🎙 Buenos Aires City Innovation Chief Talks Crypto Tax Payments and How Web3 Will Revolutionize Democracy

This week we speak to Diego Fernandez, the secretary of innovation and digital transformation for the city of Buenos Aires. Recently, news broke that Buenos Aires will be taking tax payments via crypto, an initiative that Diego helped shape. We talk about what this means for residents of the city and how it works in practice. Diego also addressed critics’ response to the measure, who questioned why Argentines would spend crypto instead of holding it as a store of value. Diego dives into the city’s broader plans with crypto, including how it wants to leverage the tools and data at its disposal to build a blockchain-based identity system.

Crypto and government have been somewhat at odds with each other. We discuss the tension of how governments, which are centralized entities by definition, can use decentralized technology. Diego outlines the long-term vision of how these two worlds can interact. The interview was recorded before Argentina’s central bank effectively banned banks from offering crypto in response to pressure from the IMF. While we did not discuss this issue, we did get into how a pro-crypto city can deal with a less friendly environment for the industry on a national level.

Podcast audio and video was edited by Daniel Flynn and Gary Leuci. Transcript was edited by Samuel Haig.

🎙Listen to the interview in this week’s podcast episode here:

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👀 Only paid subscribers have access to the full interview transcript below.

Cami Russo: All right, here we are with Diego Fernandez, the secretary of innovation and digital transformation of the city of Buenos Aires. Diego, thank you so much for joining me on The Defiant podcast, it's so great to have you here!

Diego Fernandez: Cami, thank you so much for inviting me. It’s such an honor to be here in such a wonderful place in the crypto community.

CR: Great. So first, let's get to the news. Earlier this week, the city of Buenos Aires announced that it would allow taxpayers to pay taxes using crypto. You were behind this initiative, so I'd love to get the details — what does this mean for residents of the city?

Buenos Aires rolls out support for crypto tax payments

DF: Well, it was a great step for us. It took a lot of work and definitions regarding legal perspective and how to implement this, and a lot of work with the incumbents — with the players, exchanges, and wallets in the crypto community. Argentina has a big crypto adoption rate. We are, I think, the [ranked tenth] in the world [for crypto adoption]. We have these very particular situations. We have huge inflation, and we have capital controls — it's very hard to get money in and out of the country, and that favors crypto adoption. So we want to give people and crypto users the option of having a new use case. If they want to use the cryptocurrency in order to pay taxes, they should be able to do that.

So we started speaking with every crypto player in Argentina, and they have a bunch of players. We work mainly with five of them, which are Onebit, Bitso, Belo — which is a wallet, a credit card — SatoshiTango, [and] Ripio, and they're really interested in moving forward. The agreement that we're building upon is they are dealing with a cryptocurrency exchange to Argentine peso, and the Argentine pesos go in the city's bank account. From [the] city’s perspective, it is pretty transparent, we receive pesos as with any other option, But for the user, it is transparent as well because they are able to sell, for example, their DAIs, their BTC, their ETH, their USDT, USDC, whatever [at the] exchange rate that the exchanges give them, and they're able to transfer and approve directly to pay their taxes.

CR: So is this going to be done via the tax authority of Argentina, who will receive those crypto payments and then use these exchanges to convert them to pesos? What's the flow [or] the mechanism?

DF: The mechanism is you have the user, you have the platform — whichever crypto exchange or wallet — and you have here the local tax authority. This is not for national taxes, but for city taxes. So we have a local tax authority, the user here sells [their] cryptocurrency [on] the platform… and we receive pesos.

CR: Got it. How is it different from what people were able to do before? If you have crypto and you need to pay taxes, it’s very common that you sell some crypto to pay your taxes to the tax authority. How did things change?

DF: You get a better use case, it reduces steps. As you say, you were already able to do it because you use your exchange as a fiat gateway to your bank, and the bank did the payment. Now, you reduce steps and you can do it directly from your crypto platforms.

CR: So the payment goes directly from the crypto exchange to the local tax authority?

DF: Actually, it uses a bank under the hood. But, from a user perspective, it's completely transparent.

