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6 comments on Bitcoin as an alternative to cell in Venezuela

June 7, 2020

Friday, June 5th, was a busy day on the social networks of Venezuela’s digital communities, especially on Twitter. The controversial news of the day was that the American bank Wells Fargo It had decided to delete the cell service, which makes it easier to send dollars between customers, for users residing in Venezuela from June 26.

And the?

According to a study by Econoalítica, this interbank payment service has helped pay 11% of foreign currency purchases in Venezuela, and while we can’t confirm that it’s just Wells Fargo, the importance of the service is clear. In addition, the decision of this bank could trigger a common trend among the other banks: Venezuelans could be completely excluded from cells.

The same controversy reached our farms in “cryptoTwitter Venezuela“This is the same as Venezuela’s Twitter, but it focuses on” cryptocurrencies “, with additional controversy because if someone uses Bitcoin or uses another X coin. It’s fun, especially in quarantine times.

6 comments on Bitcoin as an alternative to cell in Venezuela6 comments on Bitcoin as an alternative to cell in Venezuela

The combination of cryptocurrencies and the lack of cells sparked a tidal wave of opinions. Bitcoin and other cryptocurrencies can take on this role. It is not possible, in fact it is unlikely to occur. Cryptocurrencies serve as a means of payment. Bitcoin is a store of value. You need to open your mind and be ready to learn new technologies. Users want something simple and fast, no complexity … and much more!

From the debates there, the reality of the exclusion of services and the possibility that it may spread to more institutions and platforms due to sanctions or abuse, I will make 6 comments (positive and negative) about Bitcoin as an alternative at this time . So far this year, a weekly exchange of 450 BTC has been averaged over LocalBitcoins according to coin dance data.

I personally think altcoins don’t deserve a special mention, mainly because of the Lack of liquidity, the low impact on the real economy (with the exception of isolated cases) and the economic dominance of its focus on the country;; But anyone who wants to adapt this comment to their own currency is welcome.

Disadvantages – little interest

Outside the small bubble of Venezuelan Bitcoiners and Altcoiners, Bitcoin or one of the small chains is of little or no interest. Even after halving the FOMO, Bitcoin is still a niche element, unknown, fun, or threatening, depending on everyone’s prejudice.

You have to go through a learning curve, but there is no encouragement or incentive to do so. The real need has not manifested and simpler options continue to work and are very attractive.

The vast majority of Venezuelans really have no interest in Bitcoin for what it offers (resistance to censorship, inclusion, liquidity), and in the event of a complete loss of cell, it is sung that they will look for a similar instrument: central and easy to use.

In fact, we could summarize the current level of interest in understanding a complex tool like Bitcoin with the following tweet from Venezuelan journalist Luis Carlos Díaz:

Díaz is not only a generation that deals intensively with technology, but also one of the most active enthusiasts of digitization and its dissemination. However, Even he notes that there are still significant obstacles before the common Venezuelan even dares to download a wallet. This feeling is common.

You may be interested in: Goodbye cell – Hello Bitcoin

Pro-censorship resistance

The central element in the introduction of Bitcoin as an alternative for Venezuelans is their resistance to censorship. Bitcoin has reached a degree of decentralization over the years, making it impractical and economically very expensive to collect enough computing power to censor its operation. not to mention a network transaction.

In order to, Since there is no central entity authorized or empowered to decide whether an X or Y transaction can be processed on the network or not, Bitcoin stands above any other service that has the user’s nationality or geolocation.

Someone with a Bitcoin wallet in Iran, Nigeria, Zambia, or Venezuela has the same ability and freedom to use the Bitcoin network as someone in a country in Europe or Asia, including someone in the United States. This reality means that, unlike most of the other options available, Venezuelans have an instrument that sanctions against the regime cannot dismantle.

Disadvantages – lack of infrastructure

The first clear obstacle is the country’s infrastructure, which has only worsened over the years due to political decisions that have encouraged corruption rather than the development of services.

The electrical system is not working properly, and this requires connectivity, which in itself is not of the best quality in the region, and indeed It is one of the worst in the world.

Despite the fact that Bitcoin transactions do not require a detailed connection, the assumption that cell demand can be accepted under current conditions means oversizing the tool’s capabilities, especially since a minimal learning curve is required for secure management. that reduces and eliminates the application through its centrality.

It is true that in certain cases and for P2P operations it could work However, the current conditions for massaging payment processors, which equate the influence of cells on the domestic economy, or for mass-installing wallets across the country, do not exist. If you pay a bitcoin malt in Puerto Nutrias, you have to wait.

