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First-ever intl export deal settled with Bitcoin

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In what is seen as the first ever international export trade settlement in cryptocurrency, a Latin American-based blockchain company recently settled an export deal between Argentina and Paraguay in Bitcoin.

According to Cripto247, the deal involved the sale of pesticides and fumigation equipment by a Argentina-based vendor to a Paraguay-based buyer.

Bitex, a blockchain financial services provider that is particularly active in Latin American markets facilitated the deal.  The company took to Twitter to underscore the milestone event:

The Argentine seller received its payment in under an hour.  The value of the transaction amounted to $7,100.  In facilitating the payment, Bitex ensure that the buyer pays in its local currency whilst the seller ultimately receives payment in its local currency – with conversions to and from Bitcoin as an intermediary currency.

For many years, international trade has been settled in US dollars using the SWIFT international financial messaging system.  SWIFT is expensive and slow, usually taking a few days to achieve settlement.

Marcelo Moscatelli, Head of Business Development at Bitex explained in Cripto247 the significance of the transaction in the overall context of cross border payments:

“The costs of the SWIFT network are minimum and fixed costs that range between 120 and 150 dollars.  If you export 5 million dollars, the cost is liquefied.  It is designed for large players and important amounts.”

Bitex charges a 1% fee for its service.  It offers a financial advantage for amounts up to $15,000.  However, beyond that threshold there are still advantages in terms of the speed of the transaction comparatively. The difference between settlement within an hour rather than three days also has implications in terms of liquidity.  Transparency is also improved as there is less bureaucracy and documentation involved with fewer intermediary parties implicated.

Moscatelli clarified the payment process:

“The service is always quoted in local currency, in this case Bitcoin is just a vehicle to process the payment, the exporter receives Argentine pesos, or dollars, and the buyer pays in local currency.”

The significance of the development was not lost on members of the cryptocurrency community as this Twitter post confirms:

The current convention for international trade settlement centers around SWIFT and it appears to be ripe for disruption.  Following pressure from the US, the Brussels-based financial messaging service locked Iran out of the network.  This has led to Iran and other sanctions hit countries to look towards the use of cryptocurrency as an alternative means of settlement.

Sanctions-related use cases aside, a number of cryptocurrencies are vying to replace the SWIFT network for international remittances and cross border settlements.  Decentralized cryptocurrency Stellar has been identified as being predisposed towards this use case.  Likewise, permissioned-based cryptocurrency Ripple – which is backed and promoted by Ripple Labs – is pursuing this use case with multiple tie-ups in place with international banks.

A Move Towards Cryptocurrency in Argentina

In recent months, there have been a number of announcements which reveal a gentle move towards cryptocurrency in Argentina.  In May of last year, it emerged that Bitex had partnered with Argentine bank, Banco Masventas with regard to international settlement.  The bank expressed the desire to drop out of the SWIFT global financial network in favour of payments settled via cryptocurrency.

Bitex was also implicated recently in the provision of a facility to pay for public transport with Bitcoin in 37 cities throughout Argentina. The SUBE card (Sistema Único de Boleto Electrónico) facilitates public transportation access in Buenos Aires – together with 36 other cities in the South American country.  The card can now be topped up via Bitcoin.

Argentines have been hit hard following a 50% devaluation of the Peso against the US dollar in 2018.  This has led to a move by some towards cryptocurrency in an effort to maintain personal wealth.  As part of this trend, a network of Bitcoin ATM’s is being rolled out throughout the country.

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Pat Rabbitte
Pat is a writer from the West of Ireland - currently living and working in Medellín, Colombia. He has always had an inquiring mind when it comes to new technology. His discovery of Bitcoin back in 2013 slowly led to a realisation of the implications of the underlying tech. As a consequence, Pat’s passion for blockchain technology has led him to focus his writing on the subject.