It is no secret to Venezuela’s economic crisis that has contributed only in the last two years an immigration exodus that is similar to that of countries in warlike conflicts like Syria, with more than five million people displaced outside the borders of the former ” Little Venice ” thriving from previous decades.
The hyperinflation that the Latin American nation suffers from an average daily loss of up to five percentage points of its native currency, added to the distrust of traditional banking, are making cryptocurrencies such as Bitcoin increasingly popular in the country today in day.
● Venezuelans sell Petro at LocalBitcoins at half the official price
And it is that exchanges such as LocalBitcoins are becoming crucial for people who reside in Venezuela since it allows a natural bridge free of government control to get the money to the family. The modus operandi has two ways to do it.
The first and most erratic, so to speak, is buying Bitcoin on the platform and then sending them to an intermediate person on the Venezuelan-Colombian border, who in turn converts it to the Venezuelan currency to give it to the direct beneficiary.
● Venezuela and Cuba sign agreement to pay obligations in Petro
As a result of the above, a reference rate for Bitcoin has been created concerning the parallel dollar that governs the country, which not only influences the unofficial conversion rate that is handled every day, but also in a very low value compared to the reference mentioned above.
In a hyperinflationary country, the difference of a couple of dollars that are lost in the use of this route can mean half of a basic salary for any public or private employee in the nation.
We can see that the ‘Bitcoin dollar’ used by sources to average the daily reference rate of the black dollar is up to 5,000 units below the nominal value indicated above. The reason is that users take LocalBitcoins essentially as the backend for that trade, generating an additional cost by taking it to Colombian pesos and then to Venezuelan fiat currency within the same platform.
● Maduro announces “crypto casino” that will work with Petro
But some are already choosing to use the second way. It is the most expeditious and least expensive. In this case, the sender opens an exchange in the country where he resides to take the local currency that he handles abroad and exchange Bitcoins, and then sell it directly to Venezuelan fiat currency within the same exchange and place it in a bank account of a relative of Immediately without interventions from a third party. Personally, it is the most effective way to send money.
Thus, the P2P platform”It is being used as a bank transfer service,” as Eduardo Gómez, Purse.io Customer Service Manager, agrees.
Although many Venezuelans who receive remittances have no idea of how Bitcoin is used to send their money, a large handful that is aware of the situation is generating great traction on the platform with this type of alternative, even generating high volumes of weekly exchange within sites such as LocalBitcoins.
But not everything that shines is gold. The government is already aware of the situation and as part of its tight control in the best Cuban style to take the dollars generated by remittances, it has ordered the closure of bank accounts and stricter controls for those who enter from abroad to the virtual financial platform without prior notification of your departure from the country, or even those accounts with unusually high volumes of unjustified deposits.
That is why, for about a year, you can see on the platform ads that exchange that indicate possessing IP of Venezuela, to avoid the aforementioned sanctions.
Therefore, the best way to promote the adoption of cryptocurrencies as a decentralized solution for the payment of remittances is through the literacy of the thousands of their citizens who remain in the nation for the direct use of the platform without the need of a third party or log in to your accounts outside the borders.
The foregoing would prevent the decrease of the Bitcoin conversion value for the use of third parties, and the penalization of Venezuelan authorities for improper access to their accounts, according to the laws of the country. What, in short, if Venezuela is generating with the current use of Bitcoin for the payment of remittances, is undoubtedly a unique opportunity for innovation for bright minds within the ecosystem, especially regarding decentralized finance.