Latin America is carving a unique narrative in the global cryptocurrency landscape, with Venezuela and Argentina standing out due to their distinct socio-economic and political contexts. According to a report by Chainalysis, Latin America ranks seventh in the global crypto economy hierarchy, just ahead of Sub-Saharan Africa. The region’s preference for centralized exchanges (CEXs) over decentralized exchanges (DEXs) is notable, contrasting with global trends. However, the core attraction lies in how cryptocurrency is morphing into a tool against economic adversities in Argentina and a shield against authoritarianism in Venezuela.
Argentina: Crypto as Economic Safeguard
Argentina’s long-standing economic turmoil, accentuated by a 51.6% devaluation of the Argentine peso up till July 2023, has spurred crypto adoption as a defensive mechanism. In this period, the nation led Latin America in raw transaction volume, with an estimated $85.4 billion in value received, showcasing a strong grassroots adoption. Alfonso Martel Seward, Head of Compliance & AML at Argentina-based cryptocurrency exchange Lemon Cash, elucidates that crypto, particularly stablecoins, has become a vital alternative for savings amidst stringent foreign currency acquisition restrictions. This trend is visually evident in the spike of crypto purchasing as the peso devalued, especially around mid-April when Argentina’s inflation rate hit 100% for the first time in three decades.
Lemon Cash has capitalized on this situation, offering a debit card feature enabling users to transact with crypto at local retailers, thus alleviating day-to-day commerce challenges induced by currency instability. The rise of Lemon Cash, amid an active crypto market where about 5 million out of 45.8 million people use crypto, epitomizes the asset class’s capacity to buffer against economic hardships.
Venezuela: Crypto as a Pillar of Resistance
Venezuela’s narrative diverges from Argentina primarily due to its authoritarian governance under Nicolás Maduro. The nation’s economic woes, marked by hyperinflation rates surpassing 1 million percent, have driven many towards crypto, especially stablecoins, to preserve their savings. The crypto adoption trend in Venezuela also extends to enabling remittances, which have burgeoned due to a significant populace exodus since 2014.
A notable dimension is how crypto is fostering resistance against authoritarianism. Venezuelan opposition leader Leopoldo López shared an instance where crypto facilitated direct aid to healthcare workers during the Covid-19 crisis in 2020, bypassing the repressive governmental controls. This initiative, which benefited 65,000 medical professionals directly and impacted hundreds of thousands indirectly, underscores crypto’s potential as a humanitarian aid conduit amidst political repression.
Furthermore, López emphasized that cryptocurrency’s value in supporting democracy movements could be fully realized when the off-ramping process is independent of autocratic regimes, indicating a path towards leveraging crypto for broader societal change.
On October 11, 2023, Bitfinex, a leading digital asset trading platform, disclosed the initiation of a zero-fee trading facility for market takers on its Peer-to-Peer (P2P) platform in Argentina, Colombia, and Venezuela. This development follows the recent availability of the P2P trading service to clients within these geographies, further catalyzing the adoption of cryptocurrency trading in the region.
Bitfinex’s announcement underpins its commitment to fortifying the cryptocurrency trading ecosystem within these emerging markets. By abolishing the trading fees for market takers, individuals who execute buy or sell orders at prevailing market rates, the platform is propelling the advantage of real-time crypto-to-crypto settlements sans any financial encumbrances. This initiative is anticipated to spur trading activities by significantly reducing the cost of transactions, which traditionally acts as a barrier for many potential and existing cryptocurrency traders. The immediate financial relief is likely to enhance liquidity and foster a more robust trading environment on the Bitfinex P2P platform.
To avail of the zero-fee trading, users are required to log into their Bitfinex accounts and select the P2P option featured in the top navigation menu.
Established in 2012, Bitfinex has been at the forefront of digital token trading, extending a suite of advanced trading resources to both global traders and liquidity providers. The platform’s diverse offerings encompass peer-to-peer financing, an Over The Counter (OTC) market, and margin trading for a broad spectrum of digital tokens. With a strategic emphasis on delivering superior support, innovative tools, and a seamless trading experience, Bitfinex continues to garner a global clientele.
