Written by: Sleepy.txt
In Argentina, even the US dollar has lost its power.
Pablo has a unique perspective. Ten years ago, he was a Huawei employee stationed in Argentina, living in this South American country for two years; a decade later, to attend the Devconnect conference, he returned to this familiar place as a Web3 developer.
This ten-year-spanning viewpoint made him a witness to a brutal economic experiment.
When he left back then, one US dollar could only exchange for a little over ten pesos; today, Argentina's black market exchange rate has skyrocketed to 1:1400. According to the simplest business logic, this should mean that if you have US dollars in your pocket, you should possess imperial purchasing power in this country.
However, this "dollar superiority" only lasted until the first lunch.
"I specifically went back to the ordinary neighborhood I used to live in and found a small restaurant I always used to eat at," Pablo recalled. "I ordered a bowl of noodles, and it cost me 100 RMB when converted."
This wasn't a tourist-filled wealthy area but a "hole-in-the-wall" eatery full of life. Eating here ten years ago cost no more than 50 RMB per person; now, in a place defined by global media as a "failed state," prices are directly comparable to Shanghai's CBD or Paris in Western Europe.
This is classic "stagflation." Although the peso has depreciated over 100-fold, the dollar-denominated price of goods has actually risen by more than 50%.
When a country's credit completely collapses, inflation becomes an indiscriminate flood. Even if you're sitting in the seemingly sturdy boat of the US dollar, the water will still rise above your ankles. This country, in a surreal way, has transmitted the cost of monetary collapse to everyone, including those holding hard currency.
Many assume that in such severe turmoil, people would panic, hoard dollars, or, as tech evangelists predict, embrace cryptocurrency. But we were all wrong.
Here, young people neither save money nor buy property because the value of their wages begins evaporating the moment they are paid; Here, the true masters of the financial system are not the central bank, but a shadow financial network woven together by Jewish money houses in the Once district and over 10,000 Chinese supermarkets across Argentina.
Welcome to Underground Argentina.
Young People Dare Not Own a Future
To understand Argentina's underground economy, one must first understand the survival logic of one group: the "live-for-the-moment" youth.
If you walk the streets of Buenos Aires at night, you'll experience a severe cognitive illusion. The bars are bustling with noise, tango halls pulse with music all night long, and young people in restaurants still generously leave 10% tips. It doesn't look like a country undergoing "shock therapy" in crisis, but rather a prosperous era.
But this is not a symbol of prosperity; it's a kind of desperate "end-of-the-world revelry." In the first half of 2024, the country's poverty rate once soared to 52.9%; even after Milei forcefully pushed through reforms, 31.6% of people still lived below the poverty line in the first quarter of 2025.
In the grand narrative of the Web3 world, Argentina is often portrayed as a "crypto utopia." The outside world imagines that in this country of failed currency, young people frantically buy USDT or Bitcoin to hedge risks the moment they get paid.
But Pablo, through on-the-ground investigation, coldly burst this elite-perspective bubble.
"This is actually a misconception," Pablo stated bluntly. "Most young people are typical live-from-paycheck-to-paycheck types. After paying rent, utilities, and daily expenses, there's little left from their wages. They simply have no savings to exchange for dollars or stablecoins."
It's not that they don't want to hedge; it's that they aren't in a position to hedge.
What prevents saving is not just poverty, but the "devaluation of labor."
From 2017 to 2023, real wages for Argentines fell by 37%. Even though nominal wages have risen since Milei took office, the purchasing power of wages in the private sector still lost 14.7% over the past year.
What does this mean? It means an Argentine young person works harder this year than last, but can buy less bread and milk with their earnings. In this environment, "saving" becomes an absurd joke. Consequently, a nearly rational "inflation immunity" has spread among this generation.
Since no amount of effort can save enough for a down payment on a house, since the speed of saving can never catch up with the evaporation of currency, the only economically rational choice is to immediately convert the pesos in hand—which could turn into wastepaper at any moment—into instant gratification.
One survey shows that 42% of Argentines feel anxious all the time, and 40% feel deeply exhausted. But at the same time, a high 88% admit to using "emotional spending" to combat this anxiety.
This collective psychology is precisely a microcosm of the country's century of fluctuations. They use the steps of the tango to fight uncertainty about the future, using grilled meat and beer to numb the deep-seated sense of powerlessness.
But this is only the surface of Underground Argentina. Where do the billions of peso cash spent frantically by young people ultimately flow?
They don't disappear. Under the cover of Buenos Aires' night, this cash flows like underground rivers, eventually converging into the hands of two very special groups.
