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Enthusiasts of cryptocurrency like to talk about Venezuelan users – tormented by political oppression, economic collapse and food insecurity – as a prime example of the bitcoin subversive potential. But reality is much more complicated.
Venezuelan expatriate David Díaz from the Blockchain Academy in Buenos Aires told CoinDesk that many Venezuelans are learning about cryptocurrency through forced exposure to petro, as well as aggressive outreach strategies from projects such as dash. Many do not even know that Bitcoin is useful in itself, beyond its ability to facilitate the transfer of assets such as dash or dollars.
That's why Díaz is collaborating with expatriate colleague Jorge Farias of the Panama Cryptobuyer startup to offer a free educational course on bitcoins to Venezuelans, including online and in-person programming lessons in Argentina, Venezuela and Panama. The news of the program has been revealed exclusively to CoinDesk.
The course, which will start in February, will be very similar to paid programs. Díaz has already run for about 2,000 students in Buenos Aires, including some hundreds of Venezuelan migrants. But now the focus will be on providing free useful information in a Venezuelan context, where cheap Android phones and censored Internet access have an impact on usability.
Díaz told CoinDesk:
"The main advantage for Venezuela is knowledge, what to do with bitcoins, how to escape the power that the Venezuelan government has put there, not only economically, but also for information." There is a lot of censorship there. "
Expatriate Fellow Eduardo Gomez, the head of the Crypto startup exchange who recently moved to Argentina, now uses the LocalBitcoins peer-to-peer exchange to help his mother pay the bills.
"The government has [told] private banks and government-run banks that external IPs should not be able to access their bank accounts, "Gomez told CoinDesk." The government wants to monitor remittance activities. "
Díaz and Gomez are among the many Venezuelans who connect with their homeland through the bitcoin centric diaspora. WhatsApp groups and Instagram communities help expats to coordinate financial transactions in the field. The use of LocalBitcoins has increased throughout the year and now facilitates weekly volumes for billions of bolivars.
According to a recent UN report, a huge 17% of the country's population has fled Venezuela in recent years.
Now there are many Venezuelan expatriates working on various projects to help their fellow countrymen, including Alejandro Machado, co-founder of a non-profit organization based in San Francisco called the Open Money Initiative which aims to create products and tools fintech for Venezuela. Machado has helped several Venezuelans to use exchange platforms such as LocalBitcions and AirTM, since the latter is stuck in Venezuela.
The challenges Machado has experienced by helping New York neophytes highlight the discrepancy between technological intelligentsia and low-income communities.
"They trust me and I can do it for them, but they do not trust it," Machado said. "The level of technical sophistication among all [in Venezuela] it's not the same thing, and it's less than what you'd expect. "
Migration risks
Some Venezuelans fleeing the country do so with their assets held in bitcoins, to avoid being harassed at the airport or at the border. Both Díaz, who moved to Argentina in 2015, and Gomez, who moved in September 2018, are among them.
"Bringing cash is so risky, any item of value, jewelry, anything, is so risky," Gomez told CoinDesk. "Bitcoin helped a lot because we did not need to bring anything physical around, we came here to Argentina and all our savings were cryptic."
Gomez was thrown into Argentina for several months, until Tuesday, and relied entirely on the bitcoin community of Buenos Aires to help him liquidate the crypto assets as needed. (Bitcoin price volatility may seem negligible compared to the Venezuelan bolivar, which according to the IMF could reach an inflation rate of 1,000,000% by 2019.)
"This is a case of real use, but it's not something that many people are doing because many people do not know it's possible," Machado said, adding that if UX "cryptography" does not become easier, we won we see this operate on large scale ".
Díaz said that expats become more involved in the wider bitcoin ecosystem when they leave Venezuela. In part, this is due to the fear that the public association with crypts within Venezuela may attract the attention of corrupt government officials.
"There was a large community in Venezuela, but we were mostly underground," said Díaz. "In Argentina, I could find a more open community, we could have regular meetings."
Although some local projects such as EOS Venezuela have so far managed to provide liquidity to small groups of local users without such conflicts, these use cases are both nuanced and nascent.