Pro – value broker across Latin America

One of the key elements to understanding the Bitcoin option is its liquidity. Despite the fact that most platforms through which we were able to receive fiat money meet the Know Your Customer (KYC) requirements, the Venezuelan diaspora has adopted this cryptocurrency as the vehicle currency. Let us remember that almost 6 million Venezuelans have emigrated to different parts of the world, although the main destinations are in Latin America.

According to a study by Tulip Research, we could speak of Venezuela as that “Heart” of Bitcoin exchange activity in the region. Imagine connecting the Chilean, Mexican, Argentinian, and Colombian pesos to the real and bolivar without using the US dollar directly.

It is possible and it happens. The presence of Venezuelans looking for solutions to send money home has opened up new markets, sparked interest in Bitcoin and its technology in their target countries, and opened new avenues for free and unrestricted capital exchange.

Read on: Why is Venezuela setting the pace for Bitcoin exchange in Latin America?

Participating in an “expanded” economy has its advantages, particularly with regard to the liquidity of possible exchanges. In addition, Venezuelans can take advantage of the fact that this economic structure already exists to address the problems facing non-banks in each of these countries, as well as problems with US or regulated banks in the European Union.

In its own dimension (let’s look at how small the market is right now), Bitcoin has the characteristics of the dollar without its limitations. This has been demonstrated with the use of BTC as the basis for transfers. It may be that not everyone who accesses bitcoins does this for Hodlear, but it is known that a lot of the money transfer service in the country works thanks to Bitcoin.

On P2P platforms, it is not uncommon to receive offers from Venezuelan traders with other currencies from the region, as it is much easier and cheaper to move bitcoin value from one place to another than using the traditional banking system only.

Bitcoin is used to connect the region’s currencies and to favor Venezuelans internationally. Your impact on the domestic economy could be positive.

Disadvantages – fintech competition

But and it is important to remember that Bitcoin is not alone in the competition for the space that cell could leave. In fact, several fintech companies have already developed various applications and tools to close this possible gap. Let us remember that the danger of giving up this type of service comes from imposing the first sanctions on the regime. There was even speculation that Visa and MasterCard might leave the country.

For example, several tools were developed to help with the problems of the means of payment, but options that already existed and where Bitcoin and other Altcoin are tangent were booming. We even see the relaunch of applications like Reservations, which promises to “use cell without cell” and Valiú, a startup based in Colombia, but which brings money movement to our country, including dealing with dollars.

Even banks have tried to adjust, and with the de facto dollarization boom after the 2019 blackout, they even offer currency custody. Also try products that transfer this money. Bitcoin is not alone, there is a booming industry trying to attract potential users.

Pro – operations for everyone

Bitcoin users need a wallet and satoshis. In Venezuela you have several options to buy Satoshis directly with Bolivar. From local companies regulated by the regime’s institutions to operators of international P2P markets regulated in other countries.

A Bitcoin wallet can be installed on the simplest Android computers or on the simplest computers with a moderately new operating system and without the latest specifications. We are talking about a system that works perfectly with cheap and old devices.

And where should you spend the bitcoins? Direct spending will be a myth until processors stop stimulating this type of spending or traders really start to appreciate Satoshis. If it is money that is unimaginable to your imagination, no entrepreneur will want to risk volatility, commissions and a long time, etc.

Can AirTM AirUSD or Skrill or UpHold dollars be spent directly without the minimum infrastructure? This “payment problem” does not only affect Bitcoin or Altcoins: all token funds will face these difficulties of acceptance.

Instead of thinking about direct spending (we’ll take into account the cost of maintaining merchant incentives, agreeing with payment processors, and constantly training operators), and considering that the bolivar is still a means of dominant payment (and that no one keeps it) if you use the same platforms to switch from fiat to bitcoin, you can do the reverse step to have bolivar and pay.

Prices are generally cheaper and people can decide who they want to trade with and at which trade show. It is exactly what many do with US dollars, but without the trust-related problems that are automated and facilitated on the platforms mentioned.

Bitcoin is definitely an option with its apartments. Everyone has to see if it is comfortable for them, but initially it is an unwise decision to discard it, especially since few tools offer real resistance to censorship, a critical element for a crowd like ours.

What happens if US sanctions against the regime lead to more international services giving up relations with Venezuela? What if our intellectual property and passport really isolate us from this type of service?

It is obvious that they have a commercial and usage advantage, but Bitcoin’s unique properties would be useful for every Venezuelan. You just have to be ready to do some research for a few days.

Personally, it is my option, although unfortunately I lost my private keys in a boat accident on the Chuao coast in Aragua. I hope it never happens to them when they cheer up.