CR: Okay. Before we get into more details on this, I wanted to take a step back and learn more about you. How long have you been working in the city government, and how long has the city government been thinking about crypto and considering different use cases?

DF: I've been working in the city government for the past 12 years, but I'm 50 years old so I've been working for a lot of time. I worked in the private sector for a couple of decades, and then I kept a company that I had while I worked in the government. I sold that company in 2018, and I kept on working in the government, and I worked there since 2010. I had six years as chief of staff in the ministry of education, [and] for six years I was the secretary of social integration — I was responsible for a project that I'm terribly proud about, which is the slum upgrading process.

For the last ten months, I've been the secretary of innovation. The city of Buenos Aires has been involved and Horacio Larreta [the Buenos Aires Chief of Government] has been interested in crypto and crypto-related stuff for the last… year and a half [to] two years. I'm really a crypto fan, and… I really believe in crypto, in the crypto space, and crypto’s a world-changing and society-changing technology. I have been involved in conversations with Mayor Larreta several times speaking about crypto and the possible impact that crypto has as a new financial tool, and blockchain as well because we do believe that blockchain will have a substantial role in how the new form that society will… streamline digital interactions in a completely different way, as we are seeing today. I think in the next five years, the change will be dramatic… so we have been thinking about how to move forward for the last two years. When they took office. It was kind of my main responsibility, and that is pretty easy for me because I have the full support of man and the interest of Mayor Larreta as well.

CR: And was it something that the mayor commissioned you to do? Was the interest already there from his part, or was this something that maybe you convinced the government that was needed? How did that evolve?

DF: I wouldn't see that I convinced anyone. I would say that the major was curious about all this movement around this new technology and the things that were going on around the world. Me being a strong believer, and I consider myself a part of this community, of course, I took the responsibility from the role that I have in this circumstance in my life. I mean, I always like to think that we public officers have the circumstantial responsibility of being in office, and that is a role that you need to have the responsibility to play. So Mayor Larreta has this curiosity about this new technology, and I had the circumstantial position of influencing these decisions. I took the responsibility because I really believe in cryptocurrencies and in blockchain technology.

CR: How does the national Argentine government position relate or compare with the city of Buenos Aires’s position on crypto. Is the national government as interested in exploring crypto, or is there a difference in visions?

Supporting crypto adoption in Buenos Aires despite opposition from the national government of Argentina

DF: For everyone who is not familiarized with Argentina, the national government and our [municipal] government are from two different political parties, and we're not in a moment in which the relation between those two opposing parties is this very fluid… The central bank in Argentina, which of course is from the national government, I will say that they are really opposed to cryptocurrencies, and they have been very strongly against [crypto. They are] auditing and requesting banks not to operate with cryptocurrencies and so on.

One or two days ago, after we gave this advice, the national government commissioned the… private company which is responsible for printing pesos. So they delegated [the company] with the responsibility of investigating cryptocurrencies and blockchain technologies which was the first time… that they did something. I'm honestly really happy to see that. I don't know what the end goal would be because nobody spoke publicly, but I think that things are starting to move. To be honest, I think that if the national government moves forward and sort of abandons this opposing strategy that the central bank has pursued, I think that would be great news. I don't think that this should be something that goes with a political party, but this should be a national public policy, so I'm really happy to see whichever positive signs come around.

CR: For sure. How does it work to have a very pro-crypto government in this city that isn't [politically affiliated] with the national government? In what ways can you try to bridge that gap to make it easier to create a friendlier environment for the crypto ecosystem in Buenos Aires? What other policies can the city do, considering that the national government and the overall laws in Argentina maybe aren't so favorable?

DF: Fortunately, the cryptocurrency and the blockchain space in Argentina is booming. It's amazing. In my humble opinion, it’s probably one of the strongest spaces in the world. Every time that somebody asks me what the government can do to strengthen the crypto space and the crypto community, my first reflection is that we need not fix what isn't broken. The first thing that comes to mind [is that] if we do nothing and things are booming, we're okay.

