Bitcoin Can't Fix Venezuela: I Should Know

Today marks a week since I left my home in Venezuela.

So, here I am, watching the news since 6 a.m., haven’t separated from my phone all day. I'm worried about my loved ones, wondering if I could have done more before leaving, but knowing I had to leave anyway.

I left everything I knew behind, but I also fled an escalating crisis that jeopardized my income as a remote worker in the crypto space, where I’ve been now for years.

For the Venezuelans using cryptocurrency as a tool to survive the economic consequences of a brutal socialist dictatorship, receiving support from the international community has been vital to the reformation process. The trouble is that this attention has quickly deteriorated into a double-edged sword: a trend.

In the last few years, Venezuela has become a favorite pop culture reference in crypto, where bystanders – usually from a privileged background and perspective – spout their ill-wisdom about Venezuelan socialism, economy and migration.

This situation is particularly common in crypto. People armed with good intentions and misinformation about how Venezuela’s economy works – or better said, how it doesn’t work – spread their confusion and often diminish an extremely painful experience being shared by millions of Venezuelans.

So let me, as someone who used bitcoin to survive in Venezuela, clear up the misconceptions: Bitcoin can’t fix the situation in Venezuela.

There are no official statistics of how many crypto wallets there are in Venezuela. There’s no way to know how many each person owns. What it is very clear is that beyond a couple of businesses that accept this form of payment and a few trusted exchange platforms online, there are no services for crypto users available in the country.

No ATMs. No prepaid debit cards. Just assumptions.

The fallacy that bitcoin could “save” a country’s whole economy assumes the country meets all the requirements for mainstream adoption. Just to start, there would be needed widespread computer and financial literacy, reliable electricity infrastructure, stable internet service and an economy that not only allows the majority of citizens to count on a device to keep their digital wallets but also the safe migration from fiat money to digital money.

As we can see, the fact that Venezuela serves as a use case for bitcoin does not mean that it currently has the circumstances for broad cryptocurrency adoption.

The hyperinflation has stepped all over the Bolivar, as it also impacts US dollar-based prices that rise on a daily basis. So using bitcoin to get dollars, which is what many Venezuelans currently do, is still problematic and vulnerable to inflation issues.

There’s also the mining. Venezuela is famous for its off-the-charts rates of bitcoin transactions and mining activity. But the reality is that having access to cryptocurrency is limited to earning freelance income, trading and mining, which unless you are wealthy enough to own your own mining farm, isn't a feasible option for most Venezuelans.

The crypto misconception

Foreign initiatives to help Venezuelans have instead revealed widespread ignorance about the actual problems that Venezuelans face.

Working personally as a contact for the crypto charity GiveCrypto, owned by Coinbase, during 2018, I found a common problem in this initiative that others have followed: the gigantic misinterpretation of how to help from outside.

In the case of GiveCrypto, the goal was unreachable from the start: to feed 300 people with $100 in bitcoin. That’s 33 cents per person. To anyone with an understanding of the economic situation of the country, hyperinflation wouldn’t be this underestimated. Sadly, it’s quite commonplace.

And this isn’t an isolated case of donations given without much of strategy based on reality.

Crypto donations are very popular nowadays, like in the case of AirTM, which has just announced that will be teaming up with MakerDao on its goal to raise $1 million to distribute between its users in Venezuela, with a goal of giving away $10 to each aid recipient. (Such a small amount doesn’t serve as savings or investment, as it easily vanishes for a week’s worth of expenses.)

Despite all the international efforts to distribute crypto in Venezuela, so far there aren’t any solutions able to make a sustainable and adequate difference beyond what a similar dollar donation could have achieved. The important thing for these foreign brands appears to be just cramming a blockchain-shaped peg into any hole.

Silver lining

Despite this situation, outsider opinions don’t determine the actual impact of crypto adoption for Venezuelans.

It’s true that cryptocurrency is very useful for a specific range of activities that support survival, as an income for freelancers, as a form of remittance for families to receive U.S. dollars at minimum commission, and – when the internet and electricity allow it – for those with an extra income who mine from their GPUs or miners.

I do believe that bitcoin has the capacity to influence Venezuela’s financial landscape in a positive way. As cash loses its value, citizens are pushed toward digital money and eventually, that money could include cryptocurrencies.

While we are in this process, Venezuelans must stop being seen as a punchline for misleading arguments about the benefits of bitcoin. The country situation has shown the many phases of an economic crisis, and there are invaluable lessons that we have learned that give a whole new twist to our view on financial solutions.

That said, the crypto industry needs to stop viewing Venezuela as a testing ground for wild ideas and start viewing us as what we really are: irreplaceable partners in the financial revolution.

Venezuelan protest via Shutterstock