The prospect of a country ditching their Fiat currency for Bitcoin has Bitcoin bulls salivating.

It is easy to define where this will NOT happen. It will NOT happen where the currency is fairly well managed and trusted. Despite people who will say all currencies are Ponzi schemes, currencies such as USD, EUR, GBP, CHF, SGD are well trusted by the majority of people in those countries.

So it will only happen in a crisis and forced change such as:

– Secession (voluntary or forced). This could be Greece or Scotland. This would be a political top down decision. Despite the fun speculation, I think this is unlikely. Getting politicians to ditch a currency that they control is like asking turkeys to vote for Thanksgiving. However, strange things do happen – and it is an interesting parlor game to speculate on what could happen. In a Grexit, return to Drachma is still the most likely scenario and Scotland will probably stay in the UK, albeit reluctantly. Boring outcomes, but still the most likely.

– Hyperinflation. This could be Argentina.  This is where the people ditch their own currency. It is bottom up emergent behavior. This seems plausible. The Alternative Fintech Capital Tour took the digit express tour to Argentina to explore this thesis.

First, the Argentina fast facts:

• Argentinais #24 in global GDP rankings. Like Poland at #23, this is big enough to run a market experiment.

• Argentina is #55 in GDP per capita. What matters to Bitcoin adoption is the dispersion ie the level of equality/inequality. This is measured by the GINI ratio, which confirms that Argentina is an unequal society with a few rich people, lots of poor people and a relatively small middle class (#49 in world ranking)

• Argentina GDP growth is recovering after a brutal downturn. My history professor always told me that countries have revolutions not during the most dire times (people just hunker down) but when things start to recover but reality does not keep pace with the increased expectations.

• Argentina inflation is the reason Bitcoin is getting traction. “The inflation rate in Argentina was recorded at 15.80 percent in April of 2015. Inflation Rate in Argentina averaged 204.80 percent from 1944 until 2015.”

The GINI coefficient is the key. Bitcoin has to appeal to either rich people or poor people. The proposition for one is irrelevant to the other.

For rich people, Bitcoin is one of many hedges against inflation – hard assets, gold, dividend paying stocks, strong currencies. A 1% allocation of a $1 billion portfolio is $10m, so this works in theory. Xapo (founded as it happens by an Argentinian called Wences Casares and famous for moving Xapo HQ from Silicon Valley to Zurich) is focused on this use case.

For poor people, Bitcoin is an alternative to US$ in the black market. This is the story that is getting traction in both mass media and Bitcoin sites.

I don’t buy it.

Argentina has its own problems and is too busy to save Bitcoin.

These stories are written by people in the West who are Bitcoin enthusiasts and who are depressed by the lack of mass adoption in the West. So, they grasp at the straw that Bitcoin will be adopted somewhere else that they do not really understand.

The Bitcoin for poor people in Argentina story has two sub themes:

– Black market greenback alternative. In practice, US dollars on the black market are easier to use as a medium of exchange. The Bitcoin bulls response is that Central Bank printing means that US dollars won’t hold their value; this is perfectly true – and utterly irrelevant to the people who just want a medium of exchange to buy food and other stuff to live their daily lives.

– Remittances. Yes, the cost of remittances is way too high and yes, it is a massive market; but when you try solving this with Bitcoin, you soon bump up against the on ramp and off ramp problem. Bitcoin enthusiasts may retort that the on ramp and off ramp problems only occur because governments want to protect their ability to print money. That may be true, but entrepreneurs create services for the world that actually exists today, not the world that they think should exist. This story is confusing Blockchain based technology with Bitcoin the currency.

So playing the FT Long Short game on Argentina will save Bitcoin – Short.