If we can do small things, they need to be first discussed with the community. Because if I want to help someone, the first thing that I need to do is ask them, say ‘hey, we're thinking about doing this, what do you think about it? Do you think this will really help you?’ There is the first thing to do. So when we speak about regulations or whatever other things to improve the community, the first thing we say ‘hey, think once, then think again, and then rethink’, because if things are booming, don't mess with them — don't mess with success. Second, whichever thing that you're gonna do, you need to discuss it and agree with the community that it is a good measure. We're taking those small baby steps, [saying] ‘hey, we discussed with several members of the crypto community…

[Another policy] is the digital ID initiative, which we're really proud about. We have been working on that for the last six months I would say, and that was… also something that we discussed and we agreed was a good way moving forward with the community.

Argentinians adopt stablecoins amid crippling inflation and strict capital controls

CR: Awesome. We'll get into detail on the digitalized identity solution later. Going back briefly to the paying taxes with crypto use-case, I was super excited to see this and I tweeted out ‘wow, Argentina is amazing with crypto adoption’ and so on, and I got a couple of replies saying ‘why would any Argentine want to pay their taxes with crypto?’ I [could] kind of see what they're saying — in Argentina, people don't want pesos, and if they have crypto in their hands, they don't want to spend it. What do you think about that argument?

DF: That comment… is completely anti-crypto… in my humble opinion. It’s completely against the crypto ideals. I mean, crypto is liberty. It is me having the option to do whatever I want. So what I should never do is think that the way that I think is the way that everybody thinks. That goes against the crypto philosophy, in my humble opinion.

I will give you just one example in which a given individual may choose to pay for their taxes with crypto. For example, we have this crazy inflation [of] 6% a month… So you receive your salary the first day of the month and you don't want to stay in pesos because you think that the exchange rate [of] pesos… will plummet… So on day one of the month, you change your whole salary from pesos into DAI, and then you start… paying your local purchases in pesos [by] selling your DAI. Your main position is not in pesos, it is in DAI. So when you need to pay, for example, your taxes, you do the same thing that you do every month when you pay, for example, for your meals with your Belo credit card — you're sort of selling your DAI position against your local peso expenditures. Today, you can do it with a credit card, and now you have one more use case, which is paying taxes. [It] is a perfect example of how an Argentinian may use his or her cryptocurrency holdings against peso expenditure. I would like to focus on the liberty perspective, I mean, people should do whatever they wish and nobody should say ‘hey, this is something that nobody will do, it should be forbidden.’

CR: I love hearing a government official say that, and it’s not very common. I agree, and I especially think people should be able to have the freedom to choose how they want to spend their money whether it's in crypto, or fiat, or however. And you're right, if people are already making all payments in stablecoins, it would be a hassle to go back into pesos just to pay taxes if they already have their entire balance in DAI, or in another stablecoin.

DF: This is really common in Argentina. Lemon Cash and Belo do the same thing, which people have their balances in DAI, and each time they go and pay just for a meal with a credit card, in that instant, the DAI gets converted into pesos in order to pay for that meal. Every lemon user, or Belo user… can do that same type of mechanism. It's really common here in Argentina.

CR: I was surprised to not see Lemon on the list of companies that you're working with.

DF: I think that they have this really great product… [but] let me keep that under a confidential agreement for the moment.

CR: Okay, it’s TDB, I guess.

DF: TBD.

CR: Okay, I'd love to dive deeper into what you were saying about how Argentines are using crypto in their everyday lives. Starting with this really high degree of adoption, if you can get into why this is happening in Argentina specifically?

DF: I think that the national government is doing the greatest promotion for crypto that any government in the world can do, which is let's have a currency that destroys itself every month with this crazy as hell inflation we have. Last month, 6.3% monthly inflation — crazy inflation rates. Second, let's… control money flows — you cannot buy dollars, you cannot send money offshore. If you bring dollars from any other country, you need to sell those dollars at half their value — so it's virtually at a 50% tax rate on your dollars, and you are forced to convert those dollars into pesos, it's crazy. Third, let's have this subsidized energy. I mean, energy here is extremely cheap because it's subsidized, so it's kind of the perfect crypto promotion.

You don't have a local currency, you are not able to use your money as you wish, and your energy is subsidized. Honestly, it's really hard to find a better way of promoting crypto than doing those three things.

