Venezuela is a testing ground for digital dollarization, Zelle doesn’t like it
coindesk.com
coindesk.com
The decision from wells fargo seems reasonable, most of the Venezuelans (including me) were using zelle for commercial exchanges or forex exchange, and that is clearly agains the TOS for general uses.
I personally know business owners getting more than 20k daily in their personal zelle accounts, it was obvious that a shutdown was coming to it.
As you might understand, there is almost 500k legal venezuelans in the US [1] and another 400k [2] illegals, that’s almost 1million Venezuelans in the US, our country population right now is about 23millions (more than 5 millions have flee the country), so, pretty much everyone have family or friends in the US with zelle accounts and that is why zelle is so widely use it in here, but it starts a problem for US banks when people with business that are not related at all to US start using zelle (us based) to collect payments (of venezuelan business), this payments are all done in personal accounts and never declare taxes or anything, so… that’s a huge problem for banks
For all of you wondering if people in Venezuela uses bitcoin, NO WE DON’T USE BITCOIN AT ALL, there are only 2 uses for bitcoin in Venezuela, 1st use is as a currency exchange medium (USD to VES), hugely backed by drugs money + laundering… 2nd is to write nice articles about how bitcoin is changing venezuela for international media to consume
[1] https://en.wikipedia.org/wiki/Venezuelan_Americans [2] https://www.migrationpolicy.org/article/venezuelan-immigrant...
Is this really going to make a difference then? Most Venezuelans I know with Wells Fargo accounts are using US mailing addresses even if they don't live in the US. They use a friend's address or use a mailbox service.
PS. Que paso mi pana
P.S Que hubo menor
Another friend had a US address and never got the email.
PS: Hablenme los mios
At least that system isn't actively trying to shut people out.
So basically you run a tab?
Yes, layer-2 solutions amount to basically "running a tab". So what? Channel settlements are still happening on chain, and no layer-2 project can create/alter tokens on its own. Equating scammy ICOs with serious projects and dismissing it all with "a valueless and fraudulent solution" is as simplistic and reductionist as saying that "banks and credit card companies only use funny money".
For OP's use case, "running a tab" is exactly what is needed. It is easy for them to keep their accounting, it saves them money and operational costs and it avoids third-parties that the group do not trust. It facilitates economic activity. Why do you feel the need of pissing on it?
In some sense, this is an argument in favour of bitcoin.
If you see the link from the poster I responded to, you will see that s/he is likely a Bitcoin maximalist, so the only argument they can have is in favour of Bitcoin/"the one true chain".
The link is trying to make the argument that layer-2 projects are not "real cryptocurrency" because the transfer of values are not happening on chain. This is what I was responding to.
I am in favour of innovation in the cryptocurrency space, including the creation of new currencies where necessary, but I think that solving layer-1 scaling by adding the complexity of a layer-2 network should be a last resort.
Of course, companies and individuals who make their money from running layer-2 services will disagree with me, as will holders of currencies whose value depends on the success of layer-2 solutions. For what it's worth, I don't own any amount of any cryptocurrency.
First, scaling layer-1 and implementation of layer-2 solutions is not an either/or proposition. They can be (and are) developed in parallel and one can and should complement the other. Even if ETH2 manages to increase transaction capacity by 5-6 orders (which is quite a tall order) of magnitude there is a strong likelihood that a lot of that will be taken by dapps beyond simple token transfers, and we will be back very quickly in a scenario of network congestion and (relatively) high network fees and consequently demand for payment channel networks.
Bitcoin as well, with all of its forks and different proposals has barely managed to increase its transaction capacity 10-fold with BCH. People will not wait 10-15 years to maybe get something that resembles the capacity from Lightning, so much so that the main story from most bitcoiners is that it should be seen as a store of value (not a currency).
Second,
> companies and individuals who make their money from running layer-2 services will disagree with me
Is a huuuuge ad hominem. I can tell you that there is a good number of developers (myself included, if I may say so) and companies working on this who are more driven by ideals than pure profit. The main reason that I would like to see strong layer-2 systems working (especially in ETH and with stablecoins like DAI) is that so far it is the only feasible way to have a payment network that can actually compete with credit card networks.
To put it bluntly, layer-2 is another case of "Worse is better" if we actually want to have blockchain technology as an alternative to existing financial and monetary systems. Being a purist will not help the people of Venezuela, while layer-2 projects (even custodial alternatives) could.
