8/13/2017 Could Bitcoin Help Venezuelans As Crisis Deepens?

| Zero Hedge

Could Bitcoin Help Venezuelans As Crisis Deepens?

by Tyler Durden
Aug 13, 2017 3:30 PM

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Authored by Michael Kern via Crypto Insider,

Protests continue to rage in Venezuela as inflation soars to unprecedented levels and the price of oil remains low. The country’s national
currency is now worth less than fictional gold in Azeroth, the setting of the popular massively multiplayer online role-playing game World of Warcraft,
pushing Venezuelans to bitcoin to hedge against the nation’s struggling economy.

So, What Happened?

Under President Hugo Chavez, Venezuela underwent a revolution, bringing social programs such as education and health care to the people, propped
up by increasing oil prices. During his presidency, however, Chavez was accused of bending the economy for personal gain, human rights violations,
and intimidation of the media. Price controls placed on basic goods, including food, initially meant to redistribute wealth and reduce costs, led
to hyperinflation and shortages. Crime and violence also increased drastically under Chavez, leaving the country as one of the most violent in
the world.
Venezuela’s misfortune increased, however. In 2013, Chavez passed away and his Vice President, Nicolás Maduro, took power. Worries of corruption
mounted while plummeting oil prices created an economic climate which was less than desirable. Maduro’s inherited economic burden, in addition to
the leader’s failure to diversify the country’s economy led to widespread protests in 2014.
In response to the deepening political crisis in Venezuela, then-President Barack Obama hit prominent level officials with sanctions, with White House
spokesperson Josh Earnest saying that the administration is "deeply concerned by the Venezuelan government's efforts to escalate intimidation of its
political opponents." The administration’s efforts to dissuade corruption, however, were in vain.

As oil prices continued their descent and Maduro’s mismanagement of the country’s economy intensified, Venezuelans chose a new way to protect
themselves financially.

Venezuela Turns to Cryptocurrencies

Between 2014 and 2016, the number of users on just one Venezuelan Bitcoin exchange skyrocketed from just several hundred to over 85,000
users. Cheap, subsidized electricity and a failing currency pushed a number of young entrepreneurs to build their own mining operations. One trader,
John Villar, Caracas-based software developer, most eloquently stated "Bitcoin is a way of rebelling against the system." While the currency
remained a niche form of payment in the country, many users purchased food and goods online through online marketplaces such as Amazon.com,
albeit indirectly through gift cards purchased with the cryptocurrency.
Noel Alvarez, former president of the Venezuelan Federation of Chambers of Commerce, stated that “A maximum of one per cent of the population has
access to it, but it is very useful in our situation.”
Bitcoin’s popularity in Venezuela continued to grow. It became the country’s leading parallel currency. Some vendors even begun accepting
Bitcoin exclusively. A popular online travel agency, Destinia, cited that, due to the bolivar’s instability and the trouble many Venezuelans experience
when attempting to leave the country, “Giving priority to Bitcoin as a payment method could be of help."
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While Destina admitted that Venezuela is not a primary focal point for their company, they chose to prioritize Bitcoin payments in the Venezuelan
market to facilitate the travel needs of the people in light of the persisting economic downturn.
With infrastructure in place, trading and mining becoming more popular, and the crisis escalating, Maduro’s government began to take notice.

Maduro’s War on Bitcoin

The Venezuelan government began to crack down on the Bitcoin community, with police extorting citizens for “misusing electricity” or
undermining the country’s economy. These grievances intensified over time, however, and the attack on miners became more apparent. In the largest
raid, two miners were caught with 11,000 mining computers and were charged with cybercrime, electricity theft, exchange fraud, and even funding
terrorism.
In Feb. 2017, following the incident, Surbitcoin, Venezuela’s most popular exchange went offline. The company encouraged users to withdraw
their money immediately as Banesco, the company’s banking partner, was set to revoke the account associated with the exchange. Rodrigo Souza, the
founder and CEO of Surbitcoin, noted that "When it was found that there were 11,000 mining computers consuming the energy to power a whole town
at a time when there are severe electricity shortages, it triggered a reaction.” Souza went on to say that the company was not contacted by the
government, but Banesco revoked their account as it did not want to be associated with such an operation. Surbitcoin resumed operations two weeks
following.
The economic crisis continued to escalate as oil prices remained stagnant and Venezuela’s oil production shuttered. 
What’s Next?
On July 31st, in a highly controversial election, Venezuela voted for a new constituent assembly giving President Nicolás Maduro even greater control in
the country on the brink of civil war. The new pro-Maduro constituency will now have the power to re-write the country’s constitution.
Critics of the election have suggested that the vote was manipulated. National Assembly President Julio Borges tweeted the vote was “the biggest
electoral fraud in our history."

