Q&A with a Venezuelan about Bitcoin
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I have been closely watching the situation in Venezuela, since it is often cited as one of the strongest examples of Bitcoin’s importance. Rather than regurgitate information you can read elsewhere, I thought it would be helpful to hear a perspective from on the ground. The following Q&A is with @justmariangel, a Binance Angel from Venezuela. I have lightly edited the responses for grammar and length.
- What is the current awareness of Bitcoin in Venezuela?
The knowledge about cryptocurrencies in general, especially Bitcoin, has increased in recent years for Venezuelan society.
Bitcoin arrived in Venezuela with the opportunity to mine thanks to its low energy costs, but controversy misled it because at the time it was considered an electronic crime by security agencies of the country that were in charge of confiscating machines.
However, the social interest increased, bitcoin went from being seen as an opportunity to generate money (mining) to be seen as a savings and investment opportunity. Many people acknowledge what bitcoin is, however, they lack information on how to use it daily.
[Pomp comment: It is wild to think that law enforcement was confiscating mining equipment and charging people with “electronic crime”]
- How do people feel about it? Positive? negative?
I think the feeling is positive in general, people who own bitcoin and those who know about the existence of the currency see it as a way to save their capital and increase it. Unfortunately there is a lot of misinformation especially because of economic measures implemented in recent years by the government.
- How is Bitcoin being bought and sold?
The most popular platform for buying and selling bitcoins in Venezuela is localbitcoins.com. In December 2018, Venezuela was in second place, being the country with the most exchanges of BTC. As of February 2019, the trading of bitcoins exceeded by 7.8 times the amount of Bolivares Soberanos traded on the Caracas Stock Exchange and 8,319 BTC were traded during the month of January. However, it is also popular to buy it from other people without a platform inbetween.
[Pomp comment: Bitcoin trading is more popular than stock trading in the country, which is incredible to think about. Also, the rise in popularity of true P2P transactions, without an exchange, is pretty interesting. My guess is this has to do with lack of fiat on/off ramps for some people, along with increased security concerns when using exchanges rather than in-person transactions.]
- What are the fees associated with buying?
On localbitcoins.com, users who create ads to sell must pay 1% of the amount of their sale. To transfer BTCs to other portfolio the commission varies depending on the current usage rate of the Bitcoin blockchain. The commission is automatically adjusted based on the current network congestion.
[Pomp comment: 1% is an incredibly high fee, but people will stomach the fees when there are not many other options]
- Why don’t people just buy USD?
The strong economic crisis that Venezuela is currently going through is not a secret for anyone, mainly due to the difficulty of acquiring foreign currency since the country has currency controls since 2003, which has become more adjusted over the years. This creates a large black market to acquire foreign currency and greatly damaging imports and exports in the country.
This is why it is very complicated to buy foreign currency through the government system, it implies a wide process of registration, paperwork and waiting. So it is simply easier to buy BTC or USD from other people. But the last few months USD currency exchange went too high because of the hyperinflation and now saving in USD isn’t as effective as it used to be.
[Pomp comment: The idea that BTC is better and easier than USD is important. Once a narrative like this takes hold, it takes a long time for the narrative to unwind.]
- Do merchants accept Bitcoin? if so, what types of businesses?
According to the app "Cripto Lugares" there are more than 200 businesses nationwide that accept payments with cryptocurrencies, among them Dash, LTC, ETH and of course BTC. From restaurants and hotels to clothing stores. A prominent case would be "Tiendas Traki", the largest department store in Venezuela that accepts several cryptocurrencies, including Bitcoin. More than 5780 stores nationwide use wallets as a method of payment. In the same way, in the informal commerce many individuals accept Bitcoin among their forms of payment.
[Pomp comment: It would be interesting to compare transaction data between individuals to retail transaction data.]
- How does the current political situation affect Bitcoin's adoption?
Political instability and government decisions have caused Venezuela hyperinflation of 191.6% for the month of January 2019 and annual of 2,688,670%. The national currency, Bolívar Soberano, was devalued by 98.12% since last August, so it is very difficult for Venezuelans to save in their traditional banks, for this reason it is a priority for many to keep their savings in dollars or cryptocurrencies. The economic decline continues to advance and the lack of infrastructure in banking platforms makes transactions slower, which is why these factors have prompted Venezuelans to adopt P2P transactions, including the use of BTC, as a solution to the problem.
[Pomp comment: Imagine losing 98% of your wealth in 7 months. Nearly impossible to fathom.]
- Do you think that bitcoin could become the dominant currency in Venezuela?
Personally, I think it is the future we are targeting, Venezuela is a country dominated by electronic transactions among banks since traditional payment methods such as cash is very difficult to obtain in ATMs and credit or debit cards have a lot of connections failures when paying in stores. So most Venezuelans use electronic transfers among banks and they had to adapt their platforms and create new options to facilitate their use and speed. Our country is generating very interesting indicators that make it the perfect storm for technologies and adoption to grow with great speed due to the demand and the need to solve so many problems.
[Pomp comment: The situation in Venezuela is dire. There is an obvious need for a new currency that does not rely on the government. We are probably watching the first country switch from fiat currency to Bitcoin as the reserve. Will be interesting to see how long it takes to get to 50%+ adoption.]
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