![Bitcoin [btc] and venezuela: an experiment on trust and technology?](https://ohiobitcoin.com/storage/2019/05/Screen-Shot-2019-05-13-at-4.52.03-PM.png "Bitcoin [btc] and venezuela: an experiment on trust and technology?")
Jill Carlson, the Co-founder of Open Money Initiative, spoke about the economic crisis in Venezuela and the role of cryptocurrencies in the country at the Magical Crypto Friends Conference 2019. Carlson’s presentation on ‘Designing for Extremes: Money Hacking in Venezuela’ provided an insight into the factors behind the country’s closed economy and its crumbling monetary system, its outcome, and the present scenario.
Under the reasons that contributed to the collapsing monetary system and closed economy, Carlson laid down three factors. First, Venezuela is a Petro-state, a country that was among the richest economies in the 1950s because of its oil reserves. However, this started to change with the crash of oil prices from $100/ barrel to $40/ barrel in 2014.
Second, policies that curb civilians’ rights to do what they want with their money and the type of currency they can use/cannot use. Venezuelan citizens are not allowed to use any other currency apart from the Bolivar, as per government instructions, and if a civilian gets caught with the US Dollar, then he/she faces jail time. Further, civilians are not allowed to freely move their money [neither in and out of a currency nor in and out of the country].
Third, the United States and other countries’ sanctions on government officials/individuals who are part of the regime and the country itself restrict the government’s ability to access funding. This was followed by Carlson speaking about the current scenario in Venezuela. Along with severe price controls, civilians are also experiencing severe shortages of food, goods and services. She said,
“Venezuela is predicted, this year, to experience 10 million percent inflation, we complain if inflation ticks up above 2 percent. In Venezuela, you can’t set your price in dollars as I mentioned. You don’t get to chose what type of currency you use, even if you find a way to access it. You can’t move your money in and out of the country.”
Further, Carlson revealed that the firm’s team paid a visit to the borders of the Republic of Colombia to better understand the situation there, adding that they also spent time in two of the country’s major cities.
She stated that a ten million percent inflation meant that shopkeepers had to update the price of their goods and services on an hourly basis, instead of doing it on a daily basis. Shortages meant that women neither had access to tampons nor toilet paper in the country, and that dish soap was replaced for body soap as it would not be available anywhere. She explained,
“What does the price control’s look like? We talked to a farmer who is growing coffee beans, he loved being a farmer, this was his lifeblood. But he abandoned his farm because he told us the stories of the national guard coming to his farm when they caught a hint that he was selling his coffee beans for a profit, and they beat him and they threatened to rape his wife. And so he abandoned his farm because he would rather walk away from that, walk away from land and lifeblood then sell at the prices the government was mandating.”
Carlson further stated that the firm conducted displacement exercises on Venezuelans, where they challenged people to displace a given behavior. One of those exercises was distributing bitcoin to people and challenging them to use it to buy a product/good/service, in order to know the hurdles involved in using it.
The people who took part in this exercise were not necessarily crypto-native people, she stated, adding that it was usually people who had only heard of bitcoin. This information was further used for research purposes, information that would provide insights, help understand the narratives, information of individual experiences with which developers and technologists contribute and help these people the way they want to be.
Carlson also pointed out some of the narratives that were later proven wrong,
- Narrative: People are worried about having enough money. The important issue faced by Venezuelans is related to having enough money. Alternative: the pressing issue is shortages. Carlson stated that “shortages are killing people more than anything else.”
- Narrative: People need any alternative to the Bolivar. Alternative: People still need the bolivar to survive; This was mainly because of the government’s mandate that people had to use the bolivar. To this, Carlson gave the example of Ana Maria, a 20-year-old engineering student and her path to mining bitcoin.
“[Ana Maria] and her boyfriend, a couple of years ago, imported some Antminer S9 […] As time went on and has the crisis deepened in Venezuela, this became her family’s sole source of income. She was making $800/ month out of these Antminers; [electricity price] it’s practically free. She uses Local bitcoin, which is a peer-to-peer bitcoin exchange, in a really unique way. She changes the Bitcoins to bolivars and deposits them in her own bank account or often times her mom’s bank account.
“[…] Why would she do that? [sell her precious Bitcoins for not just a fiat currency but a failing fiat currency instead of convincing the merchant to accept bitcoin] Everything still runs on the Bolivar, but Local Bitcoins enables her to cash out at exactly the moment, oftentimes as she is waiting for line at the movie theater or the grocery store. So, she is not holding the inflating currency for a single second longer then she has to.”
- Narrative: People are starving. Alternative: People are starving, but restaurants are full
- Narrative: The police are enforcing Venezuelan law. Alternative: The police are often breaking the law themselves
- Narrative: Once people find a hack, they can use that repeatedly. Alternative: People have to repeatedly find new hacks because problems keep changing. To this, Carlson gave the example of power and internet outages in Venezuela
Source: Magical Crypto Friends Conference
- Narrative: People need products and services that enable them not to have to trust each other
“You are living in such low trust environment, right, in Venezuela. You want to not want to trust each other as much as possible. Trust-less. But, if you look carefully at all these stories that we heard […] [Alternative] People need products and services not that enable them to trust each other but that enable them to trust each other […] focus your efforts on in what ways can we elevate trust instead of having this hyper-obsession around creating the perfect trustless crypto-system”
On a product that elevates trust, Carlson cited LocalBitcoins, a centralized company, as one of the best examples, stating that they were doing “a really good job at mastering the trade-off”. The platform allowed people to find counter-parties in a reliable way with the use of its rating and comment systems, she stated.
Further, the firm also addressed some important questions like: “How might we allow people to support each other within their extended digital networks? How might we enable people with unique access to foreign financials to extend that access to others in their network?”
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Published at Mon, 13 May 2019 23:26:43 +0000