Following the election, Maduro set his sights on opposition parties. At midnight on August 1st, two opposition leaders, Leopoldo Lopez and Antonio
Ledezma, were pulled from their homes by teams of heavily armed guards.
U.S. President Donald Trump announced in a statement "The United States holds Maduro - who publicly announced just hours earlier that he
would move against his political opposition - personally responsible for the health and safety of Mr López, Mr Ledezma and any others
seized."
"We are evaluating all of our policy options as to what can we do to create a change of conditions, where either Maduro decides he doesn't have a
future and wants to leave of his own accord, or we can return the government processes back to their constitution,” Trump added.
The United States has since frozen the assets of Maduro and is considering deeper sanctions, possibly even targeting PDVSA, Venezuela’s state-held oil
company. An action which could send the country over the edge.  As tensions rise, the country is entering a state of chaos.
With the collapse of the economy, Venezuelans are running out of options. Bitcoin could come as a saving grace to many people. It has kept
food on the tables of families, helped Venezuelans escape the distraught nation, and acted as a voice of rebellion against the oppressive
government. But how Maduro’s regime will proceed remains to be seen.

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The Cooler King • Aug 13, 2017 3:40 PM

I nominate mosley & Raffie for the next 'DICTATORS' of Venezuela!
 
Think about it. If they're right (which, perhaps, THEY ARE).
 
What could POSSIBLY GO WRONG? (please answer sincerely, before resorting to the reflexive junk ~ this is actually an interesting theory)
 
& whereby ~ if the 'junks', above, are from ad hoc mosley, Raffie, & bitcoin fluffers, then, WHY ALL THE HATE ALL OF A SUDDEN?

tmosley  The Cooler King • Aug 13, 2017 3:42 PM

You don't have any arguments. Just sophistry.
We are tired of it, and you. So fuck off.

The Cooler King  tmosley • Aug 13, 2017 3:49 PM

Who are the "WE" (you & Raffie)?
 
Both of you have represented yourselves as the poster childs of future economic well being. (just buy bitcoin)
 
Not only should geniuses, such as yourselves, & whereby others just don't understand,  be in charge of Planetary economics, but that
skillset should qualify you to pull fucked up countries out of their misery as well.
 

Akin to, Zuckerberg for 'in PRESIDENT' (as it may be).

 
Anyway ~ You got MY VOTE... I think you should run Venezuela... Let that be a 'Petrie Dish' as to the viability of the 'crypto' revolution. (&
FFS, they're sittin on top of oil ~ so, WHAT COULD POSSIBLY GO WRONG)?

tmosley  The Cooler King • Aug 13, 2017 3:50 PM

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tmosley  The Cooler King • Aug 13, 2017 3:50 PM
Not an argument.

Alt-RightGirl  tmosley • Aug 13, 2017 3:52 PM

If we're not careful, the Heckler's Veto from the left will take us down the path of Venezuela.
#StandUpWhiteMan
Unite the Right and how Heckler’s Veto Shuts Down the First Amendment Again
http://dailywesterner.com/news/unite-the-right-and-how-hecklers-veto-shu...

Billy the Poet  Alt-RightGirl • Aug 13, 2017 3:53 PM

Bitcoin won't save Venezuela but fidget spinners might do the trick.

The Cooler King  tmosley • Aug 13, 2017 4:11 PM

@mosley
"Not an argument."
 
On the contrary...
 
PRECISELY an argument... Here's why...
 
