In Argentina, even the US dollar has failed.

Pablo’s story is rather unique. Ten years ago, he was a Huawei employee stationed in Argentina, living in this South American country for two years. A decade later, he returned as a Web3 developer to attend the Devconnect conference.

This decade-spanning perspective has made him a first-hand witness to a brutal economic experiment.

When he left Argentina back then, 1 US dollar could only exchange for a little more than ten pesos; but now, the black market exchange rate has soared to 1:1400. According to straightforward business logic, this should mean that if you have dollars in your pocket, you should enjoy king-like purchasing power in this country.

However, this “dollar superiority” only lasted until his first lunch.

“I deliberately returned to the ordinary neighborhood where I used to live and went to a small restaurant I frequented,” Pablo recalled, “I ordered a bowl of noodles, and after converting to RMB, it actually cost me 100 yuan.”

Note that this wasn’t some tourist-packed, upscale area, but a humble, down-to-earth “fly restaurant.” Ten years ago, a meal here cost only about 50 RMB per person; now, in a country the global media has labeled a “failed state,” prices have caught up with Shanghai’s CBD or Paris in Western Europe.

This is classic “stagflation.” Although the peso has devalued more than 100 times, prices denominated in US dollars have actually increased by over 50%.

When a country’s credibility completely collapses, inflation becomes an indiscriminate flood. Even if you sit in what seems like the sturdy boat of the dollar, the water level will still rise above your ankles. In a magical twist, this country has shifted the cost of currency collapse onto everyone—including those holding hard currency.

Many assume that amid such upheaval, people would scramble to hoard dollars, or embrace cryptocurrency as tech believers have predicted. But we were all wrong.

Here, young people neither save money nor buy houses, because the moment they get paid, the value starts to evaporate. Here, the real masters of finance aren’t the central banks, but a shadow financial network woven by Jewish money changers in the Once district and over 10,000 Chinese supermarkets across Argentina.

Welcome to underground Argentina.

Young People Dare Not Own the Future

To understand Argentina’s underground economy, you must first understand the survival logic of one group: the young people living for today.

If you walk the streets of Buenos Aires at night, you might suffer a serious illusion. The bars are packed, tango halls pulse with music all night long, and young people still generously tip 10% at restaurants. This doesn’t look like a country in crisis or undergoing “shock therapy”—it looks like a time of prosperity.

But this isn’t a sign of prosperity—it's a near-desperate “end-of-days revelry.” In the first half of 2024, the poverty rate in the country soared to 52.9%; even after Milei’s aggressive reforms, 31.6% were still struggling below the poverty line in the first quarter of 2025.

In the grand narrative of the Web3 world, Argentina is often described as a “crypto utopia.” Outsiders imagine that in this currency-failed nation, young people rush to buy USDT or Bitcoin as soon as they’re paid, to hedge against risk.

But Pablo, on his field visits, coldly pierced this elite bubble.

“This is actually a misconception,” Pablo stated bluntly. “Most young people are typical paycheck-to-paycheck types. After rent, utilities, and daily expenses, there’s barely anything left. They simply don’t have the savings to exchange for dollars or stablecoins.”

It’s not that they don’t want to hedge risk—they’re simply not eligible to do so.

What hinders saving isn’t just poverty—it’s the “devaluation of labor.”

From 2017 to 2023, Argentinians’ real wages fell by 37%. Even after Milei took office and nominal wages rose, the purchasing power of private sector wages still dropped 14.7% over the past year.

What does this mean? It means that an Argentinian young person is working harder this year than last, but can afford less bread and milk. In this environment, “saving” becomes an absurd joke. As a result, a near-rational “inflation immunity” has spread among this generation.

If you can never save enough for a house down payment, and the speed of saving will never catch up to currency depreciation, then instantly exchanging your soon-to-be-worthless pesos for immediate pleasure becomes the only economically rational choice.

One survey shows that 42% of Argentinians constantly feel anxious, and 40% feel exhausted. But at the same time, as many as 88% admit to using “emotional spending” to cope with this anxiety.