One is the country's largest "cash vacuum cleaner," the other is the "underground central bank" controlling the exchange rate.
Chinese Supermarkets and Jewish Money Houses
If the Argentine Central Bank suddenly announced a shutdown tomorrow, the country's financial system might experience brief chaos; but if those 13,000 Chinese supermarkets closed simultaneously, Argentine society might grind to a halt immediately.
In Buenos Aires, the true financial heart doesn't beat in luxurious bank buildings, but hides in the checkout counters of street corners and the deep courtyards of the Once district.
This is a secret alliance forged by two groups of outsiders: one is supermarket owners from China, the other is Jewish financiers with a century of deep roots.
In Argentina, nothing permeates the city's fabric like "Supermercados Chinos (Chinese supermarkets)." By 2021, the number of Chinese supermarkets in Argentina had surpassed 13,000, accounting for over 40% of the country's total supermarkets. They aren't as large as Carrefour, but their strength lies in being everywhere.
For Argentina's underground economy, these supermarkets are not just places to sell milk and bread; they are essentially 24/7 operating "cash deposit points."
Most Chinese supermarkets encourage customers to use cash. Some restaurants will remind you at checkout that paying with cash earns a discount, and some even post signs directly: "10%~15% discount for cash payment."
This is actually for tax evasion. Argentina's consumption tax is as high as 21%. To prevent the government from taking this slice of the pie, businesses are willing to give discounts to consumers, just to keep vast amounts of turnover outside the official financial system.
"The tax authorities must know, but they haven't strictly investigated," Pablo said in the interview.
A 2011 report showed that even back then, the annual sales of tens of thousands of Chinese supermarkets had already reached $5.98 billion. More than a decade later, this number is undoubtedly much larger. But there's a fatal problem: pesos are "hot." In an environment with triple-digit annual inflation, they depreciate every second.
"Chinese merchants earn massive amounts of peso cash and need to convert it to RMB to send back to China, so they find various ways to exchange money," Pablo said. "So for Chinese tourists, the most convenient exchange channels with the best rates are Chinese supermarkets or Chinese restaurants, because they urgently need RMB to hedge their peso holdings."
However, scattered tourists can't absorb such a massive amount of cash. Chinese supermarkets need another outlet, and in Buenos Aires, only the underground money houses, represented by those from the Once district, have the capacity to swallow cash on this scale.
"Historically, Jews gathered in a wholesale area called Once. If you've seen movies about Argentine Jews, some scenes are set in Once," Pablo explained. "There is a Jewish church there, and it's also the only place in Argentina where a terrorist attack has occurred."
He is referring to the AMIA bombing on July 18, 1994.
That day, a car loaded with explosives rammed into the AMIA Jewish community center. The explosion killed 85 people and injured over 300, marking one of the darkest pages in Argentine history. After that event, a huge wall was erected outside the church, covered with the word "Peace" in various languages.
This disaster completely changed the survival philosophy of the Jewish community. Since then, the entire community has become extremely closed and vigilant. These walls not only blocked bombs but also helped them form an intensely inward-looking, highly united circle.
As times changed, Jewish merchants gradually withdrew from the physical wholesale business and moved into an area they were more skilled in—finance.
They operate underground money houses known as "Cueva (Cave)", leveraging deep connections in political and economic spheres to build a fund transfer network independent of the official system. Today, some have moved out of the Once district, and people of other ethnicities, including Chinese, have also started running underground money house businesses.
Under Argentina's long-standing foreign exchange controls, the gap between the official exchange rate and the black market rate once exceeded 100%. This meant that anyone honestly exchanging currency through official channels would see their asset value instantly halved. This forced both businesses and individuals to rely on the underground financial network built by the Jews.
Chinese supermarkets generate vast amounts of peso cash daily, desperately needing to convert it into hard currency; Jewish money houses hold US dollar reserves and global fund transfer channels but need large amounts of peso cash to sustain daily usury operations and exchange businesses. Their needs align perfectly, creating an ideal commercial闭环 (closed loop).
Thus, in Argentina, specialized armored cars (or a few inconspicuous private cars) shuttle between Chinese supermarkets and the Once district every night. The cash flow from the Chinese provides a continuous blood supply to the Jewish financial network, while the dollar reserves of the Jews provide the only escape route for the wealth of the Chinese.
Without cumbersome compliance checks, without bank queues, relying on this cross-ethnic默契 (tacit understanding) and trust, this system has operated efficiently for decades.