Long term I agree, that's why I said "a layer-2 network should be a last resort" rather than layer-2 solutions being completely useless.
> Even if ETH2 manages to increase transaction capacity by 5-6 orders (which is quite a tall order) of magnitude
Doing a quick calculation, if ETH2 manages 9,000 transactions per second, that's about 0.1 transactions per person (on Earth) per day. You're right that a reasonable definition of success requires some sort of layer-2 solution eventually, although I don't think we are anywhere near that scale ceiling yet.
> Is a huuuuge ad hominem.
Wasn't it you who accused me of being "a Bitcoin maximalist" in an attempt to discredit my position? :-)
Anyway, we'll see how much layer-2 solutions end up helping the people of Venezuela relative to layer-1 solutions:
https://decrypt.co/11370/bitcoin-cash-just-trumped-bitcoin-i...
Decentralized exchanges, games, management of NFT, all that already exist. They are just really impractical/expensive to do on the blockchain, and layer 2 solutions are starting to come already to tackle that. It makes no sense for everyone to wait for every quantum leap in TPS capacity. "Worse is better" have always won.
Unless, of course, your definition of "winning" necessarily goes through the adoption of a blockchain that can not do much else besides transferring its one specific currency. ;)
> we'll see how much layer-2 solutions end up helping the people of Venezuela relative to layer-1 solutions
If people are getting BCH to convert straight to fiat and/or buy food, is it really a fair comparison with an alternative that is creating its own economy?
Oh the thing I use it most often for is micropayments on people commenting on Reddit. If you say !lntip 100 on reddit a bot will send a lightning micropayment of 100 satoshis to someone. Pretty cool! https://www.reddit.com/user/lntipbot
Payment Channel networks are decentralized in the sense that any one can go and open up a node and participate with other nodes. The point where it gets tricky is that your node's capacity to make payments is determined by how much you have deposited in the channels that you opened and if the capacity of the all of the nodes that connect you with the node you want to reach.
As an example, say that you have a Node A where you deposited 1 BTC in a channel with B, B has a channel open with C where they deposited 0.8 BTC. If you try to send 1 BTC to C, the transfer will fail for the simple fact that there is no A -> B -> C route where all channels have at least 1BTC capacity. Interestingly enough, it would be okay to make ~0.5 BTC separate transfers except for the fact that you will pay B twice for the mediation fees.
So, the kind of centralization that happens on the Lightning network is that nodes with more funds will be the ones more likely to be used when routing transfers, therefore they will also be more likely to make more money due to collection of transfer fees. "Small" nodes will tend to have to connect with bigger "hub" nodes and only be used to send transfers, never to make money as mediators.
The interesting thing with BlueWallet is, given that it is a custodial wallet, it operates with funds pooled from all of its users so they can make larger deposits on their Lightning node. This might seem bad as too much centralization, but as a mitigation they provide their own system as open source, so you can run your own deployment of their LndHub and invite your friends to join to "your own" hub. [0]
(Source: I am working on Hub20[1], which can be easily described as "run your own Ethereum/ERC20 Venmo/Paypal" and was inspired by both lndhub and btcpayserver)
[0]: https://medium.com/bluewallet/bluewallet-brings-zero-configu...
Case in point: XDai token and burner wallet
[0] https://businesstech.co.za/news/trending/408053/zimbabwes-in...
[1]https://en.wikipedia.org/wiki/Hyperinflation_in_Venezuela#Na...
The coming days of currency failures for the world economies (and a lot more of that will happen) will be the ultimate wealth transfer from the rest of the world to America and it would happen because the Dollar will ride to accessibility to the rest of the world on the blockchain.
'Access to U.S. bank accounts is fairly common in Venezuela. Many Venezuelans students have Zelle-linked U.S. bank accounts, which they continue to use when they return home. A large expatriate community in the U.S. provides family and friends back in Venezuela with Zelle access.
Ecoanalítica, a macroeconomic analysis company, recently tracked over 15,000 transactions in 10 different Venezuelan cities including Caracas, San Cristóbal and Puerto Ordaz. Around 56% of these transactions were conducted in U.S. dollars. According to Asdrúbal Oliveros, an economist at Ecoanalitica, 12% of all transactions were processed by Zelle. Those are impressive statistics. The fact that Zelle payments are free has no doubt promoted usage'
To answer your question: a large percentage of the Venezuelan population.
