Venezuela and Bitcoin
Venezuela is currently involved in a humanitarian crisis.There is a lack of food and medicine and those that are available are unaffordable. Children are fainting from hunger in their classrooms and a survey by ENCOVI found that 75% of Venezuelans lost on average 8.6kg during 2016.
Cash has completely lost its value in Venezuela. The largest note, the 100-bolivar note was scrapped in December 2016 after it became worth a mere two US cents. In January a new 20 000 bolivar note was introduced but even that is only worth $6 and depreciating very quickly. Increasingly Venezuelans are turning to cryptocurrencies such as Bitcoin as both a means to produce income (mining Bitcoin) a store of wealth (due to rampant inflation in Venezuela and lack of access to hard currencies) and as a way to purchase products such as food and medicine which are unavailable in Venezuela.
Mining Bitcoins is relatively simple, all that is needed is a computer connected to the internet that is able to run difficult computations at very high speeds. The limiting factor is that it requires a lot of computer processing power which in turn requires a lot of electricity. Anywhere else in the world the cost of electricity makes it very expensive to mine Bitcoins, but in Venezuela thanks to the socialist government electricity is virtually free. Owning a specialised computer in Venezuela is akin to being able to print money. Having access to Bitcoin allows Venezuelans to purchase foreign products that they wouldn’t be able to buy with bolivars. For example they can use Bitcoins to purchase Amazon gift cards through eGifter (www.egifter.com), have the Amazon delivery sent to Miami and route the orders to Venezuela through a courier service. Others use a card such as Neteller which offers a pre-paid debit card which can be filled with Bitcoin. They can then cross into Colombia and purchase groceries using their Neteller card. Bitcoin is also now being used for remittances from other countries into Venezuela. The official exchange rate in Venezuela is 662 while the rate on the black market is over 3,000 so it does not make sense for relatives living abroad to send money back at the official rate. Instead they are able to use exchanges such as SurBitcoin and convert
currencies to Bitcoin and send them to relatives.
The government has started to crack down on the mining of Bitcoins with the charge of electricity theft which has led to requests for bribes for those that are caught and threatened with jail. The situation in Venezuela remains very difficult and recently the Members of the Organisation of American States (OAS) threated to suspend the country unless new elections were held. Venezuelan reserves continue to decline and now stand at just over $10bn, a new 15 year low. The discussion is moving towards which coupon Venezuela will default on rather than which year they will default
Venezuela is currently involved in a humanitarian crisis.There is a lack of food and medicine and those that are available are unaffordable. Children are fainting from hunger in their classrooms and a survey by ENCOVI found that 75% of Venezuelans lost on average 8.6kg during 2016.
Cash has completely lost its value in Venezuela. The largest note, the 100-bolivar note was scrapped in December 2016 after it became worth a mere two US cents. In January a new 20 000 bolivar note was introduced but even that is only worth $6 and depreciating very quickly. Increasingly Venezuelans are turning to cryptocurrencies such as Bitcoin as both a means to produce income (mining Bitcoin) a store of wealth (due to rampant inflation in Venezuela and lack of access to hard currencies) and as a way to purchase products such as food and medicine which are unavailable in Venezuela.
Mining Bitcoins is relatively simple, all that is needed is a computer connected to the internet that is able to run difficult computations at very high speeds. The limiting factor is that it requires a lot of computer processing power which in turn requires a lot of electricity. Anywhere else in the world the cost of electricity makes it very expensive to mine Bitcoins, but in Venezuela thanks to the socialist government electricity is virtually free. Owning a specialised computer in Venezuela is akin to being able to print money. Having access to Bitcoin allows Venezuelans to purchase foreign products that they wouldn’t be able to buy with bolivars. For example they can use Bitcoins to purchase Amazon gift cards through eGifter (www.egifter.com), have the Amazon delivery sent to Miami and route the orders to Venezuela through a courier service. Others use a card such as Neteller which offers a pre-paid debit card which can be filled with Bitcoin. They can then cross into Colombia and purchase groceries using their Neteller card. Bitcoin is also now being used for remittances from other countries into Venezuela. The official exchange rate in Venezuela is 662 while the rate on the black market is over 3,000 so it does not make sense for relatives living abroad to send money back at the official rate. Instead they are able to use exchanges such as SurBitcoin and convert
currencies to Bitcoin and send them to relatives.
The government has started to crack down on the mining of Bitcoins with the charge of electricity theft which has led to requests for bribes for those that are caught and threatened with jail. The situation in Venezuela remains very difficult and recently the Members of the Organisation of American States (OAS) threated to suspend the country unless new elections were held. Venezuelan reserves continue to decline and now stand at just over $10bn, a new 15 year low. The discussion is moving towards which coupon Venezuela will default on rather than which year they will default
Nessun commento:
Posta un commento