CR: So true. So that leads to Argentines who want to protect against this, what is it 50% annual inflation?

DF: If you analyze the inflation that we had last month, it’s closer to 100%. [It] is now 6.3% monthly, so we say 75% to 78% annually. It’s completely insane.

CR: Oh my god, that's insane! That's crazy. No okay I mean for people listening. It means that if you put ‘X’ amount in the bank in January, by the end of the year, that amount will be worth almost 80% less. So in this context, Argentines are obviously dumping their pesos and going to any store of value because the government prohibits buying actual dollars, they go to things like DAI, other stablecoins, Bitcoin, ETH, and so on.

DF: Argentines are not able to move their money around as you can do in Chile, or the United States, or wherever you live where you can send dollars, Euros, or whatever currency you choose to any other account in the world — we cannot do that, we live in this pretty crazy economy.

Just to give you an example, this one thousand pesos is the highest bill that we have in Argentina. This bill, which is the highest… denominated bill that we have, is $5 dollars.

CR: I remember when I was there, I think the one hundred peso bill was the… highest denomination bill when I was there in 2013-2014, and now one thousand is the highest denomination, and it's still lagging. Like you were saying, it's only five bucks.

DF: This bill now is $0.50. It’s completely crazy.

CR: Oh my god, it's crazy. It's absolutely crazy. So I'm surprised that crypto is not more heavily regulated… given the fact that the national government is very strict about saying what people can and can't do with their money, and they can't buy dollars but they are selling pesos and buying crypto. Why do you think this is allowed to happen?

DF: I honestly don't know. There are two or three initiatives to regulate crypto. To be completely honest, I don't think that's the way to go. But today, the political forces in the congress are pretty equal, so I don't think that the national government will be able to force any type of regulation without requiring an agreement with other political parties. So I think that that type of checks and balances are kind of providing us with peace of mind that at least things will be negotiated.

CR: Okay, good. I'm glad that those institutions are still respected and still work, and that you can have that kind of safeguard.

DF: Believe me, I'm glad as well, and we are glad as well. The thing there is how the balance of the political forces are within the congress, and today, they are pretty balanced.

Using crypto in Argentina

CR: Good. It’s clear why Argentines are going to crypto, and now going to how they are using crypto. So you were saying that there are wallets that allow people to use crypto like a debit card. Can you explain the kind of everyday use?

DF: Lemon and Belo are those examples. You have an unnominated credit card — visa in the case of Lemon, and Mastercard in the case of Belo — and you can use that credit card to pay expenditures in local currencies, and the expenditures are directly debited from whichever cryptocurrency balance that you hold in your Lemon or Belo account.

CR: It's a credit card? Or a debit card? Does it actually give you credit?

DF: No, it doesn't. I'm not an expert, I don't want to speak on behalf of either Lemon, Belo, or whichever provider, but I think they work as a credit card, but actually, you need to have an actual balance in order to use them. And I think that they have a BTC cash-back. I don’t know if it’s both of them, but [some] have a BTC cash-back.

CR: Okay, so these fintech apps can connect to people's banks, and people can buy crypto with their pesos and then have that crypto balance in the app? Is that how it works?

DF: Again, I'm not an expert in either of those products, but I think that you can send crypto from whichever wallet or exchange you have to these platforms. I think that you can send… local fiat currency to your bank account and buy crypto. Then you can stay either in pesos or in crypto and use your credit card with these two wallets to [pay] with debits against your pesos or cryptocurrency.

CR: Okay, and then people are just like buying everyday goods with crypto?

DF: Yeah, they are, and that's a great use case, and… that is the… rational… use case. And hey, you know what, let's give these platforms a new use case — now you can pay taxes, you can pay your groceries. You can pay your lunches and dinners, and you can pay your taxes.

CR: What percentage of the population do you think is using crypto on a daily basis?

DF: I don't think that's information that anybody has. I got into my hands a really nice study that was done something like three or four weeks ago, a national study that said that one-in-four people know how to use cryptocurrencies — either had or knew how to use. And the most amazing figure, one-in-two would use cryptocurrency, and that is amazing. I mean, it's a really strong number.