Venezuela, a country known for its volatile political climate, has recently made headlines for shutting down several crypto mining facilities throughout the country. According to reports from local media outlets and tweets from Venezuela’s National Association of Cryptocurrencies, mining operations were ceased in the states of Lara, Carabobo, and Bolívar in the past few days. Although it is unclear how many crypto firms were affected by the shutdown, several crypto exchanges were also ordered to cease their operations.
The closure of crypto mining facilities is believed to be part of an ongoing investigation into corruption involving Venezuela’s state-owned oil company, Petróleos de Venezuela S.A. (PDVSA), and the country’s national crypto department. The Venezuelan government has been grappling with the financial crisis and hyperinflation, leading many to turn to cryptocurrencies as a more stable investment option. However, the mining of cryptocurrencies requires a significant amount of energy, which is often subsidized by the government. As a result, the shutdown of crypto mining facilities could be seen as a way to conserve energy and resources amidst Venezuela’s financial struggles.
Additionally, the corruption investigation involving PDVSA and the national crypto department has been ongoing for several years. PDVSA has been accused of embezzlement and money laundering, with the country’s former oil minister, Rafael Ramirez, at the center of the investigation. The national crypto department, which was created in 2018 to oversee the country’s cryptocurrency operations, has also been under scrutiny for alleged corruption and mismanagement of funds.
The shutdown of crypto mining operations in Venezuela has raised concerns among crypto investors and traders, who are now questioning the government’s stance on cryptocurrencies. While some experts believe that the shutdown is simply a way to conserve energy and resources, others believe that it is part of a larger crackdown on cryptocurrencies in the country. The Venezuelan government has been known to take drastic measures to control the country’s economy, including imposing strict capital controls and devaluing the country’s currency.
In conclusion, the shutdown of crypto mining operations in Venezuela is just one of many challenges facing the country’s cryptocurrency industry. The ongoing corruption investigation involving PDVSA and the national crypto department, coupled with the country’s economic struggles, has created an uncertain future for cryptocurrencies in Venezuela. It remains to be seen how the government will navigate these challenges and what impact they will have on the country’s crypto industry.
The Venezuelan government has approved a new tax bill aiming to collect up to 20% in taxes from cryptocurrency transactions, according to local reports.
Venezuela’s National Assembly held the second discussion session on Thursday for a new draft bill targeting taxes on “large financial transactions” in cryptocurrencies like Bitcoin (BTC).
The Venezuelan government reportedly approved the draft bill last Thursday, requiring local firms and individuals to pay up to 20% for operations carried out in cryptocurrencies as well as foreign currencies like the U.S. dollar.
Filed on Jan. 20, the draft law aims to collect from 2% to 20% over transactions in any currencies other than those issued by the Republic Bolivarian Republic of Venezuela, or the Venezuelan bolivar and the country’s oil-backed cryptocurrency, El Petro.
The initiative aims to incentivize the use of the national currency, which reportedly lost over 70% in value last year alone and shed nearly all its value over the past decade.
“It is necessary to guarantee treatment at least equal to, or more favorable, to payments and transactions made in the national currency or in cryptocurrencies or crypto assets issued by the Bolivarian Republic of Venezuela versus payments made in foreign currency,” the bill reads.
Related:India to introduce 30% crypto tax, digital rupee CBDC by 2022–23
As previously reported by Cointelegraph, Bitcoin adoption has been skyrocketing in Venezuela in recent years, with many thousands of local businesses starting moving into cryptocurrency to survive amid hyperinflation. In October 2021, a major international airport in Venezuela was preparing to start accepting cryptocurrencies like BTC as payment for tickets and other services.
Down in Bogotá, cryptocurrency adoption is raging on. Colombia’s tax authority, the DIAN, (Dirección de Impuestos y Aduanas Nacionales de Colombia) has begun to catch up. It seeks to take “special measures” to crack the whip on cryptocurrency tax avoiders.
In a statement released on January 28th, the DIAN stated that it would attempt to better regulate the cryptocurrency space, to work toward a more “honest” Colombia. The statement admits that Bitcoin (BTC) and cryptocurrency use is growing worldwide:
“Currently, operations with crypto assets are a reality worldwide and with the boom in the use of so-called virtual currencies or cryptocurrencies, the DIAN has initiated actions aimed at to control the taxpayers who carry out operations with them.”