Border economy
Some migrant experts compare the Venezuelan crisis to the Syrian civil war, a forced mass emigration movement that leaves many people in need and desperate for basic needs.
The difficulty that low-income households have in the purchase of food is precisely what the nonprofit company GiveCrypto has tried to address with its campaign to distribute EOS to 100 families living in the Venezuelan border town. of Santa Elena de Uairen.
The executive director of GiveCrypto, Joe Waltman, told CoinDesk that EOS Venezuela provides legal liquidity to a local trader while the participants use the EOS Bonnum portfolio, which does not support Bitcoin nor offers its users private keys.
On the one hand, this allows different families to use the same phone to access EOS donations. In addition, the Bonnum CEO, Edmilson Rodrigues, told CoinDesk from Brazil that the company aims to one day offer a portfolio linked to the blockchain.
However, for now, Venezuelan traders seem to be more interested in using EOS to access fiat than to keep the cryptography itself.
Waltman explained:
"Go to this person and say that this stupid foreigner is dropping a lot of money in this city and will only be redeemable in a couple of places. Do you want to be one of those places? … It was not a difficult sale."
This experiment originally originated from the closed beta of Bonnum in Brazil, where the startup discovered that some dozens of families used EOS to purchase basic necessities from a local merchant near the border that accepts EOS. Those families then routinely lived across the Venezuelan border, delivering goods to Santa Elena de Uairen. This type of frontier economy fed by the crypt is increasingly widespread.
Jose Antonio Lanz, a Venezuelan reporter from EtherWorldNews, told CoinDesk that he had used Facebook and Telegram groups to learn about cryptocurrency. So he sent bitcoins to a Colombian black market merchant who brought medicine across the border to Lanz's mother, who was fighting cancer.
"Now I can say that my mother is alive thanks to the bitcoin," said Lanz, adding that he tried local hospitals and pharmacies, but in the end he was forced to turn to the black market.
"The important thing is to be able to give sellers the money they want, some wanted bolivars, some wanted PayPal," he continued.
Cryptographic limitations
All in all, there is still a long way to go until the crypt is used for its own merits in Venezuela. At the moment, it is often used as a tool to acquire or liquidate fiat.
Machado, of the Open Money Initiative, told CoinDesk that the daily use of cryptography is "not a widespread phenomenon" in the field. Waltman accepted, saying:
"There is a sad irony: the poorer you are, the less you can actually use cryptocurrency."
Díaz does not agree, saying that almost every Venezuelan he knows now uses bitcoins for remittances and international transfers. He admitted, however, that most are using it as a tool to get goods delivered to Venezuela or acquire and then store dollars in an offshore bank account.
Dash and EOS may have more adoption by traders in Venezuela, according to Díaz, but rely on sponsored liquidity networks and local ambassadors who convert new users who often do not have a basic understanding of cryptocurrency.
As such, the co-founder of the Open Money Initiative, Jill Carlson, said that there is a desperate need for further fieldwork in Venezuela. Otherwise, cryptocurrency distribution initiatives run the risk of becoming simple marketing acrobatics.
"Perhaps we find that cryptocurrency is actually, in its current form, not suited to a situation like that in Venezuela," Carlson said. Waltman agrees that GiveCrypto is still thinking about how it would be a long-term strategy in Venezuela.
Speaking of how middle-class families use crypto to conserve value and buy basic goods like shampoo, Carlson added:
"It's not just a single experience or situation, and then for us, as entrepreneurs working with technology and cryptography, we have to recognize that the person who cares about the shampoo and the person who cares about how they are going to feed their children tonight they are so, so different ".
While the respective projects of Carlson and Rodrigues collect data, the upcoming program of the Blockchain Academy in Díaz aims to fill the knowledge gap within Venezuela so that newbies can choose which cryptocurrency and storage solutions work best for them .
Meanwhile, the underground migration network continues to spread.
"I know other projects that help people out of the country with bitcoins," Díaz said.
Venezuelan protesters image vi Edgloris Marys / Shutterstock
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