This is an article that I worked on to leave some comments on the introduction of Bitcoin and Cryptocurrencies in Venezuela. The latest News about Excelsior Gama accepting cryptocurrency payments was the last ingredient to get it done.
In this case, A well-known supermarket chain in the country decided to use cryptocurrencies as a new payment option. So, users who want can use their bitcoins to buy their market. And the experience is simple, and it just keeps getting better with practice and time. Assuming it is actually used.
And the first element I need to clarify is that after going through the process of the destruction of the bolivar and the rise of the dollar as a de facto currency in the country’s economic relations, I understand that the current problem in the Venezuelan economy cannot be solved with more means of payment.
It is more than obvious that there is a problem with payments, but it’s not THE problem.
Let’s say the more complex it is to use, the longer it takes to learn and the fewer benefits it offers. Any payment solution is doomed to fail in the face of the impoverished bolivar that goes from hand to hand without anyone wanting to keep it, at least as a means of payment.
Be it fintech or directly the cryptocurrency created by Satoshi Nakamoto, both will fail if it doesn’t improve the experience and bolivar rates.
Regarding the latter, it should be said that with its expansion in the Venezuelan economy The dollar sparked a fintech fever, which I find interesting before moving on to Bitcoin.
De facto dollarization solutions
As the bolivar continues to decline, Venezuelans are increasingly using and knowing the dollar better. However, since it is not the local currency, since access to American banks is made considerably more difficult and the influence of the sanctions of the Donald Trump administration against Venezuela even exists as a latent threat, the full assumption will not be made that it has been possible.
It might interest you: Venezuelans can have savings accounts in Colombia through Fintech Tpaga
To make that leap, a significant number of applications were born that simply: They want to build a bridge between the Venezuelans and the coveted dollars. Options of this kind exist in Venezuela, as already consolidated solutions such as PayPal or Cell are left out due to their own characteristics and limitations.
As marketing data, it seems important that the name is spelled as the pronunciation sounds and that the English grammar is lacking in order to Venezuelanize the product. This is the case with Mony, Pipol Pay or Valiu. Reserve didn’t make its name tropical, but it’s one such fintech solution with traction on social media and a growing number of users.
The goal? That Venezuelans can use dollars and link them to the National Bank or other similar services … Well, that the dollar exists at least as a unit of account in the environment of these applications.
All of this flourished before the intention of private banking to create systems similar to mobile payment with bolivars but working in dollars, although this project will have to wait as the superintendent of the institutions of the banking sector (Sudeban) of Chavismo has already warned it This will not be able to take effect and give fintech companies more leeway.
The challenge is to build a bridge between Venezuelans and dollars Or at the very least, efficiently simulate dollars while attracting enough liquidity and forming alliances with traders to get users to their deals at some point.
Meanwhile, Wells Fargo’s decision to withdraw cell from Venezuelan users has been undone, and dollar transactions are becoming increasingly important in the economy, albeit with their homes. According to Ecoanalítica, a company that follows Venezuelan business news, the number of transactions in dollars rose from 80% to just over 50% in August.
Other countries devoted to the Venezuelan diaspora have been the territory of successful experiments with fintech solutions for these citizens without bank details. A special mention deserves the case of Ualá of Argentine origin with a significant mass of compatriots on its platform who use it to be able to live in Argentina but also to manage the resources that travel to Venezuela via remittances.
According to Matt Alhborg, whom I interviewed for the Satoshi podcast in Venezuela, The vehicle currency between the Venezuelan diaspora and the country’s economy is Bitcoin, although it is generally not done directly or deliberately. In this case, it is argued that many of the remittances would have difficulty converting from the local currency of origin – for example, Argentine pesos – to US dollars and then settling in Bolivar in Venezuela.
And so? Well, the “wire transfers” solution was to use mostly Bitcoin and other cryptocurrencies to a lesser extent. Ahlborg himself portrayed it when he spoke of the heartbeat of the introduction of BTC in the region, showing how the 2019 power blackout in Venezuela also led to a radical decline in BTC exchanges in the rest of the region. Bitcoin is a key element of the flow of value to Venezuela, but it doesn’t complete the cycle in local pockets, bolivars and dollars generally get there for the happiest.
For those who have always worked with currencies, now there are those who make the job easier because everything is online. without having to search through the circles of trust to find liquidity. This allowed more and more liquidity to flow through the different regions of the region, Bitcoin and Bolivar.
We could even talk about those who limit themselves to profiting solely from arbitration in bolivars and bitcoins, mostly operators of Chinese origin, without mentioning the increasingly notable OTC operations carried out between small exchange offices, now up to six large ones Numbers from the Internet move the comfort of your home. And all of this in small circles of trust that have increased in their hands, but not enough to make you think of Bitcoinzuela.