In effect, the DIAN wishes to establish a framework that would establish a tax control for “omitted” or “inaccurate” taxpayers. That includes Colombian citizens who failed to record income obtained from crypto operations, or those recording inaccurate cryptocurrency activities.
It comes as little surprise as Colombia is an increasingly active country for Bitcoin and crypto adoption. Colombia is consistently the second most active Bitcoin trading country in Latin America according to usefultulips.org, an online service tracking peer-to-peer BTC trading across the world.
Meanwhile, a search on Coinmap shows hundreds of merchants and ATMs across the country for Bitcoin services. Indeed, according to the Venezuelan newspaper El Nacional, there are 687 Bitcoin-friendly retailers in Colombia.
While hardcore crypto libertarians may roll their eyes at the tax authorities attempting to regulate the space, the move may in fact be encouraging for greater crypto adoption. Recent news, as well as the DIAN’s approach to regulation, would suggest that Colombia’s institutions are in fact warming to crypto.
Currently, Colombia’s laws dictate that its financial institutions are prohibited from protecting, investing, brokering, or managing cryptocurrency operations. However, Colombian citizens can invest, and some legacy financial institutions are paving the way for greater adoption of cryptocurrencies in the country known as the “gateway to South America.”
In March last year, one of Colombia’s oldest banks, Banco de Bogotá, surprised incumbents, announcing it would explore crypto-related services as part of a regulatory sandbox project. The Winklevoss twins’ Gemini trading firm has since partnered with a rival bank, Bancolombia, for clients to trade four crypto assets: Bitcoin, Ether (ETH), Litecoin (LTC) and Bitcoin Cash (BCH).
It would appear the Colombian government consents to crypto, launching a game that teaches young people how to invest in the stock market and cryptocurrencies in September 2021.
Related:Volatility, hyperinflation and uncertainty: How everyday Venezuelans are using stablecoins to protect their livelihoods
Nonetheless, before jumping to conclusions that Colombia may become the next Latin American country to adopt Bitcoin as legal tender, understand that the DIAN’s efforts are simply an attempt to fight tax evasion.
The country will need to up its user numbers, trading volumes and win over more government ministers before such a move could take place.
Two currency crises two thousand years apart. Modern-day Venezuela and the Roman Empire have more in common than you might think. Both know too well the dangers of soaring inflation and a collapse in investor confidence. But, only one has crypto on its side.
Venezuela’s official currency, the bolívar, has suffered from hyperinflation for half a decade due to repeated currency devaluations, minimum wage rises and significant public spending increases.
For a sustained period of several centuries, the Roman Empire enjoyed the enormous trade and commercial benefits associated with the world’s first fiat currency, as explored in my book Pugnare: Economic success and failure. The Roman currency was comprised of three coins: gold (Aureus), silver (Denarius) and copper or brass coins (Sestertius and Dupondius). Crucially, and despite fluctuations in the value of the underlying metal, the exchange rate between them was fixed by imperial decree.
This seemingly simple financial innovation brought with it untold wealth and commercial opportunity to the citizens of the Roman Empire, leading to the transition of Ancient Rome from an empire dependent largely on the spoils of war and imperial conquest to one founded on trade, commerce and free enterprise.
Just as with modern currencies, it was underpinned by a sophisticated banking system, which allowed goods to be bought and sold without the physical transfer of tonnes of precious metal. Most of their money was also like ours: created by banks out of thin air when they made loans. Just like modern economies, the majority of Rome’s money supply was held in bank deposits rather than cash in circulation. Though modern-day electronic transactions are faster, whether you use a graphics card or a horse and cart, the process is much the same.
Much like modern-day Venezuela, irresponsible public spending and currency debasement in the empire led to soaring inflation, a collapse in investor confidence and an abandonment of the consumer trust that underpinned the exchange rate innovation. But, if the Romans, paralleling the citizens of Venezuela today, traded in their Aureus for Ether (ETH) or if the government had set up a “digital denarius,” could the empire have survived?
Related:Gold, Bitcoin or DeFi: How can investors hedge against inflation?