In those years when the state machinery failed, it was this non-compliant underground system that supported the most basic survival needs of countless ordinary families and businesses. Compared to the shaky official peso, Chinese supermarkets and Jewish money houses were clearly more trustworthy.
Peer-to-Peer Tax Avoidance
If Chinese supermarkets and Jewish money houses are the main arteries of Argentina's underground economy, then cryptocurrency is the more hidden veins.
Over the past few years, the global Web3 community has been spreading a myth: Argentina is the holy land of cryptocurrency. Data似乎 (seems to) corroborate this—in this country of 46 million people, cryptocurrency ownership reaches a high of 19.8%, ranking first in Latin America.
But when you delve into this land like Pablo did, you find the truth behind the myth isn't sexy. Few here talk about the ideals of decentralization, and few care about the technological innovation of blockchain.
All the enthusiasm ultimately points to one赤裸裸的 (bare) verb: escape.
"Outside the crypto circle, ordinary Argentines don't have a high understanding of Crypto," Pablo said. For most Argentines using cryptocurrency, this isn't a revolution about financial freedom; it's a self-defense battle for asset preservation. They don't care what Web3 is; they only care about one thing: can USDT prevent the money in my hand from shrinking?
This explains why stablecoins account for 61.8% of Argentina's crypto trading volume. For freelancers with overseas business, digital nomads, and the wealthy class, USDT is their digital dollar.
Compared to hiding dollars under the mattress or risking black market exchanges, clicking a mouse to convert pesos to USDT seems more elegant and safe.
But safety isn't the only consideration; the deeper motive lies in concealment.
For the底层民众 (lower classes), their "cryptocurrency" is cash.
Why do Chinese supermarkets prefer cash? Because cash payments allow them to avoid issuing receipts, directly saving the 21% tax. For a salaried worker earning only a few hundred dollars a month, this crumpled peso is their "tax haven." They don't need to understand blockchain; they just need to know that paying with cash is 15% cheaper.
For the middle class, freelancers, and digital nomads, stablecoins like USDT play the same role. Argentina's tax authority (AFIP) cannot track on-chain transfers. A local Web3 practitioner described cryptocurrency as a "digital Swiss bank." A programmer in Argentina taking on overseas projects, if receiving payment through a bank, not only gets forced to settle at the official exchange rate but also has to pay high personal income tax. But if they receive payment in USDT, the money becomes completely invisible.
This logic of "peer-to-peer tax avoidance" permeates every stratum of Argentine society. Whether it's the cash transactions of a street vendor or the USDT transfers of the elite, it's essentially a distrust of state credit and a protection of private property. In a country with high taxes, low welfare, and constantly depreciating currency, every "grey transaction" is a反抗 (resistance) against institutional plunder.
Pablo recommended a WebApp called Peanut, which doesn't require downloading and can be used directly, offers exchange rates close to the black market, and even supports Chinese ID verification. This app is currently experiencing rapid growth in Argentina. Its popularity precisely proves the market's渴望 (thirst) for an "escape channel."
Although tools have become accessible, this Noah's Ark still only carries two types of people: the彻底的 Underground (those彻底 underground—the poor using cash and the rich using Crypto), and digital nomads with overseas income.
When the poor avoid taxes with cash, and the rich transfer assets with Crypto, who becomes the only loser in this crisis?
The answer is heartbreaking: it's the law-abiding "honest people."
Compliance Traps the Honest
We typically believe that having a taxed, compliant, decent job is a ticket to the middle class. But in a country with a dual exchange rate system and失控 (out-of-control) inflation, this "compliance ticket" becomes a heavy shackle.
Their困境 (predicament) stems from an unsolvable arithmetic problem: income is pegged to the official exchange rate, expenditure is pegged to the black market rate.
Suppose you are an executive at a multinational company with a monthly salary of 1 million pesos. On official statements, calculated at the 1:1000 official exchange rate, your monthly salary is equivalent to $1000. But in real life, when you go to the supermarket to buy milk or to the gas station to refuel, all prices are锚定 (pegged) to the black market exchange rate (1:1400 or even higher).
This income versus expenditure means your actual purchasing power is halved the moment your salary hits your account.
Worse still, you don't have the资格 (qualification) to "hide." You cannot evade taxes by offering cash discounts like Chinese supermarket owners, nor can you conceal assets by receiving payments in USDT like digital nomads. Every cent of your income is within the sights of the tax authority (AFIP), completely transparent, with nowhere to hide.
