Blockchain-Based Payment Technologies and Bilateral Trade Flows: Gravity Model Evidence from Argentina

This study investigates whether cryptocurrency adoption has affected Argentina’s bilateral trade flows within a gravity-model framework. While blockchain-based technologies are often expected to reduce transaction costs and facilitate international trade, quantitative evidence on their actual impact remains limited. Using panel data on Argentina’s trade with its main partners, the analysis combines standard gravity variables with country-level measures of cryptocurrency activity and estimates fixed effects, random effects, and high-dimensional fixed effects models.The results confirm the continued relevance of traditional trade determinants. Distance shows a robust negative effect on bilateral trade, with an elasticity ranging from −0.54 to −1.65 (p<0.05) across specifications. Country contiguity is associated with a 3.5-fold increase in bilateral trade (coefficient: +1.25, p<0.01). The effect of cryptocurrency adoption, by contrast, varies across specifications: in the random effects model, it is negatively associated with formal trade (−0.049, p<0.01), while in the correctly specified PPML model with origin-destination-year fixed effects, the contemporaneous effect is statistically insignificant. However, when cryptocurrency adoption is lagged one period, it shows a positive and highly significant association with trade (+0.061, p<0.01), suggesting that the trade-facilitating effect of crypto infrastructure may operate with a delay. We also find marginal evidence (p≈0.10) that cryptocurrency adoption attenuates the trade-reducing effect of distance. This counterintuitive result may indicate that cryptocurrency adoption substitutes for formal trade channels or reflects periods of economic instability, including the COVID-19 pandemic. However, this relationship is not robust to more demanding specifications that control for unobserved heterogeneity.Overall, the findings suggest that blockchain-based technologies have not yet translated into measurable trade-facilitating effects, partly due to limited institutional support and legal uncertainty. The paper highlights the gap between the potential benefits of blockchain for international trade and its actual adoption, emphasising the role of coordinated institutional frameworks in enabling technological diffusion.