The woes of Venezuela, or Greece, or others in that category that you'd might want to nominate are EXACTLY mired in economic slavery.
Here are the facts that follow (that you yourself are on record as acknowledging)
 
- Bitcoin wallets, today, number, around 15.8 million (a number you yourself put forth)
- the 'ceiling' on bitcoin wallets is 2^16, which, you yourself acknowledge.
- The population of Venezuela, or Greece, (or even the next 10 that you might want to nominate & AGGREGATE wouldn't even come
close to ticking the present exponential on 2^160 even by 1)
- So, IOW, you, as dictator, could furnish EACH Venezuelan citizen with 1 bitcoin wallet each and fund it with, THE MINIMAL necessary.
(FFS ~ just sell some oil to come up with the necessary funds)
- Then, sit back and watch as bitcoin rises to $50k (you could even appoint McAfee as your Defense Minister to make sure this
happened).
 
WHAT.COULD.POSSIBLY.GO.WRONG.?

Spankotron • Aug 13, 2017 3:34 PM

Could Bitcoin Help Venezuelans As Crisis Deepens
 
Sure, why not... using gasoline to put out a fire is always a good idea

tmosley  Spankotron • Aug 13, 2017 3:41 PM

Are you implying that Bitcoin causes communism?
Or are you just saying words that sound like they will hurt the "other side"?

VWAndy • Aug 13, 2017 3:38 PM

 They best start bartering in a big way.

BritBob • Aug 13, 2017 3:39 PM

Perhaps Maduro will use his 'Malvinas distraction' against the British imperialists?
Maduro is a keen supporter of Argentina's mythical Malvinas claim even speaking at regional conference on behalf of Argentina (CELAC).
How can Argentina claim the Falklands when she has never legally owned them?
Falklands- Never Belonged to Argentina:
https://www.academia.edu/31111843/Falklands_Never_Belonged_to_Argentina
 
Still, why let a good old socialist distraction get in the way of the truth.

Xredsx  BritBob • Aug 13, 2017 3:50 PM

Did you know that Britain gets a vote from each commonwealth country when it comes to voting  in the UN. Your worrying about nothing
my dear friend. 

debtor of last ... • Aug 13, 2017 3:40 PM

I'd like a pound of wheener meat, can i pay with btc?

Crypto Kevin • Aug 13, 2017 3:41 PM

So the Tylers' have gone from pumping silver to pumping crypto now. It might be time to sell. We all remember what happened to silver 7
years ago when ZH was pumping it everyday.
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years ago when ZH was pumping it everyday.

Grandad Grumps  Crypto Kevin • Aug 13, 2017 3:44 PM

I have had my fill of pumping and fake news from ZH.

Billy the Poet  Grandad Grumps • Aug 13, 2017 3:54 PM

But you keep coming around because there's always room for Jello?

Dirtnapper  Crypto Kevin • Aug 13, 2017 4:00 PM

Besides food/weapon/ammo/seeds, one should be buying silver and cryptos.  Gold, not so much.

debtor of last ...  Crypto Kevin • Aug 13, 2017 4:09 PM

So the deep state has gone from providing propaganda to filling up blogs.
It might be time to ignore. We all remember what happened to the world when Goebbels was pumping truth.
Fixed it for you.

ebworthen • Aug 13, 2017 3:42 PM

Sure, you're average everyday Venezuelan is going to be buying flour and toilet paper with Bitcoin.
And maybe freedom-fighting warrior unicorns from Planet Rainbow 9 will conquer Maduro and the Socialists.

tmosley  ebworthen • Aug 13, 2017 3:44 PM

Replace "Bitcoin" with "gold" in your post, and then re-evaluate your position.

malek  tmosley • Aug 13, 2017 4:12 PM

OK, I'll try:
1. Starting at zero (or after a complete collapse), the first form of trade will be -as always- bartering goods-for-goods.
2. The next evolution is trading goods-for-most-commonly-accepted-valuable-goods.
(3. Much further down the road those are replaced, first locally, with scrip promising redeemability to those valuable goods. At a late stage
that becomes universally accepted fiat.)
Could bitcoin replace gold in step 2? Unlikely as every trader would need a working internet connection.
Could it replace fiat in step 3?
Yes. but that will not help Venezuela in the near future.

Bay of Pigs  ebworthen • Aug 13, 2017 3:49 PM

What could have helped them? The author conveniently forgets that Chavez brought all their physical gold back to Venezuela, which in turn
was basically given away by Maduro. I'm sure anyone holding gold or silver has protected themselves from the hideous inflation as have the
BTC owners.