Consequently, a cruel sociological phenomenon emerged. From 2017 to 2023, Argentina saw the emergence of大批 (large numbers of) "new poor (Nuevos Pobres)."
They were originally decent middle-class, with higher education, living in good neighborhoods. But squeezed by rising living costs and depreciating incomes, they watched themselves slide below the poverty line.
This is a society of "reverse elimination." Those who thrive in the underground economy—Chinese supermarket owners, Jewish money house operators, freelancers accepting USDT—they have mastered the code to survive in the ruins. Those who try to "work properly" within the official system instead become the ones footing the bill for the system's costs.
Even the most精明 (shrewd) among this group, all their efforts are merely a "defensive" struggle.
Pablo mentioned the "financial wisdom" of the Argentine middle class in the interview. For example, using platforms like Mercado Pago which offer annualized yields as high as 30%~50% for holding demand deposits.
Sounds high? But Pablo did the math: "Factoring in the exchange rate erosion from inflation, such APY only allows the dollar value of their pesos to remain unchanged if the exchange rate is stable. But the exchange rate is often unstable. Overall, such returns cannot keep up with the depreciation speed of the peso."
Additionally, many savvy Argentines,预感 (anticipating) a sharp drop in the peso, will cash out via credit cards regardless of the cost, convert to US dollars, and arbitrage using the time lag of inflation.
But these are all "defense," not "offense." In a country with collapsed monetary credit, all financial management and arbitrage are essentially attempts to "not lose" or "lose less," not true wealth growth.
The collapse of the middle class is often silent.
They won't protest by burning tires in the streets like the lower class, nor will they emigrate directly like the rich. They just silently cancel weekend gatherings, change their children's private schools, and anxiously calculate next month's bills every late night.
They are the country's most obedient taxpayers, and also the most thoroughly harvested group.
The Gamble of National Fortune
On this return trip to Argentina, Pablo saw a microcosm of the country's shift on a wall socket.
Previously, Argentina practiced an almost absurd trade protectionism. All electrical appliances had to comply with "Argentine standards," forcibly removing the top pin of the universal three-pin plug, otherwise sales were banned. This was more than just a plug issue; it was a symbol of mercantilist barriers, using administrative orders to force citizens to pay for inferior and expensive domestic industry.
Now, Milei is tearing down this wall. This "madman" president, a believer in the Austrian school, is wielding a chainsaw in a social experiment that has made the world take notice: slashing 30% of government spending, lifting foreign exchange controls that lasted for years.
This move had an immediate effect. The budget showed a surplus unseen for years, the inflation rate fell from a crazy 200% to around 30%, and the huge official-black market exchange rate gap, once over 100%, was compressed to about 10%.
However, the cost of reform is acute pain.
When subsidies were cut and the exchange rate liberalized, the new poor and the live-from-paycheck-to-paycheck groups mentioned earlier bore the first wave of impact. Yet, to Pablo's surprise, despite the hardship, most people he contacted still supported Milei.
Argentina's history is a cycle of periodic collapse and reconstruction. From 1860~1930, it was one of the wealthiest countries in the world; but thereafter it fell into long-term decline, oscillating between economic growth and crisis.
In 2015, Macri took office, lifted forex controls, and attempted liberalization, ultimately failing, leading to the re-imposition of controls in 2019. Will Milei's reform be the turning point to break this cycle? Or just another brief hope followed by deeper despair?
No one knows the answer. But one thing is certain: that underground world built by Jewish money houses, Chinese supermarkets, and countless "inflation-immune" individuals possesses strong inertia and vitality. It provides shelter when the official order collapses, and chooses to lie low and adapt when the official order rebuilds.
At the end of the article, let's return to Pablo's lunch.
"I initially thought things were so expensive that the waiter must earn a lot, so I only gave a 5% tip. Later, a friend corrected me; you still need to give 10%," Pablo recalled.
In a country with soaring prices and a collapsed currency, people still maintain the habit of tipping, still spin in tango halls, still laugh and talk in cafes. This野蛮的生命力 (raw vitality) is the true底色 (underlying color) of this country.
For a hundred years, the Rose Palace in Buenos Aires has changed owners batch after batch, and pesos have been废弃 (scrapped) one after another. But ordinary people, relying on underground transactions and grey wisdom,硬是 (somehow managed to) find a way out in a dead end.
As long as this country's渴望 (thirst) for "stability" remains less than its yearning for "freedom"; as long as the people's trust in the government remains lower than their trust in the corner Chino, then the underground Argentina will forever exist.
Welcome to Underground Argentina.