The population of Venezuela is 28.8 million [0]
The number of ex-pat students abroad is relatively tiny: 8,540 to the U.S. for 2016/2017 school year. [1]
[0] https://data.worldbank.org/country/venezuela-rb [1]https://wenr.wes.org/2018/11/venezuela-in-crisis-what-does-i...
Venezuela population is calculated to be 24 millions at the moment, with more than 5millions who left the country over the past 5 years, those 5millions are OFFICIAL numbers, they don't even account for illegal venezuelans who crossed the borders to colombia or brasil, that are calculated on 2 or even 3 more millions, we can't know.
I can count with my hand the VES transactions I've done this month, but transactions in USD, are over 100, I just checked my bofa app and i have to wait "load 25 more" 2 times to cover this month..
Also you forgot to account for the 500k legal +400k ilegal venezuelans in the US. I have no clue why this article is talking about expat students
I suggest if you want hard numbers on crypto in Venezuela you should check out GiveCrypto which has crypto programs running in country with verifiable data.
Granted I should have acknowledged this in my original comment.
Results are mixed, but there is some movement.
A volatile cryptocurrency can go up or down. A currency with a 2000% annual inflation can only go down.
Here in 1990 we get Pesos that was something like a stablecoin. The Economy Minister said "One Peso, [equal to] one Dollar". Ten year later the President said "The person who deposited dollars [in the bank] will receive dollars". Then ... https://en.wikipedia.org/wiki/1998%E2%80%932002_Argentine_gr...
If that's the case, it seems like a stablecoin would be the right choice rather than BTC.
For long term storage, my guess is that they get some real dollars and keep them under the mattress or buy some real state.
[We never had here in Argentina this level of inflation for a so long time, so I have to guess. It is weird, because most of the time I can just say "Been there, done that.", but this is an exception.]
I use my AMEX, BoFA VISA, citi MC, with absolutely no problems on venezuelan point of sales.
Bolivars are not worthless when you getting the full exchange value of it, they render worhtless when you put them in a savings account for 1 full year, at this moment, the rate of usd/ves has kept around 1:200k for around 2 months, this kinda gets some time for people to maneuver their VES, it changes hands really quick
Central bank rate is pretty much similar as "black market one" since 1 year ago. Sometimes is even better.
As of today, 1 USD from an USD credit card in venezuela exchanges to 203.639,64 [1] while 1 usd exchanged in the "black market" gives you 205.310.06 [2]
This is just a roundabout way of saying that the only way to not lose value is if you spend bolivars immediately.
Even if the exchange rate is stable for "around 2 months", this does not mean that the currency is keeping its purchasing power. It just means that the central bank has successfully managed to keep the currency peg for this period.
The advantage of Zelle is that unlike Visa, it is a dollarization tool. A Venezuelan merchant can directly earn U.S. currency.
The ones that do manage to get any savings will rush to the black markets to convert bolivars to USD or EUR. The ones that don't get any savings are SOL.
As someone who grew up with 30%-40% inflation a month, I find it really weird to see someone thinking any of that is cool.
Is cool that they do it, as it allows more payment methods to then and allows me to spend my USD, the more formal the business is, the more it will avoid using informal payments methods like zelle, so I do use my US creditcards in big chains, etc. As for every other aspect of our economy, im clearly hugely affected by it, me saying that POS taking usd cards is cool, doesnt mean i agree to our mess of an economy
I don't know if you miss the point that the official currency of venezuela is still the VES, and business have to still use VES for so many reasons, yes a big part of the VES gets exchange to USD but the main currency, still the VES
And yes, I understand that the economy is not de jure dollarized, so that there are still the need for bolivars at some point. My point though is that having a parallel, USD-pegged economy outside of the "official" markets would be better for the people than not having it.
I suspect a side benefit of dollarization is being able to avoid to declaring income. I doubt they are paying taxes in the USA either.
If you mean traditional Venezuelan credit cards, remember that the original problem is hyperinflation, this is exactly the kind of thing they want to avoid.
I don't see the opportunity being missed here.
This leads to great disparities between official rates and secondary market rates. So if you are the one accepting credit cards, either you had to have different cash/card price tags (usually not acceptable for the card companies) or you simply don't accept card payments.