Bitcoin: Lifeline for Venezuela
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That's it.
So how it works is that people have tons of VEF from different sources, go to localbitcoins and get some btc and sell as soon as possible for usd in other places.
The thing got so crazy that USD:VEF black market rate was stable at 1USD:200,000 VEF for like 2 weeks but the "bitcoin dollar" was trading at 1USD:350,000VEF
Besides that, bitcoin has absolutely no use.
And for the people saying that "mining" bitcoin is good in venezuela, they are totally wrong, mining bitcoin is a business you wouldn't want to go in, there is alot of mafia (because of what i said above) and alot of weird things happening, only those who are related to mafia/gov/drugs/illegal gold mining/corruption in general are the ones who can mine without the risks, if you are the average techie guy you are in huge risk, from like getting all your hardware stolen [1][2][3] to even be jailed and charged as terrorist [4]
[1] https://losbenjamins.com/2018/01/vea-regimen-roba-maquinas-b...
[2] https://www.criptonoticias.com/sucesos/desmantelan-centro-mi...
[3] https://www.el-carabobeno.com/pareja-detenida-por-comercio-i...
[4] http://www.el-nacional.com/noticias/sucesos/incautaron-compu...
Services, fuel and basic groceries have regulated prices so at least as a regular venezuelan you can survive but you can't afford to improve your life (buying new things, traveling, housing, etc) you couldn't even afford health care (please don't even mention public/free healthcare in venezuela, it's a complete joke)
This is why everyone is leaving the country. From my highschool class (we were 75 people) only 5 are still in the country, fromy my university class of about 45 only 4 are in the country, the young "educated" population pretty much dissapeared.
Remote working + business within the country. I can't really leave as opportunities for me are here. Other people do have to flee as they dont have USD income or good living conditions so emigrating is their only way, most of my family is outside too so I travel back and forth alot.
https://np.reddit.com/r/CryptoCurrency/comments/60x8wv/freed...
>>I´d rather buy bitcoins from localbitcoins in less than 5 minutes than risk my safety buying USD from some really speculating, shady people. I invest most of my crypto savings long term in alt coins
For someone whose private wealth is always at risk of seizure, and is in a impoverished country where the majority are at the brink of extreme deprivation, it seems pretty reasonable that cryptocurrency would help.
University teacher (my mom) does ~4,000,000 VEF thats 10$
Wages and salaries in venezuela suck as you can see, there is no way that a salary is over 50$ a month for regular Venezuelans.
I dont see this guy buying 3$ worth of bitcoin monthly, this is probally a made up story or the guy is into those shaddy business that I named in the root post.
Once again, regular venezuelans can't afford to buy bitcoins, its even more expensive than USD.
Most of the "bargain rates" usd comes from small transactions of people sending USD to their family in Venezuela and are not up to date with pricing or inflation.
You can see people still selling USD at 210,000 VEF while bitcoin usd is almost hitting 400,000 today.
Others just buy alot of merchandise of any kind in VEF (stock it few months) and sell it at big prices later.
I would think that putting your savings into bitcoin would have use over holding a currency (Bolivar) with an annual inflation of ~6000%? It is your argument that using bitcoin as an inflation hedge isn't useful? or maybe that there are better inflation hedges?
Inflation here merely depends on USD exchange rate to VEF, thats it.
If i need to "protect myself" (and I do) all i do is open facebook, find someone selling USD in a BOfA account, give them my zelle email wait for the money and transfer them VEF in regular venezualan banks accounts (instant transfers).
USD >>>>>>>> BTC anytime in terms of "protection agains inflation".
How is a Venezuelan suppose to buy things online with paper USD? If you have to order medicine to stay alive because there's a scarcity in Venezuela, you cannot use paper USD for that.
Bitcoin's valuation is too unstable at the present to be a good store of value. This is going to be doubly the case if inflation has already destroyed your savings: you need highly liquid, highly fungible reserves, and things like gold or bitcoin are just simply not up to that task.
Are you framing your Store-of-Value judgement on a very narrow, confirmatory window of time? There have only been 5 months out of the past 96 months of Bitcoin's existence where bitcoin trades have been at a net loss. Additionally ~81.7%[1] of buy volume is in the black (by a healthy amount: 20X).
>If bitcoin ends up the year down 90% (not unreasonable)
Would you sell me a call at 10% of spot-market price? I would love to buy that.
[1](14.786+1.379+1.158+1.265)/22.728
- dozens of miners have gone to prison for exploiting power subsidies. Mining now requires pooling electricity from neighbors to hide high-usage households
- vast majority of Venezuelans don't even know about Bitcoin, remains a niche topic, not a useful currency at the moment
- unlike Bitcoin, the Bolivar has a military and police force behind it, they will squash competing currencies that begin gaining momentum
Only selected individuals can do it without consequences, mostly people from the government and military. For example, there is a rumor going around that they are restoring an entire floor of a public university with the front that they are going to "research" how to mine more effectively. It's not a coincidence that it's Vicerector was imposed just last year by the government[1].
I don't think Bitcoin will get more popular in Venezuela, there are other ways to exchange VEF:USD, in hard cash and wire transfers that generates more trust in most of the population.
[1] http://www.el-nacional.com/noticias/educacion/vicerrector-ac...
"According to a recent report by The Economist, Venezuela is the cheapest region on earth to mine bitcoin, because of its cheap electricity and the worthless Bolivar."
How does that relate to USD? There are hundreds of stable currencies that could replace the Bolivar but due to extremely cheap electricity, Bitcoin is in a unique position to help Venezuelans.
It's a nice story, and I don't doubt that some Venezuelans benefit from bitcoin somehow. But for BTC to be considered a "lifeline" for the population would require people to actually do day-to-day transactions with it. That's not happening.