This collective psychological contradiction is a reflection of the nation’s century-long ups and downs—they fight the uncertainty of the future with tango steps, and numb their inner helplessness with barbecue and beer.

But this is only the surface of underground Argentina. Where did the billions of pesos in cash, crazily spent by young people, ultimately end up?

They didn’t disappear. Under cover of Buenos Aires’s night, this cash flows like underground rivers, eventually pooling in the hands of two very special groups.

One is Argentina’s largest “cash vacuum cleaner”; the other—the “underground central bank” that controls the exchange rate.

Chinese Supermarkets and Jewish Money Changers

If the Central Bank of Argentina suddenly shut down tomorrow, the country’s financial system might be in temporary chaos. But if all 13,000 Chinese supermarkets closed at once, Argentine society could immediately grind to a halt.

In Buenos Aires, the real financial heart doesn’t beat in the grand bank buildings, but is hidden in the cash registers on street corners and the deep courtyards of the Once district.

This is a secret alliance forged by two groups of outsiders: Chinese supermarket owners and Jewish financiers with a century of history.

There’s nothing more capillary-like in Argentina than the “Supermercados Chinos” (Chinese supermarkets), which have permeated the urban fabric. As of 2021, there were over 13,000 Chinese supermarkets in Argentina, accounting for more than 40% of all supermarkets nationwide. They aren’t as huge as Carrefour, but they’re everywhere.

For Argentina’s underground economy, these supermarkets aren’t just places to buy milk and bread—they’re essentially 24/7 “cash absorption points.”

Most Chinese supermarkets try to get customers to pay in cash. Some restaurants remind you that paying in cash gets you a discount; some even post signs: “10%-15% discount for cash payment.”

This is really about tax evasion. Argentina’s value-added tax is as high as 21%. To keep the government from taking a slice, merchants are willing to share profits with consumers, just to keep massive sales volumes outside the official financial system.

“The tax bureau definitely knows, but they haven’t cracked down hard,” Pablo said in an interview.

A 2011 report showed that back then, over ten thousand Chinese supermarkets already had annual sales of $5.98 billion. Today, that number is only higher. But there’s a fatal problem: pesos are “hot potatoes.” In an environment where triple-digit annual inflation is the norm, their value melts away every second.

“Chinese business owners make a lot of pesos, but need to convert them to RMB to send back home, so they’ll look for any way to exchange money,” Pablo said. “For Chinese tourists, the most convenient and best-rate exchange channel is Chinese supermarkets or restaurants, because these businesses urgently need RMB to hedge against their peso holdings.”

But scattered tourists can’t absorb this ocean of cash. Chinese supermarkets need another outlet, and in Buenos Aires, only the Jewish money changers from the Once district can swallow such massive amounts of cash.

“Historically, Jews gathered in a wholesale district called Once. If you’ve seen movies about Argentine Jews, some scenes are set in Once,” Pablo explained. “There are Jewish synagogues there, and it’s the only place in Argentina to have suffered a terrorist attack.”

He’s referring to the AMIA bombing on July 18, 1994. That day, a car loaded with explosives rammed the AMIA Jewish Community Center, killing 85 and injuring over 300—the darkest day in Argentine history. After that, a huge wall was erected outside the synagogue, inscribed in many languages with the word “Peace.”

This disaster fundamentally changed the survival philosophy of the Jewish community. Since then, the whole community became extremely closed and vigilant. These walls kept out not only bombs, but also shaped a highly inward-looking, tightly-knit circle.

With changing times, Jewish businessmen gradually withdrew from physical wholesale, turning to their area of expertise—finance. They run underground money shops known as “Cueva” (cave), leveraging deep networks in politics and economics to build a financial system independent of the official one. By now, some have moved out of Once, and people of other backgrounds—including Chinese—have also entered the underground money exchange business.

Under Argentina’s long-standing forex controls, the gap between the official and black market exchange rates once exceeded 100%. This meant that anyone exchanging money through official channels would instantly lose half their assets. As a result, both companies and individuals rely on the Jewish community’s underground financial network.