Centuries apart, Rome and Caracas face the same menace: Hyperinflation
From the time of Emperor Philip the Arab (244 AD to 249 AD), the system of fixed exchange broke down. Every day, commercial activity became more difficult because of the variable rate of exchange. The equivalent effect would be if ten one-dollar bills were worth a ten-dollar bill one day then a five-dollar bill the next. Citizens no longer knew the value of their money. Economic activity declined.
This was a dramatic fall from grace for the world’s first government-controlled currency, which had been in use to pay for goods from Britannia to Judaea to Africa Proconsularis.
Unlike their Roman forebears, digital currencies have offered the citizens of Venezuela an innovative solution. They can circumvent the bolívar by adopting cryptocurrencies such as Bitcoin (BTC), Ether, Dash (DASH) and EOS (EOS), to the extent that the government introduced its own, the petro, in 2018. Iran is hoping to use the profits from a booming cryptocurrency mining sector to bolster its economy while still under siege from United States sanctions.
Related:US sanctions strategy and crypto: The cracks are showing in Iran
Turning to cryptocurrency was, despite the many technological and societal advancements they made, not an option available to the Romans. Instead, the Roman currency collapse led to a decline in economic activity, delivering economic destitution to once prosperous regions and triggering the start of a long and slow economic decline from which it would never truly recover.
Romans could have made a mint from crypto
Cryptocurrency would also have relieved the Romans of having to maintain a mint as well. It eventually became more and more difficult for the Romans to source the gold and silver to make new coins, so the government cheated by increasing the amount of base metal. This led to inflation which eventually made people lose trust in the money they held.
The breakdown in trust was worsened by a civil war in 193 AD that led to key currency reforms which had centralized control of the currency being abandoned. Once that control was lost, manufacturing and trade went into decline.
Like Venezuela, soaring inflation, a loss of confidence in government and civil unrest led to a collapse in the banking system and, finally, full-scale economic collapse. But, unlike the Romans, the decline of centralized currency offers a possible route out of economic decline for Venezuela, not the slow nail in the coffin it was for the empire.
Cryptocurrency is used by Venezuelans for everything from hotel bookings to pizza deliveries. While President Maduro’s government released the Petro, crypto has also been used against them. Maduro’s rival, National Assembly President Juan Guaidó, has used the stablecoin USD Coin (USDC) to circumvent Venezuela’s banks and send humanitarian aid to healthcare workers.
Power over the empire’s monetary supply was often contested between rival factions. For example, during the civil war of 193 AD, a new mint was opened in what is now Turkey and used by rival claimants to the imperial throne, Niger and Septimius Severus. In contrast, Emperor Vespasian was able to maintain a period of peace and stability between AD 69 and 79, partly because he recognized that he must control the money supply, especially the mints.
Roman cryptocurrencies could have survived to modern times
Governments in Venezuela, Iran and elsewhere today looking at adopting cryptocurrencies as official currencies should pay attention to the Roman example. It shows how badly things can go wrong if the money supply is controlled by different even rival organizations.
Perhaps if the Romans had not been reliant on physical currency but had instead had access to crypto, maybe it would not have been destabilized by economic collapse and in-fighting.
If so, maybe today the people of Venezuela would not be using Bitcoin or Ether, but instead a digital currency inherited from the time of Nero and Vespasian.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
George Maher is an academic and author. His latest book Pugnare: Economic Success and Failure, explores the rise and fall of the Roman empire from an economic perspective. It has been listed in both the Financial Times and Money Week. George holds a PhD in the economy of the Roman Empire from King’s College London and both a first-class honors BA and MA with distinction in Classics from Birkbeck University of London. He is a fellow of the Institute and faculty of Actuaries and holds a first-class honors degree in Special Honours Mathematics from Trinity College Dublin.
Surprising the world, Fidelity predicts what Bitcoin’s game theory implies. It’s as Satoshi Nakamoto said, “It might make sense just to get some in case it catches on.” That’s the exact same conclusion that Fidelity reaches in its “Research Round-Up: 2021 Trends And Their Potential Future Impact” report. Take into account that Fidelity is a multinational financial services corporation, it doesn’t get more mainstream than this.