I did that for a friend a while back, and he was able to exchange for Bolivares and buy food and essentials. He also reported that the exchange was illegal and carried substantial risk, but that the exchange rate was so good $100 was basically a life-changing amount of money and worth the risk.
Maybe a few miners can strike it rich through money laundering, based on heavily subsidized mining, but that fixes nothing. Cryptocurrency isn’t an escape from reality.
Bitcoin is a lifeline for citizens and residents of Venezuela.
It actually does seem harmful to frame “pro-crypto” in those unlikely terms. Or in other words, how does inventing an abstraction layer on top of your original failed currency, obtained by burning fossile fuels, help the average Venezuelan trying to buy food and sundries? It seems more like slapping a bandaid on a sucking chest wound and claiming that you’ve helped the patient.
I’m not interested in the “crypto space” and what it needs, especially in a discussion of an article purporting to describe what the people of Venezuela need. Unless those two things overlap to the degree that it’s a “lifeline” for those people, it reeks of the usual pumping of cryptocurrency that seems to pervade the “space” in question.
Bmelton: Between the distortion of the original Economist article used in this article, and this: https://news.ycombinator.com/item?id=16783272
I’d say that’s not what this is about. This currency is just a laundry for dollar bills.
Moreover, we know that in currency crises, black and gray markets spring up like wildfire, so it takes even less imagination to picture a proprietor starting to prefer crypto currencies in exchange for tangible goods vs. the already bad -- and more importantly, still declining local currency.
Despite the volatility of crypto currencies, and the fact that they've been on a hard slide lately, it's still a better depreciation than hanging on to Bolivars.
The Economist talks about mining bitcoin in Venezuela being profitable due to government-subsidized electricity.
> Venezuela is the cheapest place to mine bitcoin in the world. Miners are arbitraging, buying an underpriced commodity (electricity) and converting it to bitcoin for a profit.
On the other hand, this article tries to claim that large numbers of Venezuelans are using Bitcoin as a currency, saying things like:
> Eventually, the people of Venezuela landed on bitcoin, the only currency that is censorship-free and digital, which cannot be confiscated or restricted by the Venezuelan government.
This claim is unsupported by the Economist article. It also conveniently omits the conclusion of the Economist article:
> President Nicolás Maduro does not like bitcoin miners, and the government’s ownership of the electrical grid enables it to locate, and crack down on, those using the unusually high amounts of electricity that bitcoin mining requires. There are no laws regarding cryptocurrencies, so targets have been arrested on spurious charges such as energy theft. Mining equipment has been seized by officials, some of which was then used for their own gain. While bitcoin can protect from the tyranny of governments printing money, other kinds of tyranny remain unchecked.
[1] https://www.economist.com/blogs/economist-explains/2018/04/e...
I asked how this article survives the weight of its own lofty claims for a cryptocurrency. Do you have an answer?
Wait, did you sign up for Hacker News a few minutes ago just for that post?
Other than the electricity cost how can they find you? People have found many more clever ways to hide economic activity in dangerous situations (see black markets in North Korea).
I thought the whole point of cryptocurrencies was to exactly to get around this central control. If this wasn't possible, it’s an unfortunate and interesting example of how bitcoins ideologies don’t work in reality.
Edit: Huh, what's with the downvotes?
Like anything else it can be stolen but, they would need to know about it. If I can stash a small rig somewhere, then I can produce currency. This process doesn't require scale or major investment, so you could mine at a small enough scale to be below notice.
[1] https://www.reuters.com/article/us-venezuela-blackouts/venez...
[2] e.g., https://www.reuters.com/article/us-venezuela-blackout/blacko...
[3] https://www.cnn.com/2016/04/26/americas/venezuela-blackouts/...
Stashing of small to moderate currency against a low-quality government or mafia (via the conversion of electricity) seems like one good use case of currencies. If this isn't the case, it would be genuinely interesting to know why.
Less sarcastically... that's kind of the big issue that people forget. The price of bitcoin is approximately the cost it takes to mine it less the cost of capital or so--in other words, you should expect to spend something like 95¢ in electricity to make $1 of bitcoin. Electricity prices aren't consistent across the world, but the notability of bitcoin is such that you have to compete against the lowest-cost places. In order to make a decent amount of money from bitcoin, you have to consume a decent amount of electricity. And that electricity has to be converted into some other form of energy, which usually comes out as heat or (in some cases) RF leakage.
What that means is detecting mining is as simple as noticing who's using all the electricity (trivial, if you're the electric company), or walking down the street with a wide-spectrum RF sensor and IR gun.
When you look at that kind of power draw,
Your derogatory tone is uncalled for, nothing in my comment was pro-crypto.
Stashing of small to moderate currency against a low-quality government or mafia (via the conversion of electricity) seems like one good use case of currencies. If this isn't the case, it would be genuinely interesting to know why.
> ...you should expect to spend something like 95¢ in electricity to make $1 of bitcoin
Got a quote for this 95% figure? Yes, I understand efficient markets. Presumably, a lot of the value of crypto is amortized from the hardware.
> When you look at that kind of power draw,
Your criticism relies on two unstated assumptions.
1. Large scale. If I can stash a small rig somewhere, then I can produce currency. This process doesn't require scale or major investment, so you could mine at a small enough scale to be below notice (see also: black markets). This seems like a viable way to save funds at a personal/family level.
2. Has electricity prices risen correspondingly with inflation? I would expect in a dev country electricity is subsidized or small relative to other living costs. The same energy it takes to run a home I could generate a few bucks here. A few bucks in our country is incredibly valuable right now in V.