Chinese supermarkets generate vast amounts of peso cash daily and urgently need to convert it to hard currency. Jewish money shops have dollar reserves and global fund transfer channels but need large quantities of pesos to sustain their high-interest moneylending and exchange operations. Their needs match perfectly, creating a closed business loop.

Thus, in Argentina, dedicated cash transport vehicles (or inconspicuous private cars) shuttle between Chinese supermarkets and the Once district every night. Chinese cash flows provide a constant lifeblood for the Jewish financial network, while Jewish dollar reserves give Chinese wealth a much-needed escape route.

No complex compliance checks, no bank queues—this cross-community trust-based system has operated efficiently for decades.

In an era when the machinery of the state failed, it was this non-compliant underground system that sustained countless ordinary families and businesses. Compared to the shaky official peso, Chinese supermarkets and Jewish money shops are clearly more trustworthy.

Peer-to-Peer Tax Evasion

If Chinese supermarkets and Jewish money shops are the arteries of Argentina’s underground economy, then cryptocurrency is its more hidden veins.

In recent years, the global Web3 community has spread the myth that Argentina is a cryptocurrency haven. The data seems to support this: in a country of 46 million, crypto ownership is as high as 19.8%—the highest in Latin America.

But if, like Pablo, you dig deeper, you’ll find that the myth is unglamorous. Few people talk about decentralization ideals or care much about blockchain innovation.

All the enthusiasm boils down to one raw verb: escape.

“Outside the crypto bubble, most ordinary Argentinians know little about crypto,” Pablo said. For most Argentinians who use crypto, it’s not a financial freedom revolution—it’s a defensive battle to preserve assets. They don’t care about Web3, only one thing: can USDT keep my money from shrinking?

This explains why stablecoins account for 61.8% of Argentina’s crypto trading volume. For freelancers, digital nomads, and the wealthy with overseas business, USDT is their digital dollar. Instead of hiding cash under a mattress or braving black market exchanges, swapping pesos for USDT with a mouse click is more elegant and safer.

But safety isn’t the only motivation—concealment is even more important.

For the grassroots, “cryptocurrency” means cash.

Why do Chinese supermarkets love cash? Because cash payments mean no invoices and a direct 21% tax saving. For a worker earning only a few hundred dollars a month, those crumpled pesos are their “tax haven.” They don’t need to understand blockchain—just that paying cash saves 15%.

For the middle class, freelancers, and digital nomads, stablecoins like USDT play the same role. Argentina’s tax bureau can’t track on-chain transfers. One local Web3 professional described crypto as a “digital Swiss bank.” A programmer taking overseas projects, if paid through the bank, not only has to convert at the official rate but also pay high income tax. With USDT, the money is completely invisible.

This “peer-to-peer tax evasion” logic runs through every level of Argentine society. Whether it’s a street vendor’s cash transaction or an elite’s USDT transfer, it’s all about distrust in state credit and protecting private property. In a country with high taxes, low welfare, and constant currency devaluation, every “gray transaction” is a rebellion against institutional plunder.

Pablo recommended a WebApp called Peanut, which works without downloads, offers exchange rates close to the black market, and even supports Chinese ID verification. The app is quickly growing in Argentina, proving the market’s hunger for “escape routes.”

Even with tools readily available, this Noah’s Ark still carries only two types of people: the truly underground (poor people using cash and rich people using crypto), and digital nomads with overseas income.

When the poor evade taxes with cash and the rich transfer assets with crypto, who’s the only loser in this crisis?

The heartbreaking answer: the honest, law-abiding people.

Compliance Traps the Honest

We usually think that having a tax-paying, compliant, decent job is a ticket to the middle class. But in a country with a dual currency system and runaway inflation, this “compliance ticket” becomes a heavy shackle.

Their plight comes from an unsolvable math problem: income is pegged to the official exchange rate, but expenses are pegged to the black market rate.

Suppose you’re an executive at a multinational, earning 1 million pesos a month. On official reports, at the 1:1000 official rate, your salary equals $1,000. But in real life, when you shop for milk or fill your gas tank, all prices are pegged to the black market rate (1:1400 or higher).

So, your real purchasing power is cut in half the moment your salary arrives.

