Crypto Use in Venezuela: How Significant is it Really?

in LeoFinance3 months ago

Venezuela is frequently presented as a country where crypto is helping ordinary people to survive in the midst of intense hyperinflation - this is clearly the message in this Reuters article from earlier on in the year for example: As Venezuela's Economy Regresses Crypto Steps in to Fill the Gaps.

The economic situation in the country is certainly dire - Venezuela has experienced the most drastically intense period of hyperinflation in modern world history - it has been in double digits since the 1980s, became the highest in the world in 2014, reached 400% on 2016, 2000% in 2017 and peaked at over one million percent in 2018 at which point the government stopped producing inflation figures, but current estimates from external sources put inflation at over 2000% in 2021.

The minimum monthly wage in Venezuela is now $3, which means people either have to rely on remittances from abroad (5 million have left the country since hyperinflation began), side hustles and/ or black market economics to escape dire poverty and survive day to day, and there have been a lot of reports that crypto has played an important role in this, given the fact that the Venezuelan Bolivar is now effectively worthless in dollar terms.

Crypto Adoption in Venezuela

Venezuela ranks third on Chain Analysis' crypto adoption index and there is also robust anecdotal evidence that people in Venezuela have become increasingly interested in cryptocurrency with the most popular coins being Bitcoin, Ether, Dash and Eos, and apparently Binance exchange has become as well known as the country's biggest commercial bank, Banco de Venezuela.

There are three main ways in which Venezuelans use crypto in their day to day lives:

  1. To send remittances
  2. To protect wages from inflation
  3. To help businesses manage cash flow.

Five million Venezuelans live abroad and many residents rely on their remittances to survive - crypto is crucial here because there are very few fiat currency trading pairs for the Bolivar (VES), so most expats send their remittances in crypto - local Bitcoins being the most popular P2P transfer site, as that allows BTC to be sold for VES.

Screenshot 2021-08-20 at 10.50.48.png
Current price = 178 BN VES for 1 BTC.

Fast food chains Pizza Hut and Church's Chicken as well as some supermarkets are accepting bitcoin and dash as payment and it is also increasingly possible to pay street vendors with digital coins in some of the larger Venezuelan cities like Caracas or Valencia.

In terms of businesses, they are increasingly converting any VES they receive into crypto ASAP as it simply holds its value better, such is the unreliability of the VES.

This article from DW is worth a read for more information.

What happened to the Petro...?

The Maduro government developed its its own digital token in 2018, the Petro, on a centralised ledger, supposedly backed by the value of oil.

The Petro was distributed to millions of Venezuelans and apparently it is accepted as a form of payment for taxes and in state run petrol stations.

HOWEVER, there is little evidence that the Petro has had that much use, it is currently very difficult to exchange it for anything else and it seems to be a dead project, even though there are calls to revive it.

There is also some evidence that the main use of the Petro was for the government to move very large sums of money out of the country, so this is more about the wealthy extracting funds from a failing economy rather than helping the poor survive, Chain Analysis found last year that 90% of funds moved were for sums over $1000:

Screenshot 2021-08-20 at 10.47.36.png
One of the approved Maduro exchanges to facilitate trade in the Petro.

So how important is Crypto in Venezuela really?

Despite the fact that the country is ranked third in global crypto adoption it seems that crypto is mainly being used by expats and the better off, the middle classes, if you like.

According to Triple A, only 10% of the population own some form of cryptocurrency and so I imagine that for the very poorest, the only access they've had to crypto is through the government's Petro token, which is a fundamentally flawed project given its closed nature and probable use by government officials to extract funds for themselves.

At the end of the day it's not so much a matter of crypto being used 'in' Venezuela but rather 'through' Venezuela' as those who are lucky enough to have access to friends and relatives abroad are able to receive funds on a regular basis and cash that into VES as they need it, and I think that's probably playing a significant role in keeping millions of Venezuelans going despite the government mismanaging the economy.

As with all things crypto, I imagine there's a polarising effect going on - those with external links are surviving, those without them are probably suffering for more severe hardships.

I also wonder how far crypto might be playing a role in keeping the current regime in power?

IF the middle classes are managing to bypass the worst hardships of hyperinflation through crypto, there's maybe less of an impetus towards regime-change?

Final Thoughts...

I know there are a few Venezuelans active on Hive, I'd be interested on hearing from them how many people have access to crypto in their day to day lives and how important it is.

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I have 8 splinterlands accounts and 7 are being played by people in Venezuela, @hevpleon and the family of @qqueenqueen
Through the DEC and the Cards I am splitting 50/50 with them, they are making roughly 450 USD per month between them. That is 150x the local wage average...

Just by doing the daily quest, how crazy is that

That is mental!

Who'd have thought that Splinterlands could literally be keeping people alive.

