing level of inflation within the country. It recorded a 47.6 percent rate of consumer price inflation in 2018, according to the National Institute of Statistics and Censuses.
This isn’t a novel idea since countries like Venezuela and Kenya have adopted a similar model to combat hyperinflation by instituting an alternative to the fiat currency. Argentina has been highly receptive of this new digital asset in recent years, being the second largest country in South America to install crypto ATMs. Bitcoin is also a legal tender for passengers on buses and trains.
There has been a worldwide acceptance of cryptocurrencies as alternative payment and investing options. Countries, such as South Korea and India, that have banned the use of cryptos as legal tender are, however, in full support of its underlying tech, blockchain. The US and China lead the charge in both crypto and blockchain use, though, in 2018, India has filed more blockchain patents compared to European countries.
The number of patents filed in 2018, in general, rose to 1,060 up from 962 in 2017. The country is to be a part of the incubation program that was set to launch on March 25, 2019. Other countries that are a part of the program include Lagos, Berlin, Singapore, San Francisco, and Hong Kong.
“Argentina, being hub to some of the best projects and entrepreneurs in the region will benefit tremendously from an ecosystem like Binance. I am confident the projects under the Binance Labs incubation program will contribute significantly to the blockchain community worldwide,” noted Pablo Orlando, founder and CEO, LatamEx Crypto Exchange.
Several skeptics have voiced their opinions about Argentina’s partnership with Binance Labs, along with the expansion of an already weak and fragile asset class. They the economists believe widespread use of cryptocurrencies will only deteriorate the market further as they have zero backing, and the asset is, at best, volatile. While Bitcoin has managed to barely stay afloat, the recent and sudden declines in value that have the past spanned six months cannot be ignored.
Economies that are quick to integrate cryptocurrencies into their fiscal policies oftentimes do so to plug financial hemorrhaging. As Argentina strives to become the leading crypto country in Latin America, it will have to employ greater innovation in the use of blockchain, which can be integrated into any sector. Nonetheless, a little government backing goes a long way in boosting investor confidence in a struggling market.
“Blockchain will be canonized in history as the most collaborative form of finance. It will allow for greater opportunities economically as adoption comes on. Countries that reject this formative model of finance will fall behind no matter the population size. The demystified approach to governance, compliance, and education will bring alternative methods of finance possible globally,” said Jess Davis, CEO of Uberstate.
The volatility and skepticisms surrounding cryptocurrencies have done little to quell global interest in this digital asset class. From solving inflation problems to providing alternatives to fiat currency, cryptocurrencies appear to be the next best solution for many economies. With Argentina backing projects supported by Binance Labs, there might be wide scale adoption across sectors in the near future.
Disclaimer: David Drake is on the advisory board for most of the firms mentioned or quoted in this article.