But in my opinion, I think that that the cryptocurrency space is growing [at an] exponential rate. If you saw how the cryptocurrency space was in 2018, and just four years afterwards, the evolution is really staggering, and is something that blows your mind. I think the tendency is pretty clear, and it's growing every day.

CR: Yeah, totally. I do know that Lemon — I’ve talked to those guys — I can't remember the exact number, but they told me their uses are in the millions. The city of Buenos Aires has how many… like three million people?

DF: The city of Buenos Aires is a strange city because… our population is three million, but we [also] have three million people that get in and out every day because they live in the suburbs and they come to work every day — myself, for example. So we say that we are kind of six or seven million people if you [see it] from a metropolitan perspective. And I've been with the Lemon CEO, a great guy, and his platform is growing, and growing, and growing [at] an amazing, amazing curve. They're really happy, [and] they're really successful.

CR: I was so… surprised to see how quickly they grew, and knowing that they have millions of users. It must be a decent percentage of the city of Buenos Aires’s people who are actually using crypto every day. I think it's pretty remarkable to see the level of adoption that's happening in Argentina.

DF: Yeah, and I think that the companies and products such as Lemon and Belo give users a perfect way of having this totally seamless and transparent gateway between fiat and crypto… Just with this credit/debit card, you can go [and] buy your groceries, and everything works transparently, and that's great.

CR: All of these platforms are custodial, centralized entities. Have you seen whether DeFi is becoming popular in Argentina at all? Like non-custodial wallets, decentralized applications, lending, and borrowing — that sort of thing?

DF: The level of users relying on DeFi is smaller than people relying on custodial solutions, such as the ones that we just mentioned, or Binance, which is very popular here. I think… the really knowledgeable users and sort of experts are completely aware of the difference between custodial and non-custodial, and DeFi and centralized platforms. But a lot of people use DeFi through Binance because Binance has this connection with peer-to-peer users and you can connect a lot of people using these kinds of platforms, or they maybe use DeFi savings but through centralized platforms.

I think that people who really understand the difference between one and another are small at this very moment, and those numbers are growing.

Buenos Aires’s coming blockchain identity solution

CR: Now, going back to this other initiative you mentioned earlier, the digital identity platform. Can you talk more about that?

DF: I think that web3 technology applied to different solutions that do not involve financial solutions are perhaps four [to] six years lagging the development that we're having in financial solutions. I think that the advantages that we may have as a society [in] implementing web3 in non-financial solutions is huge, and perhaps the greatest advantage will be in digital identity.

Why? …We have a great system of trust in the analog world. Our physical credentials, passports, driver licenses — these national IDs — are very well-established trust solutions. When the digital world came with the internet in the late 90s, we started first with a username and password — and we have thousands of usernames and passwords. Then we started with these sorts of digital identity providers — Google, Facebook, LinkedIn, Twitter, or whatever — and maybe even national governments, we here in the local tax authority have this sort of fiscal key in which you can log into different places. But the thing is if you imagine all of these identity providers — Google, Facebook… the local national tax authority, or whatever — and we users are circling those entities, requesting those entities to give us access to their systems. I think that web3 technologies are changing [the] paradigm, and putting users in the center and having those entities request from us to access our information which is in our digital identity. There is a huge change of paradigm, and that will allow us to first, be in control of information, and second, selectively disclose the information to the party that we wish to disclose and not everything.

Just to give an example, here in Argentina, you need to access whichever building. They say ‘hey, can you give me your national ID’, and we give the people sort of in the gate of the building our national ID — [they] see its number, it’s our name, the address in which we live, the date we were born. And that is crazy. Why are we disclosing so much information to everyone?

Third, today, we have several different credentials from several different institutions in our kind of physical wallet, and now we will [have] a digital identity solution [with] every verified digital credential within the same confidential storage that only we control. Every private institution may be a credential with our authorization to our identity, and that will be in our confidential storage without any other party, nor the government, or anyone knowing or being able to access that information. We think that would streamline the way we do business [and] the way we interact with people because you will allow interactions that are digital from end-to-end. And [that] is an amazing opportunity that we have as a society.