I was part of the deep dives and #informationwar community and researched Venezuela using Wiki Leaks, The real reason Venezuela is punished IMO through hours of hard research using official documents is "Petro Caribe" I was a NFT sceptic but I like promoting Hive and it was a community I new nothing about even the tokenomics had my head spinning. I joined the #NFTShowroom on #Hive, bought a NFT with swap Hive in my Leo Dex and was hooked!! I than became serious and the best artist's on the Hive Block Chain are from Venezuela, There is a art movement in Venezuela that is distinct and original, and you heard it here first, "Venezuelan Anime" I noticed a trend most of my favorite artists are in Venezuela. I interviewed 4 artist from Venezuela on my blog, and made incredible friends, Google Translate is so good our Global Block chain has no language barriers, Historic, Crypto for the NFT artists on Hive is as important as my 40 hour paycheck in the States is. Alas I believe Venezuela needs more grassroots accounts and real independent reports from the citizens what is really happening and why. That's why I referred Nahu to you, Hive is helping feed families and no one is talking about it, there are people in countries with very low Cost of living that are able to provide for their family off of Content Creation, The NFT Showroom on Hive has artists from all over the world, and nobody ever tells me this, the Truth is when you buy NFT's on Hive it is a store of value and in exchange people can provide for their families using the Block chain, in the US you would need $5,000 a month and that wouldn't go far with a family in certain states and cities, I applaud the post, I currently am involved in promoting the Hive Blockchain the NFT Showroom and namely Venezuelan NFT artists from Hive. Venezuelan art is on fire, Venezuela will definitely be known for NFT Art the way Germany is known for cars.

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I'm more than willing to believe Venezuela and other oil producing countries are the victims of global economic sanctions, I just don't know enough about it to comment.

I have actually taught 'global development' for many years, but have focussed mainly on ex-British colonies as they're closer to home (you can't do everything, it's just impossible).

Interesting to hear about the NFTs, I know Hive is supporting a lot of people, it's something I want to dig into more!

Getting some great comments here,

CHeers!

I can récord an English vídeo speaking about the situación around here. For me, criptos really saves My life, that was a living hell because the económic System around here. I create some posts and vídeos in the past in steemit some years ago, speaking about the situatión here. I need to make a vid cause I can explain a Lot of that, i'm still here in Caracas the venezuela capital city, and well i'm not rich at all but i earn here more that My payment sallary 2$ (i'm university professor with 2 school degress and i worked in the Main university of the country here - The Central)
I'm going to leave here in the coments seccion the link when I make the vídeo maybe tomorrow @taskmaster4450le

:) btw I have a Comunity here #pukumundo and Discord since 2017, and in the past I was a Youarehope member, TheAlliance member and part of obtye aid program - in the past, in steemit i had My own aid foundation: Unknownheroes - And in hive i'm músician and CriptoArtist Nftshowroom / splinterlands - i make a Lot of stuffs for hive :)

Really good to hear Hive is working out for you, but at the same time depressing that you're so qualified and you have to rely on it!

I had to ate food from garbage and descompose food too, and I studied art history, antropology, beside músic, and art and lawyer degree diplom, but here is hard if You arent follower of the goverment party... I make an old 2017 vídeo and post about it. If You wanna take a look first be My guest, october 25, 2017:

I will do cheers!

I'm glad Hive is making a difference!

Yeah i'm glad too. Lol i'm recording the vídeo today. I'm músician here but now I wanna talk about it. In some hours i'm going to leave the link here :)

This is an interesting summary of what is happening in my country with the use of cryptocurrencies. Certainly there is a significant boom especially in the professional working class whose salary is significantly depleted.
Now how many people are using cryptocurrencies I could not say, but there is a community in hive where many Venezuelans work, it is Hivemexico, and the Hivevenezuela community is being reactivated.
And to finish, as in my case we depend economically on what we produce in hive.
Saludos desde Venezuela

Translated with www.DeepL.com/Translator (free version)

I'm glad to hear Hive is making a difference for you.

Someone from Venezuela should start a 'Hive Venezuela' list - @steevc does one for the UK, it's interesting to see!

I'd do one myself, but I think that sort of thing is better coming from someone who actually lives in Venezuela!

You've made an excellent post @revisesociologia!!!! And just like @enrique89, I am also from Venezuela and I support everything he mentioned but I need to add something else...

The internet is an important issue regarding the proper adoption of cryptocurrency, but we also need to mention the constant and sometimes inhumane power outages due to regular failures of the electrical system (this goes logically beforehand the internet issue), which also leads to not having any other basic service, such as fluid water... And this, of course, leans much more towards a health issue than economics.

It should also be put on the table that many people have their minds focused mainly on surviving rather than learning how to use markdown to get some write stuff and get coins, or simply learning what a cryptocurrency is, or if it is good or fraud in general, most Venezuelans ignore cryptocurrency simply because they have not had the opportunity to learn about it because most of the people still there have their mind somewhere else they consider more important, and sometimes are.