Worse, you’re not allowed to “hide.” You can’t give cash discounts to evade taxes like a Chinese supermarket owner, nor receive USDT payments like a digital nomad. Every cent you make is within the tax bureau’s (AFIP) reach—completely transparent, with nowhere to hide.

Thus, a cruel sociological phenomenon has emerged. From 2017 to 2023, Argentina saw the rise of the “new poor” (Nuevos Pobres).

They were originally upstanding middle class, well-educated, living in decent neighborhoods. But as living costs soared and incomes devalued, they watched themselves slip toward the poverty line.

This is a “reverse elimination” society. Those skilled in the underground economy—Chinese supermarket owners, Jewish money shop operators, freelancers accepting USDT—have mastered the survival code amid ruins. Those trying to “work properly” within the official system end up paying the cost of the system.

Even the smartest in this group can only “defensively” struggle.

Pablo mentioned the “wealth management wisdom” of Argentina’s middle class. For example, using platforms like Mercado Pago, which offer 30%-50% annualized returns on deposits.

Sounds high? But Pablo did the math: “Factoring in inflation and currency depreciation, such APY only lets savers maintain dollar value if the exchange rate is stable, but rates are often unstable. Overall, this yield can’t keep up with peso depreciation.”

Beyond that, many savvy Argentinians, sensing a coming peso crash, will cash out credit cards and convert to dollars, arbitraging the time lag of inflation.

But these are only “defensive” moves, not “offensive.” In a country where currency credit has collapsed, 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 don’t protest in the streets like the underclass, nor do they emigrate like the rich. They just quietly cancel weekend dinners, switch their kids out of private school, and anxiously calculate next month’s bills every night.

They are the most obedient taxpayers in the country—and the most thoroughly exploited.

A Gamble on National Destiny

During his return to Argentina, Pablo saw a symbol of national change at an electrical outlet in the corner.

Once, Argentina practiced an almost absurd level of trade protectionism: all appliances had to meet “Argentine standards,” forcibly removing the top of the universal triangular plug—otherwise, sales were banned. This wasn’t just about plugs—it symbolized mercantilist barriers, forcing citizens by decree to buy expensive, low-quality domestic goods.

Today, Milei is tearing down that wall. The Austrian-School “madman” president is wielding a chainsaw in a globally watched social experiment: slashing government spending by 30%, lifting years-long forex controls.

The effect was immediate. The government ran a surplus for the first time in years. Inflation dropped from a frenzied 200% to around 30%. The once 100%-plus gap between official and black market exchange rates is now down to about 10%.

But reform comes at a painful cost.

As subsidies are cut and the exchange rate is liberalized, the “new poor” and paycheck-to-paycheck crowd we mentioned earlier took the first hit. Yet to Pablo’s surprise, despite hard times, most people he met still support Milei.

Argentina’s history is a cycle of collapse and rebuilding. From 1860 to 1930, it was one of the world’s richest nations; then it slid into long-term decline, swinging between economic growth and crisis.

In 2015, Macri lifted forex controls and attempted liberal reforms, only to end in failure and the return of controls in 2019. Will Milei’s reforms break this cycle, or will another brief hope give way to deeper despair?

No one knows the answer. But one thing is certain: the underground world built by Jewish money shops, Chinese supermarkets, and countless “inflation-immune” individuals has immense inertia and vitality. It offers shelter when official order collapses, and adapts or hibernates when official order returns.

Let’s end with Pablo’s lunch.

“At first I thought with such high prices, the waiter must make a lot, so I only tipped 5%. Later, my friend corrected me—you still have to tip 10%,” Pablo recalled.

In a country of soaring prices and currency collapse, people still tip, still spin in tango halls, still laugh and chat in cafes. This raw vitality is the nation’s true essence.

For a hundred years, the Casa Rosada in Buenos Aires has changed hands again and again, pesos have come and gone, but the people—through underground deals and gray-market wisdom—have always found a way out of dead ends.

As long as the desire for “stability” remains less than the yearning for “freedom,” and trust in government remains lower than trust in the Chino on the corner, Argentina’s underground will always exist.

Welcome to underground Argentina.