CR: That's really exciting. As a government doing this, how can you leverage the tools that you have because I imagine governments do have this record of people? Maybe, as a government, you can download that information into a distributed ledger, and maybe have that be each person's identity, but the fact that it was already verified that the information is true, maybe that provides an advantage — the fact that this project is being done by a city government? How are you thinking of implementing this and using your resources to do this in the best way?

DF: It's a very good question. As we say here in Argentina, let's put the elephant on the table. I mean, why is a government doing this? You are a centralized institution, why are you using a distributed ledger, and what is your intention? Why don’t you just keep with your centralized system, and that's it?

What we are doing first is we are promoting the creation of a digital identity protocol which we will be a user [of] that protocol, and we will not control that protocol. That is kind of a very philosophical perspective of how we are willing to move this forward. When we started creating this protocol, we requested the help of… several different experts and people from the community. We presented a white paper, which everyone can download from GitHub… we are developing the protocol, [but] everyone is contributing and sharing their views. So the first thing is, we're not the ones owning the protocols, but we're promoting its creation.

Second, going to your question — don’t you have an advantage being a centralized institution? I think that we are able to provide the first attestation and ensure that we are sybil resistant… There's an advantage in that, certainly, and what we are thinking and we're discussing with several members from the space, is we will have a distributed protocol on a distributed ledger, and several different centralized identities will use that protocol in order to give different attestations to individuals.

So a university is a centralized institution, and eventually would mint the credential of your university degree. A football club, I'm a fan from River Plate, which is the best football team in Argentina [and] a centralized institution, eventually [it] could use the distributed lecture on the identity protocol that we are using in order to mint the verified credential of you being a member of a club… From my perspective, in the future, we will have this [system] where centralized institutions are using distributed ledgers and decentralized ledgers — those two things will coexist for a lot of time because not everything will be decentralized…

I think the role of governments will change in a very dramatic way in the next ten years. Unless everything breaks up — and that would be dramatic from… the perspective… of society… I think that we will have this coexistence of centralized institutions and decentralized distribution and distributed ledgers… We need to understand that coexistence will occur.

Argentina’s digital identity solution expected to be deployed zero-knowledge rollups

CR: Yeah, I agree. Is this planned to be a protocol that's built on top of a Layer 1 blockchain, or will this be its own individual blockchain? If it is on top of a Layer 1, which one are you considering?

DF: We think that this protocol should be blockchain agnostic first, and it should be able to run on several different blockchains. As a matter of fact, we're using the Sidetree protocol, then we will use that protocol on different blockchains. Second, our view is that we should use an open, permissionless blockchain, so we're looking forward to public permissionless blockchains. Given the discussions with several governments that are looking forward to private, permissioned blockchains, we're looking forward to moving onto public, permissionless blockchains. Third, at this very moment, we are thinking about moving forward to zero-knowledge-proof, Layer 2 blockchains.

CR: Interesting.

DF: Yeah, I don't want to give the definition right away because we're speaking with several different blockchains, but probably RSK, Algorand, and from the Ethereum side, we're having conversations with Polygon sidechain with optimistic rollup and zero-knowledge rollup… Optimism from the optimistic rollup side, we speak with Starkware as well in the zero-knowledge rollup from the Ethereum side.

CR: So interesting. Okay, so you're still considering exactly which zero-knowledge Layer 2 you want to use?

DF: We’re in the middle of the process.

CR: Very cool. Okay, and this decision is to [use] Layer 2 is because obviously, it’s more scalable, and zero-knowledge because of the privacy capabilities that has?

DF: Yeah, of course. Because of using zero-knowledge, you're able to manage costs in a very different way — something which is really important. The protocol would not put users' information on the blockchain, that is really important. Users' information… will be stored on the confidential storage that each user has within their own devices. What we will have on the distributed ledgers is the public key, but the user and the institutions sign those documents.

CR: That's super important because of the privacy concern of having all user information in a public blockchain. I don't think anyone would want that.

DR: Definitely, and to be honest, the position that everybody working [on the] development of the [digital identity] project is that… not even… encrypted information should be within the blockchain. But anyway, we don’t have an easy [explanation for everything] because things that are not yet defined. For example, how do you deal with confidential storage, and how do you deal with identity recovery?