I agree with @Fidelity, of course, but still astonishing to read this on Bitcoin adoption game theory in such a mainstream financial report: pic.twitter.com/7zRO9rEele
— Alex Gladstein 🌋 ⚡ (@gladstein) January 13, 2022
What did Fidelity say about Bitcoin adoption at the nation-states and central bank level?
They put it very clearly:
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“We also think there is very high stakes game theory at play here, whereby if bitcoin adoption increases, the countries that secure some bitcoin today will be better off competitively than their peers. Therefore, even if other countries do not believe in the investment thesis or adoption of bitcoin, they will be forced to acquire some as a form of insurance. In other words, a small cost can be paid today as a hedge compared to a potentially much larger cost years in the future.”
In other words, It might make sense just to get some in case it catches on. And, as Stacy Herbert said, “First mover advantage goes to El Salvador”. At least if we’re talking out in the open, because other countries might be accumulating Bitcoin on the down-low. For example, Venezuela seized a lot of ASICs from private miners. Chances are those are active in a warehouse somewhere. And, of course, there are rumors that the USA is already mining.
Fidelity is one of the biggest asset managers in the world
They see what ID-10ts fail to understand
First mover advantage goes to 🇸🇻
Game over for fiat, game on for #bitcoin
— Stacy Herbert 🇸🇻 (@stacyherbert) January 13, 2022
In any case, what does Fidelity conclude?
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“We therefore wouldn’t be surprised to see other sovereign nation states acquire bitcoin in 2022 and perhaps even see a central bank make an acquisition.”
If those players do it in the open, it will probably trigger a race like no other. A race in which it will be too risky not to participate.
Speaking About Bitcoin Mining…
Fidelity’s report summarized 2021, it goes through most of the major stories that NewsBTC has covered ad nauseam. The company doesn’t try to figure outwhy did China ban Bitcoin mining, but it highlightshow fast the hashrate recovered.
“The recovery in hash rate this year was truly astounding and one that we think demonstrates several issues that will be important to keep in mind for 2022 and beyond.”
The Fidelity report also highlighted how well the network responded. “This has now been tested and bitcoin’s network performed perfectly.”
BTC price chart for 01/17/2022 on Eightcap | Source: BTC/USD on TradingView.com
What Does Fidelity Say About The Ecosystem In General?
The report wasn’t exclusively about Bitcoin, they also identified the biggest trends in the wide crypto sphere.
“The biggest non-Bitcoin themes put on display this past year included the massive issuance of stablecoins, the maturation of decentralized finance, and the early days of non-fungible tokens.”
And about those trends, Fidelity predicted:
“The growth in interconnectivity between siloed blockchains”
“Traditional fintech companies partnering or building capabilities to interact with DeFi protocols”
“The dawn of decentralized algorithmic stablecoins has officially begun.” Responding to the “growth in demand for more regulated, centralized stablecoins.”
“While the long-term value of these NFTs is not known, the impact of increased digital property rights for art, music, and content is likely to be meaningful in some form.”
In general, Fidelity thinks that investment in digital assets will keep growing:
“Allocating to digital assets has become far more normalized over the past two years for all investors.The Fidelity Digital Assets 2021 Institutional Investor Surveyfound that 71% of U.S. and European institutional investors surveyed intend to allocate to digital assets in the future. This number has grown across each individual region of the survey for the past three years, and we expect 2022 to show another year of higher current and future asset allocations to digital assets amongst institutions.”
However, something has to happen to catalyze widespread institutional adoption. “The key to allowing traditional allocators to continue to pour capital into the digital asset ecosystem revolves around regulatory clarity and accessibility.”
Is 2022 the year of regulatory clarity? What will happen first, institutional adoption of cryptocurrencies or nation-states adoption of Bitcoin? What central bank will earn first-mover advantage? Burning questions for the year ahead.
Featured Image by Damir Spanic on Unsplash | Charts by TradingView
On Dec. 17, 2021, the Senate of Paraguay approved a cryptocurrency bill introduced in July. The provisions, which define several key terms including virtual assets and call for licenses to mine cryptocurrencies, will now be sent to the Deputy Chamber for further deliberation.
Senator Fernando Silva Facetti, the bill’s sponsor, revealed that it’s passed in the Paraguayan Senate after a contentious debate. According to the senator, the law also aims to foster the growth of crypto mining activities by using the surplus electricity generated in the country.