The main entry ramps for this liquidity for small savers or investors are the P2P stock exchanges for Bitcoins or direct exchanges like Binance.
Read on: Venezuela is the second largest market for LocalBitcoins
It is because of this unusual ecosystem of remittances, bolivars and BTC that the Venezuelan market has become so important. No one has talked about payments, and while mining is an activity that we can call popular, it is far from being a thriving industry than the financial fabric of remittances. So far in October 1,789 BTC have been traded via LocalBitcoins.
Do you think the advent of more and more banking / fintech solutions for handling dollars in Venezuela will slow the adoption of bitcoin and cryptocurrencies?
– Javier Bastardo🏴☠️🫓 (@criptobastardo) October 3, 2020
A key element that speaks for this reality is that the attached survey, in which 645 Twitter users took part, shows that the adoption of more and more fintech payment solutions will not stop the adoption of Bitcoin and cryptocurrencies. When reading the comments, it becomes clear that transfers and payment methods don’t mix, right?
Market directly with your transfers!
As I said at the beginning, the final trigger for this article was the fact that Excelsior Gama decided to accept cryptocurrencies through Cryptobuyer. As one of the few reporters from the cryptocurrency source still in Venezuela, I will try my luck with the implementation every time news like this is announced.
I can assume that the first Bitcoins purchase through this system is mine, although I know that if it had been a “normal” user, the experience would have been more traumatic than pleasant.
At first they didn’t want to charge me because “the system is not ready” ❌
A member of staff (whom I asked when I arrived) was encouraged ✔
Normal tariff and commissions ✔
I paid twice ❌
Already reimbursed✔ pic.twitter.com/GAss9bvEip
– Javier Bastardo🏴☠️🫓 (@criptobastardo) October 24, 2020
In fact, my previous experience with the Cryptobuyer tool has been negative, mainly due to the fees for payment processing. However, this implementation has resolved this issue. The idea of directly linking transfers with expenses also sounds interesting.
The problem is that like I said before Bitcoin is not in the pockets of Venezuelans, but in the value chains that have been extended to the country. In many cases, the pesos that are sent into the country arrive in bolivars, not even dollars as the unit of account.
It would be necessary to ask, but it seems that compared to “remittances” dealing with BTC and crypto, the number of family members and friends receiving these resources directly in crypto is negligible and should be valued within that percentage How Much Anyone Might Have an Interest in Spending Against Volatility or Network Charges, in the case of USDT for Ethereum. In any case, this system is still perfect.
What is really the goal of enabling a new payment method that is not very popular and has a significant learning barrier? Will people who do not have a cell or other means of payment in dollars use cryptocurrencies? Is there really a lack of “commercial adoption” so that more BTC / crypto is on the streets and in people’s pockets?
Now that we have the option to spend satoshis in a supermarket chain and the commissions are not as high as they were before (from 12% to 4 to 5%), What does Venezuela need to be a Kryptonation?
As a final consideration, Bring up the fact that the strength of Bitcoin and other cryptocurrencies has depended on the death of our fiat economy for more than 20 years.
“In December 1998, the generation that voted for Hugo Chavez had a minimum wage of Bs 100,000 at the time, which was equivalent to $ 176. $ 176 in 1998 is $ 280 today. That was the base. That was what got the least paid on a payroll. Today he charges $ 0.80“, how Publicity the journalist Luis Carlos Díaz recently.
What is needed is a change from this trend of destruction. Simple but complex in its performance. Political way? International way? Do you give up political life and rely on radical individualism?
What is needed is that the citizen is not forced to flee for bitcoin or cryptocurrencies because the country’s domestic economy is a nightmare. That there is at least enough normalcy for people to achieve these monetary abstractions on their own.
But it seems, Remembering this is a heresy against the cries of adoption and kryptonization.
There is an inversely proportional relationship that few benefit from, and the paradigm shift we have driven leaves (and will leave) a vast majority of the country with no access to technology, connectivity, or the most economically viable cryptocurrency user.
This struggle takes place between economic actors or, more simply, people who survive the crisis. For many of them, even that small extra 5% is a sufficient barrier not to use the service.
One wonders whether the potential and latent failure of cryptocurrencies as a means of payment means a failure of their role as vehicle currency. As long as we continue to try to solve the country’s big problems with short-term or more marketing-oriented responses, it is difficult for the vivid reality of remittances and the diaspora to implement this type of adoption.
The bright future of cryptography depends on the struggle between different types of money, with Bitcoin being the great banner of liberation. At least with this promise. However, for this scenario to be real, the citizen must have the economic means to choose it. He must be able to think beyond the daily solution.
That’s far no matter how much hype and cymbals are heard to celebrate the much-applauded (commercial) adoption.