Just to give an example, confidential storage — if you wish the safest solution, the only confidential storage that you have is in your own device. But if you lose your device, you need to go to every issuer to have your credential reissued in the same way as if you lose your physical wallet [and] you go to each institution [to] request a reissuing of your credentials. If you want better usability, you can say ‘you know what, I'm going to have an encrypted backup of my confidential storage.’ But then again, although it's encrypted, at the end of the day it is hackable. If you want more usability, you sacrifice security, and the other way around. And identity recovery is another big issue. How am I able to re-attest my identity, reissue my identity in case I lose it.

CR: Yeah, super hard questions. But it's great to see that you're building in the open, and that you have many members of the crypto community in Argentina and globally participating in this protocol.

DF: Next week, we're doing the first open workshop. It’s in my Twitter feed, but we’re doing the first open workshop in order to deal with identity recovery because we think it's a great issue, and we will do several other workshops as well.

CR: Very cool. Another topic I wanted to talk about is CityCoins. It’s something that the city of Miami was looking at, and I think Israel was testing something similar. It's something that different cities globally have been piloting or exploring. You're obviously looking at all kinds of crypto use cases from a government perspective very closely — I'm super interested to hear your thoughts on these experiments.

Municipal tokens need use cases

DF: We are looking at those experiments, in particular the New York Coin and the MiamiCoin, quite closely. I think that they are a very nice initiative to try and pilot. I think that the challenge there is to generate use-cases at the end of the day. If you don't have a use case, if you don't have anyone to use your coins, [it’s value] is not that clear. I mean, if we issue a new coin, I [have to have some]where to use that coin — I think that's the great challenge. But I think that it’s great that both Miami and New York are testing this new thing.

And we have been in touch with the CityCoins company, Mr. Stanley is a great and very inspiring person. But we’re watching what is happening in Europe, and the city of New York, and Miami city very closely. And eventually, anything can happen.

CR: Okay, so you'd be open to having a Buenos Aires coin?

DR: We're not thinking about having a Buenos Aires coin right now. But what I think is that as we're kind of in the dome of everything… this relationship between governments, cities, countries, and crypto is just starting. I think that we are moving forward with this digital identity project, and Miami and New York have decided to move forward with the CityCoin initiative, and Wyoming regulating [crypto firms]. I think that what every city, every province, every country does is interesting. But we need to see, we need to be very aware of what everybody… is doing because we will learn from every other experience, and that is great.

Web3 will change political organization

CR: So thinking about the future. How do you see politics and governments using crypto? For example, do you think we'll ever see a political party that's a DAO, and maybe that DAO will make it to the government and make it to the presidency, and then we'll see a country DAO with full-on blockchain voting, digital currency, a CBDC — like everything implemented. Or do you think that's too much sci-fi, and it'll be a little more restrained?

DF: To be honest, I don't see a DAO taking government. But I see web3 changing the way we rule our society. To be honest, I don't know how and I don't know when, but web3 provides today a much more effective way of ruling the things we do. And DAOs are an example of the system that we use in modern democracies today. Actually, it’s not that modern… it’s I don't know, 300 years old to around 50 years old, and technology today provides a different alternative. I don't know how that alternative will finally take shape as a new way of governing results…

In most countries, we vote every two to four years. So we were able to express the things we want and the things we like every two years. But when we analyze the way we behave ourselves every day, we express ourselves and we both say that hundreds of times a day on several different topics, and I think in the upcoming years — I don't know if that’s three years, five years, ten years, twenty years — but the way that modern democracies are shaped will definitely change. I don't know if the change will be total and we will find ourselves living in a DAO, or certain aspects of the institutions will start to shape themselves to the new technology, but what I am positive is that the system in which society is able to express itself every two years needs to change, needs to take a different shape.

CR: So do you think we'll see a system that allows for more frequent voting or decision making?... I think it's been called ‘liquid democracy’, this idea of how people can very easily participate and give their opinions about different things happening in public life?