Jimmy Jimmereeno  Bay of Pigs • Aug 13, 2017 3:55 PM

",,,Price controls placed on basic goods, including food, initially meant to redistribute wealth and reduce costs, led to
hyperinflation and shortages..."
While it is true that price controls will cause shortages of goods and services (the price control level is a ceiling and most or all goods will
experience a "ceiling bid"),  the author is full of shit when he states that controls caused hyperinflation in Venezuela.  He lacks a basic
understanding of economics, a basic understanding of how humans behave.

dlfield • Aug 13, 2017 3:42 PM

Good God YES!!  Let's sell bitcoins to them!!

Grandad Grumps • Aug 13, 2017 3:43 PM

I have to believe that the crypto currencies are controlled by the same forces as the central banks and what looks like a possible exit is
simply submitting to the dragon's maw.

FreeShitter  Grandad Grumps • Aug 13, 2017 3:47 PM

How are they controlled by the same forces? Are you implying these forces mine them?

tmosley  Grandad Grumps • Aug 13, 2017 3:47 PM

Is someone putting a gun to your head to make you believe that?
If you think for a second, you might realize that the gun is in YOUR hand.

DeepFriedLizards • Aug 13, 2017 3:43 PM

Buying groceries from Amazon?  So the postal system is still intact yet not monitored?  There seems to be a lot of missing peices to this
story.

tmosley  DeepFriedLizards • Aug 13, 2017 3:48 PM

I don't think the government minds supplies coming in. It's just they don't want currency exchanges happening at non-official rates, as
that humiliates them.
And they would rather the citizens starve than be humiliated.

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SantaClaws • Aug 13, 2017 3:50 PM

Might be Maduro and his insiders who are buying Bitcoins with what's left of Venezuela's wealth.

Bay of Pigs  SantaClaws • Aug 13, 2017 3:57 PM

BOJ too. No question that the Japanese are responsible for this impressive run in BTC.

hoytmonger • Aug 13, 2017 3:53 PM

What happens to bitcoin when the electricity goes out?
 

hoist the bs flag  hoytmonger • Aug 13, 2017 3:54 PM

shit.. you beat me to it

Planet Israel  hoytmonger • Aug 13, 2017 4:00 PM

"What happens to bitcoin when the electricity goes out..."

because all the electricity is being used to mine bitcoin?

In.Sip.ient  hoytmonger • Aug 13, 2017 4:06 PM

Happens all the time.
And the results?  Bitcoin cleared $4000 today   !
 

MPJones • Aug 13, 2017 3:55 PM

Great news for Venezuelans (except those living of wealth plundered from the population). Bear in mind that those calling themselves 'The
Government' are nothing but members of the prevailing crime syndicate in an area, stealing with arms and legs from the working population
to keep themselves in BMWs, private jets and caviar. They are parasites.
However, it important to starve them out by switching away from the fiat-fraud perpetuated by their partners in crime: the central banks, by
using cryptocurrencies, local currencies, metals and barter trade before a crisis like the one in Venezuela hits - and it inevitably will in
countries infested by socialist ideas and collectivism. Take control of your own life and shrug!

hoist the bs flag • Aug 13, 2017 3:54 PM

does BitCON work without electricity?

Dirtnapper  hoist the bs flag • Aug 13, 2017 3:58 PM

Sure, just use paper wallet.

Planet Israel  Dirtnapper • Aug 13, 2017 4:03 PM

I can imagine the lady at the check out counter writing down on paper public keys, btc amount and venezuelan bolivar amount hoping to
enter the numbers into the block chain when the system finally get back up.

Dirtnapper • Aug 13, 2017 3:57 PM

What, a peer to peer international payment system on cell phones is hurting some centralized fiat system? Heaven forbid.  Say it ain't so!

Maximeme Q • Aug 13, 2017 3:58 PM

Meh. Larger pic of the chick confronting cops was disappointing.

bugs_ • Aug 13, 2017 4:01 PM

acting and thinking as a group is apparently not working for the Venezuelans.
acting and thinking individually may help and bitcoin can be a part of that.

centipede • Aug 13, 2017 4:02 PM

I do not quite get how could possibly cryptos be a solution form most of Venezuelans. Their main problem is to get basic food on the table.
Are they gong to pay with bitcoins on the local markets for bread, meat, fruit and vegetable?
If I were in their shoes, I would try to get $, euros, GB ponds, ... or gold, silver, platinum or even nickel or cigarettes, soap, ... for my
products and services and trade them for food.

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