And something else, cryptocurrencies are volatile, we all know that, well, most Venezuelans are not willing to risk losing -sometimes- the little they have "playing digital currencies", that's a reality.

As Venezuelans, we all hope everything changes soon but man our country is already deep down the void that gets larger and larger... Our issues are not just economical or political anymore, now we have a serious social and cultural matter to deal with for at least 20 years ahead, something that does not really get fixed with tangible things but with the will, something harder to find than coins.

It's sad to hear, I completely get everything you're saying, I always had a feeling Crypto was kind of not really a magic bullet for most people.

Sounds like you've got a classic case of the 'resource curse' going on - oil revenue just keeping a corrupt government in power while the majority lose out, and struggle to survive in spite of the government!

I hope we can turn things around!

Hi, interesting post, I am from Venezuela, and I helped with the adoption of EOS before Hive started.

Currently where I live I pay 70% with cryptocurrencies, even my internet service. But indeed the economics is difficult to explain.

About the adoption in the social classes is because of the education of the citizens and the lack of equipment such as Smart Phones or PC, but I think the main problem is the internet, I pay more than 65$ monthly for internet and most Venezuelans don't have to pay that service.

False project expectations: Many have wanted to help Venezuela, but they make bad strategies to create adoption (due to lack of knowledge in marketing) which makes that the task is not fulfilled and some funds are lost.

I think that with HIVE we can go further, there is a project for the promotion of Hive exclusively: @Hiveve driven by @Theyycallmedan and they are also working on other projects such as a token driven by the community that generates opportunities.

Finally I want to point out that Venezuela only needs opportunities (work) that allow them to receive cryptocurrencies and Hive can help with that, I do not believe in charity.

I can help in any way I can, because I want to help my country.

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Interesting to hear, I hadn't thought of the internet fee as a barrier to entry, I guess there must be a lot of share connections!

I'm a big supporter of Hive as a means of opening up opportunities for earning all over the world, a much better solution than charity in the long term for sure.

I'm not from Venezuela, but a friend from Indonesia @el-nailul, create a program called "world Smile project" on steemit, he send many steems to a venezuelan to buy food for the needy and now he's trying to build a house for them too with steem too. I used to have a splinterlands player from Venezuella played my deck and he can make enough money for living. That's Awesome!

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It is important to highlight opportunities like this. Here is where cryptocurrency can make a difference, especially Hive. We can help people to engage on here and make a lot more than the $3 a month.

In fact, think about how many upvotes that is from some decent sized accounts. It can be reached in a couple days if one has a minor following when we include all the HE tokens.

This message needs to be spread.

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Yes, we can create jobs on Hive and also content creators, gamers, can get an income greater than 3$, I would like to see on Hive a marketplace where they can buy equipment such as PCs and Phones, through a loan by placing the HP as collateral.

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It is all possible. Just need some more developers and creative ideas.

With the HAF we might see that happen.

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Hive does have some decent potential to easily distribute money from those with wealth to those with out for sure!

It's one of its major understated use cases if you ask me!

Thanks for sharing this amazing piece of contents about Venezuela

3$ a month, wow. I would think about it when I spend money next time, and be grateful to live in better conditions.

I think the reason more people are not able to adopt crypto is they might not have access to gadgets, interenet access, language barriers and a lot of other factors.

And then, crypto is quite a complicated stuff.

I know a lot of people who are smart, but are not from software or tech background. And they have difficulty understanding wallets, keys etc.

My cousin is an accountant. But crypto is a bit hard for him. He understands stocks well. He understands price etc, but not the tech.

Another friend, who is a doctor, understands stocks etc, but does not understand wallets, private and public keys.

We are around here for long, so it sounds easy, but it's hard for normal people.

That's a lot of fair points, there are a of barriers to entry, easy to forget when you're used to the whole game!

True. It's not easy, as I said in my main comment in this post, most people are focused on surviving and there really aren't many "millennials" out there anymore, most of us ran out, most of the population right now is over 55, which most understandable technology is a TV (not smart tho!), and under 25, who were basically born in the current conditions.

Hey very accurate and true your post, certainly not everyone can access cryptocurrencies, and those who are in Hive do not use them as they should.

So let's say that less than 10% of the population uses them, because although the government has wanted to make plans with cryptocurrencies, so far it has not had any success and everything is corruption.

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I think if you look up corruption in the dictionary the definition is 'Maduro government' isn't it?!?

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There is now a way to convert HIVE & HBD directly to Sats (and vice versa) thanks to @brianoflondon & @ausbitbank.

https://lnd.v4v.app/

This should be very useful for South American Hiveans trying to live on Hive and Splinterlands earnings.

Support the DHF proposal to massively expand and decentralise this service.

https://peakd.com/dhf/@brianoflondon/proposal-v4vapp-and-the-start-of-a-decentralised-hive-lightning-network-bridge-for-podcasting-20

Hey cheers I will check out for sure!

!PIZZA


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