
Bitcoin: Lifeline for Venezuela - deanfankhauser
http://www.tokentalk.co/TokenTalk/press-release/Bitcoin%3A%20Lifeline%20For%20Venezuela
======
firekvz
Venezuelan here, bitcoin is only used as a fast bridge between VEF and USD*
mostly money laundering.

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...](https://losbenjamins.com/2018/01/vea-regimen-roba-maquinas-
bitcoin/)

[2] [https://www.criptonoticias.com/sucesos/desmantelan-centro-
mi...](https://www.criptonoticias.com/sucesos/desmantelan-centro-mineria-
bitcoins-once-mil-equipos-venezuela/)

[3] [https://www.el-carabobeno.com/pareja-detenida-por-
comercio-i...](https://www.el-carabobeno.com/pareja-detenida-por-comercio-
ilegal-con-7-maquinas-bitcoin-en-guacara/)

[4] [http://www.el-nacional.com/noticias/sucesos/incautaron-
compu...](http://www.el-nacional.com/noticias/sucesos/incautaron-computadores-
para-minar-bitcoins-lara_215326)

~~~
CryptoPunk
For a counter-point from another self-purported Venezuelan:

[https://np.reddit.com/r/CryptoCurrency/comments/60x8wv/freed...](https://np.reddit.com/r/CryptoCurrency/comments/60x8wv/freedom_of_the_masses/)

~~~
jcranmer
That's not so much a tale of "how Bitcoin is useful for normal people in
Venezuela" as "here's why I, a cryptolibertarian, think Bitcoin is going to
beat down fiat currency" where the cryptolibertarian happens to live in
Venezuela.

~~~
CryptoPunk
It's not just a political statement. He/she provides a practical effect of
cryptocurrency on their life:

>>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.

------
sebleon
I seriously doubt the author has spoken to a single Venezuelan about Bitcoin.
A couple realities:

\- 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

------
gabythenerd
Mining is really riskful. If the electricity spike is noticed they can search
your house and jail you.

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...](http://www.el-nacional.com/noticias/educacion/vicerrector-academico-
para-usb-tiene-meritos-academicos_192561)

------
matt_wulfeck
This article is exactly 100% correct, but only if you replace the word
"bitcoin" with "USD" throughout the entire thing.

~~~
malvosenior
The article states:

 _" 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.

~~~
rat87
USD is most popular

~~~
malvosenior
Right, but it's the functional uniqueness of Bitcoin that allows Venezuelans
to acquire the USD. They aren't getting it directly.

------
fyi1183
I call bullshit.

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.

~~~
darawk
Not really, it could also serve as an inflation hedging store of value. To
which you might respond that Bitcoin is highly volatile, and you'd be correct.
But it's substantially less volatile than the Bolivar.

~~~
wpietri
But way, way more volatile than USD, EUR, or any currency of a neighboring
country, as well as being much harder to buy anything with.

~~~
darawk
Yep, possibly easier to obtain and/or hide, though.

------
throwoaway90401
The only real use for Bitcoin in Venezuela that I’ve seen is sending money to
people there.

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.

------
cornholio
The original source referenced in The Economist :
[https://www.economist.com/blogs/economist-
explains/2018/04/e...](https://www.economist.com/blogs/economist-
explains/2018/04/economist-explains-2)

------
dbasedweeb
This article completely ignores all of the reasons _why_ the economy
collapsed, and seems to just happily go on with the unstated assumption that a
new currency can help. The truth is that Venezuela is dead, what you’re seeing
now is just agonal breathing, not life. Society is divided, the economy is
destroyed, so of course the currency based on that failed. How does inventing
a new currency on top of that failed system help? How is it not rearranging
deck chairs on the Lusitania?

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.

~~~
crypt1d
umm...what? The article simply talks about how Bitcoin is used in Venezuela to
deal with the crisis, not how it is a solution that will fix all of its
problems. Its obviously a pro-crypto website talking about utilization (which
is something the space really needs), and there is no harm in that.

~~~
dbasedweeb
It opens with a very strong claim.

 _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](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.

~~~
bmelton
I agree with (some of) your original post in that Venezuela is an ailing
nation at best, but at the same time, it shouldn't take too much imagination
to see that if you can convert cheap (in Bolivars) electricity into currency
that is accepted at a much better exchange rate outside of the country that
one can have supplies shipped in.

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.

------
foobarbecue
What happened with the petro?

------
jamesmurray
Hold on. How can the mafia, or government for that matter, systematically stop
people from mining small amounts crypto (possibly arbitraging a huge gulf
between electricity prices and USD exchange rates)?

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?

~~~
jcranmer
What, you mean the simplified world ideologies don't hold up in practice to
the real world? What kind of craziness is this?

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,

~~~
jamesmurray
>What, you mean the simplified world ideologies don't hold up in practice to
the real world? What kind of craziness is this?

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.