(1/3) Today, after an intense debate, the Senate @SenadoresPy approved todaya New Law Project which regulates the industry and commercialization of #Crypto assets #Bitcoin #Paraguay after …(open threat)
— FernandoSilvaFacetti (@FSilvaFacetti) December 17, 2021
The body of the legislation includes a definition for virtual assets, tokens, cryptocurrency mining and VASPs (virtual asset service providers). It also grants the Ministry of Industry and Commerce the authority to seek assistance from government bodies outside its boundaries to implement the law.
The bill explicitly states that cryptocurrency mining is a legal activity, noting that:
“Virtual asset mining is a digital and innovative industry. This industry will benefit from all incentive mechanisms provided in national legislation.”
Paraguay reportedly produces more energy than it consumes. As a result, several firms are interested in establishing cryptocurrency mining operations there to exploit this potential surplus.
Related:Mass adoption looms as South America’s second-largest company accepts crypto payments
In July, Paraguayan Congressperson Carlos Rejala and Senator Fernando Silva Facetti presented a Bitcoin (BTC) bill in Congress, demonstrating the lawmakers’ commitment to crafting a comprehensive digital asset policy for their nation. The legislation has now been passed by the country’s Congress and will be discussed in the Chamber of Deputies in 2022.
Due to local economic and fiscal challenges, especially in Argentina, Venezuela, and Mexico, South America has emerged as a viable hotbed for cryptocurrency adoption. For example, as their national fiat currencies crumbled, Argentinians and Venezuelans have turned to digital alternatives like Bitcoin as a more viable payment option. Others, such as El Salvador, have taken a completely different approach, with the president encouraging the use of BTC on the people
As Venezuelans have struggled to survive the pandemic during times of dictatorship, the crypto company Circle collaborated last year with the countries’ opposition to financially aid healthcare workers who were abandoned to a broken-down system with almost no proper medical equipment and a discouraging $15 a month salary.
Today $1 equals 45,000,000,000,000,000 bolivars –although it has been devalued to look like 4,5 VES–, a cipher too large to comprehend, much like the general panorama. The basic food basket is calculated over $300 a month, but the minimum wage is roughly $7, and last year many doctors were making as much a $15 a month.
Financial Times published a report where they describe the methods used by the interim president to bypass the Maduro regime’s tight grip that would not allow citizens to receive any type of external aid.
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As Gideon Long’s report remembers, the U.S. sanctions on Venezuela had made the situation worse for its citizens with the state funds frozen in U.S bank accounts, but the politicians who oppose the government –with Guaidó recognized by Washington as Venezuela’s legitimate president– found leverage in that by managing to access the accounts after convincing the US Treasury of doing so.
But how would they get the money to the health carers’ hands if the government was extremely against it? Legitimized or not, Venezuela is still under Maduro’s control, so the banks were not a possibility, but stablecoins were. During the bumpy road, the crypto era opened a pathway that wouldn’t have been there a decade ago.
Circle, U.S.–based fintech innovator Airtm and Juan Guaido’s team collaborated in what they claim to be the first “use of stablecoins for foreign aid“, the “only viable option available”.
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Circle says on its website: “we were able to put in place an aid disbursement pipeline that leveraged the power of USDC — dollar-backed, open, internet-based digital currency payments — to bypass the controls imposed by Maduro over the domestic financial system and put millions of dollars of funds into the hands of people fighting for the health and safety of the people of Venezuela.”
Maduro’s regime did its best to block the Airtm platform, where healthcare workers would receive the aid, but Guaidó’s team published a guide on how to use the Canadian company TunnelBear’s VPN, which provided free services for a while.
Many countrymen have said that not much changed for Venezuelans either way but at the same, the landmark that collaborations like this ones create show the possibilities that the crypto era we are entering can offer in situations of despair. It’s not all about the market, it’s also about freedom.
Related Reading | Venezuelan Airport To Accept Payment In Bitcoin
Inside The Effects Of Crypto
As the countrymen were already in a heartbreaking situation, the times of Covid came around and Venezuela entered deeper despair. Numbers on deaths cannot be officially traced because the regime covers them up to make itself look better, and all we are left is with the abandoned voices of its victims.