DF: Yeah, I think that definitely we will be able in the future to express our opinion much more frequently, and our decision will be something that will shape the way that society behaves. The decisions that we make, that we take as a society… maybe we will start doing that in small communities, and then that will grow up into cities, and then into countries. Countries as we know them today [may] change. I think that this technology will change life in perhaps the most substantial way that we have seen in the last couple of centuries.

CR: That's so exciting to imagine. Then just like going back to Buenos Aires itself and maybe thinking not so far in the future but say a decade from now, what's the vision for the city government with respect to technology and crypto? If everything goes right and you're able to implement all the things that you want to implement, how does that look like for the city?

DF: Well, our mission is that technology should be an enabler, an enabler to streamline the way that we interact with other parts of the society today. The state acts as a sort of centralized, omnipresent certificator of everything, and I think that there has been a lot of discussion regarding the bureaucracy, the role of the state, and so on in the last decade or maybe a couple of decades. And at the end of the day, I think that discussion will become obsolete because we will hopefully find [in] technology a way of decentralizing a lot of these certifications to make them automatic, instant, extremely cheap, and not relying on a central party. Of course, there will be some certifications and some social acts that will need to be certified by the state. But there are a lot of interactions that today need the state to… happen. The role of the state in those types of transactions will disappear in the future.

CR: So you mean the role of the state as a centralized entity that verifies different aspects of society, you mean that will be replaced?

DF: Yeah… just for example… in my country, [if you] have a son who is under 18 years old, you need to give him an authorization to travel, and that involves either the state, or a notary. That type of thing, in a digital ID world, will be done directly by the parents without interaction with whichever centralized institution. And I think that type of thing, where today the state provides a certification to the thing that you want to do in order for everyone to be sure that you are you, and that you are willing to do what you're willing to do, I think the state will no longer be needed there. And I think that free protocols will provide that service to society in an instant way, in an automatic way, in a very cheap way, and I think that we will start seeing a lot of things changing. To be honest, I think that whichever city, country, and society adapts more rapidly to that type of reality will have a huge advantage because, at the end of the day, they will be much more competitive in the long run.

CR: So that's the bet that Buenos Aires is doing?

DF: Yeah, you bet we're taking that bet.

CR: Awesome! Well, it's great to see that one of my favorite cities is at the forefront of this technology. As you know, I'm a big fan of Argentina and Buenos Aires. I was living there for a long time, so it's so great to see the huge steps that you're making.

DF: Thank you so much. I'm happy to hear that you express publicly that you love Buenos Aires. To anybody who hasn't been here, I strongly recommend that you take a trip and get to know our beautiful city because it's an amazing place in the world.

CR: Yeah, I haven't been in… I think it's been five years since I last went and I think I'm due for a visit, especially because I know all the crypto adoption has happened pretty recently, like in the last two or three years, so I’d love to see it first hand.

DF: Well, take my promise, we will give you a very big excuse to come to Buenos Aires this year. I cannot reveal that now, but we will have this huge event in the coming month in Buenos Aires, and there you have your perfect excuse to come back to Buenos Aires.

CR: Amazing. Well, guys, you heard a little bit of alpha here first, there's something big happening. So Yeah, I'm sure we'll all have a great excuse to go there. Okay, and then wrapping up. Diego, I would love to hear how you think you are defiant, or what makes you defiant?

DF: As I said before, I think I am defiant because I think that we have been extremely fortunate to be the witnesses of perhaps the most radical change in society in the last couple of centuries with internet and then with web3. We will see society taking a new shape, a more egalitarian shape, a more universal shape. Society will take a form in which everyone can express itself and everywhere we have access to kind of the same opportunities. And I think that decentralized finance and decentralized everything will be the tool in order to achieve that goal.

CR: Awesome! And you're helping make that happen!

DF: We're putting our small grain of sand in that mountain.

CR: Awesome! Okay, well it was a huge pleasure. Thanks again for taking the time, and I really really enjoyed this.

DF: I enjoyed this as well, Camila. And once again, I said it in private but I’d like to say it in public, I’d like to express my total, my complete congratulations on your great achievement with The Infinite Machine book and movie.

CR: Awesome, thank you so much! I’m super excited about that, and I appreciate it. Okay, hope to see you in person in Buenos Aires soon!