In the New York Times, an economist from Venezuela explains the importance of Bitcoin for the citizens of his country. What he writes confirms much of what we already suspected: Bitcoin helps people in Venezuela to survive.
The New York Times introduces Carlos Hernández as an economist from Venezuela. His report is titled “Bitcoin Saved My Family.” It starts with Hernández going out to buy milk and mentions that he doesn’t own a bolivar.
“I have all of my Money in Bitcoin. ”Keeping it in Bolivar would be“ financial suicide. ”Daily inflation was around 3.5 percent in 2018, which is 1.7 million percent a year. Dollars would be an alternative – but it doesn’t work. “I don’t have a bank account abroad, and with Venezuela’s currency controls it is difficult to use a conventional foreign currency like dollars.” Hence bitcoins.
To buy milk now, Hernández has to but the bitcoins change back to bolivars. For this he uses LocalBitcoin.com. This is the most popular exchange for Venezuelans. He looks for buyers who use the same bank as himself. In this way, the change from Bitcoins to Bolivar takes just ten minutes. Perhaps it is this simultaneity of a declining economy and an intact banking system that has triggered an enormous trade in LocalBitcoins in Venezuela. After Russia, Venezuela is the second largest market on the global trading platform. For a country with such a small economic power, that is enormous.
The only restriction is that you can only exchange small amounts. While the government is not monitoring Bitcoin transactions, any bank transfer of more than $ 50 will cause the bank to automatically freeze the account until it can be proven where the bolivars come from. That sounds very little, but in Venezuela it is quite a lot. This is shown in a brief story by his brother Juan, told by Hernández.
Juan actually worked as a lawyer, but “in times of hyperinflation everyone gets poorer, including lawyer clients.” Juan finally did earned so little that he ended up paying more to be able to work. Even his father, a government employee, was making $ 6 a month (!!) more. Juan gave up and tried to make money online as a graphic designer and translator. The usual payment methods for freelancers – such as PayPal – are blocked by currency controls in Venezuela. So Juan had no choice but to be paid with cryptocurrencies.
A little later, Juan fled the country. The border military patrols are notorious for stealing money from the fugitives. “But Juan’s money, stored in Bitcoin, was only accessible through a password he memorized.” Money without borders, said Hernández, “is more than a buzzword for those of us living in a collapsing economy and a collapsing one Live a dictatorship. ”From Colombia, Juan wanted to send money back to his family.With Western Union and other service providers you only get the official exchange rate of the bolivar, which is set by the government, which is usually only half the rate on black markets. Bitcoin is cheaper, faster and safer here than even using the black markets.
Economist from Venezuela: “Bitcoin saved my family”
Street in Caracas. Image from Zaprittsky via flickr.com. License: Creative Commons
In the New York Times, an economist from Venezuela talks about the importance Bitcoin has for the citizens of his country. What he writes confirms much of what we already suspected: Bitcoin helps people in Venezuela to survive.
The New York Times introduces Carlos Hernández as an economist from Venezuela. His report is titled “Bitcoin Saved My Family.” It starts with Hernández going out to buy milk and mentions that he doesn’t own a bolivar.
“I have all of my Money in Bitcoin. ”Keeping it in Bolivar would be“ financial suicide. ”Daily inflation was around 3.5 percent in 2018, 1.7 million percent a year. Dollars would be an alternative – but it doesn’t work. “I don’t have a bank account abroad, and with Venezuela’s currency controls it is difficult to use a conventional foreign currency like dollars.” Hence bitcoins.
To buy milk now, Hernández has to but the bitcoins change back to bolivars. For this he uses LocalBitcoin.com. This is the most popular exchange for Venezuelans. He looks for buyers who use the same bank as himself. In this way, the change from Bitcoins to Bolivars takes just ten minutes.Perhaps it is this simultaneity of a declining economy and an intact banking system that has triggered an enormous trade in LocalBitcoins in Venezuela. After Russia, Venezuela is the second largest market on the global trading platform. This is enormous for a country with such a small economic power.
The only restriction is that you can only exchange small amounts. While the government is not watching Bitcoin transactions, any bank transfer of more than $ 50 will cause the bank to automatically freeze the account until it can be proven where the bolivars come from. That sounds very little, but in Venezuela it is quite a lot. This is shown in a brief story by his brother Juan, told by Hernández.
Juan actually worked as a lawyer, but “in times of hyperinflation everyone gets poorer, including lawyer clients.” Juan finally did earned so little that he ended up paying more to be able to work. Even his father, a government employee, was making $ 6 a month (!!) more. Juan gave up and tried to make money online as a graphic designer and translator. The usual payment methods for freelancers – such as PayPal – are blocked by currency controls in Venezuela. So Juan had no choice but to be paid with cryptocurrencies.
A little later, Juan fled the country. The military patrols on the borders are notorious for stealing money from the fugitives. “But Juan’s money, stored in Bitcoin, could only be accessed with a password that he had memorized.“Boundless money, says Hernández,“ is more than a buzzword for those of us who live in a collapsing economy and a collapsing dictatorship. ”From Colombia, Juan wanted to send money back to his family. With Western Union and other service providers you only get the official exchange rate of the bolivar, which is set by the government, which is usually only half the rate on black markets. Bitcoin is cheaper, faster and safer than using the black markets yourself.
In the end, however, Juan couldn’t find a job in Venezuela, which is why Hernández had to provide him with money again. This was possible, you already guessed it, through Bitcoin transactions.
History shows that Bitcoin does exactly what it should. The currency is there for people who need stable money and for whom the government makes it difficult to enter into economic interaction with foreign countries. The government can impose its will and exchange rates on payment service providers and banks – Bitcoin cannot. What happens is exactly what we have long suspected: Bitcoin plays a role when the economies of nations collapse.
Venezuela is the most glaring example here, but by no means the only one. Zimbabwe, North Korea, Argentina, Suda, Iran, Liberia, Turkey, Angola, Egypt and Nigeria also suffer from inflation rates of more than 10 and in some cases more than 50 percent. In most of these countries, as in Venezuela, there are strong currency controls that make it difficult for people suffering from the troubled economy to trade with other countries. Anyone who is able to use Bitcoin there not only has a further possible customer base, but also receives money that will probably increase in value compared to the local currency.
All the learned and ideological discussions that the Western Bitcoiners have, who quarrel about the coin of their choice, who want to operate a full node on a Raspberry Pie, who dream of Schnorr signatures, Lightning or the Metanet, the trench warfare between Ethereum, Bitcoin and Ripple lead – all of this becomes relatively meaningless if you look at where Bitcoin really happens.