Guillermo Herrera Gallo, a Venezuelan doctor that currently works for the Red Cross in the country, was one of the health workers to receive the bonus. He made comments to newsBTC about his personal experience regarding the financial aid through the decay of Venezuela’s health system.
Herrera said that the aid didn’t make much of a difference for the lives of doctors, but he did see relief in the eyes of nurses who could finally afford a better meal and supplies for their children. He thinks that the method and platform used were strongly beneficial when facing a national currency devaluation that has become useless and was pleased with how secure using AirTM feels like.
Circle adds that this event remarks “the freedom of people to transact, even in the face of brutal dictatorships. It also marks a historic moment where in order to execute on foreign aid objectives, economic and political leaders have turned to stablecoins. ”
Related Reading | How Bitcoin is The Answer To Venezuela’s Stuck-At-Sea Oil Supply
Last month, Cointelegraph interviewed Reserve CEO Nevin Freeman and the payment decentralized application’s community manager Yens Michiels about the company’s mission to provide access to stable currencies. More recently, Cointelegraph spoke to a couple of users based out of Venezuela and Colombia who shared their positive experiences with Reserve.
Reserve is a tool to exchange fiat currency like Venezuelan bolivares for U.S. dollars via the Reserve (RSV) stablecoin. From everyday purchases to family remittances, Reserve has said that its use cases are increasingly growing in Latin America. After one year on the market in Venezuela, Colombia, Panama and Argentina, there are over 100,000 weekly app visitors and more than 8,000 merchants accepting it as a means of payment.
Sasha Antunez and Alicia Stephany are two Reserve customers who offered their perspective on the app’s role in their daily lives and on the economic situation in Venezuela. Antunez is a neurologist living in Maracay, Venezuela and a self-proclaimed “Reserve Ranger” who uses Reserve both at home and at work. Stephany is a Venezuelan living in Bogota, Colombia who uses Reserve to support her family members that still live in Venezuela.
Antunez explained how she uses Reserve for daily expenses:
“I have my Reserve dollars saved in the app. Suppose I have to go to the supermarket and I have around $20. I do the exchange so that I have bolivares in my bank account and can pay for everything at the supermarket. But I also know that I can take my bolivares, turn them into Reserve dollars, and then into USDT.”
Most customers use it to save their money. If they get paid in their local currency, they do not have to worry about its devaluation if it is in U.S. dollars. And if they need to buy something in a local currency, as Antunez described, they can always convert it back or pay directly with the RSV stablecoin if the merchant accepts it. Most don’t even realize that it has to do with cryptocurrency, like Stephany.
“The Venezuelan bolivar loses value so fast that if you have bolivares, you need to change it as soon as you can to protect them,” she explained, adding the example that if she’s in Colombia and her father is in Venezuela, but “I needed to pay for his things, then instead of only exchanging what I needed at the supermarket, I was always looking for someone to buy extra dollars from me. So, I convinced the people from the supermarket and the pharmacy I use to download Reserve.”
Related:Venezuelan international airport to accept Bitcoin payments: Report
The government introduced a re-denomination of the currency in October, the third one since 2008, in order to ease computations. The economy, however, had already been increasingly unofficially dollarized. This means that prices in stores are marked in dollars, corresponding to the black market rate rather than the official exchange rate, as more and more merchants use PayPal, Zelle or, now, Reserve. With Reserve, users can exchange currencies at rates closer to those of the central bank.
Couple this volatility with hyperinflation, and mistrust in the government and the banking system is bound to surge among citizens. When asked about the prospects of the economy getting better in Venezuela, Antunez said:
“I believe that technology will play a big part because cryptocurrencies allow financial freedom and free access for everyone. That’s how we need to address this situation, by giving people the tools to protect their money. Here, we don’t have any solutions, at least not right now. And I don’t see things getting any better. In the meantime, we’re just trying to protect the little money we earn from our jobs.”
At the time of publication, the project’s iPhone app was the No. 1 most downloaded app in the Venezuelan app store under the finance category. Binance and MetaMask, two other cryptocurrency trading apps, are among the top 10 as well.