Ep. 10 | The Use Case for Cryptocurrency (with Alejandro Machado)
In this episode, we discuss the emerging using of cryptocurrency in Venezuela and the potential use case for this revolutionary technology to combat the endemic hyperinflation that plagues the country’s economy.
Venezuela's national currency, the bolivar, is at the brink of extinction. The value has plummeted to such a degree that the currency is worth less than the paper is printed on. This severe devaluation has led to a de facto dollarization in the country, and a reliance on dollar remittances from families living abroad.
However, sending money across borders into Venezuela can be very difficult. US dollars are restricted, and capital controls affect the functionality of traditional remittance services like MoneyGram and Western Union. Many of the five million migrants spread across Latin America are unbanked (without a checking or savings account), and have to resort to remittance transfers in black markets that are often rife with high fees, delays, and potential fraud, affecting their ability to send funds to their families in Venezuela.
Cryptocurrency may be a solution. Venezuela now ranks third in cryptocurrency use worldwide. How is it being used? What advantages could cryptocurrencies like Bitcoin have for Venezuelans who need to preserve their wealth and purchasing power amidst endemic hyperinflation and monetary restrictions by the Maduro regime?
We’re joined in this episode by Alejandro Machado, a Venezuelan entrepreneur and software designer. Alejandro is the co-founder of the Open Money Initiative (OMI), a research organization that looks into how people use money in closed economies, specifically how Venezuelans at home and abroad used dollars, Bitcoin, and bolivars. He’s also the Head of Research at Valiu, a Colombia-based startup and remittance service working to help fight inflation with synthetic U.S. dollars backed by Bitcoin.
We discuss how Bitcoin solves the problem of hyperinflation in Venezuela, and how remittance services like Valiu can help create new synthetic dollar accounts for Venezuelans who need a solution to avoid using bolivars, which can decrease in value at a literal hourly rate.
We also discuss the use of AirTM, another cryptocurrency exchange and remittance service, by the interim government of Juan Guaidó to send funds to health care workers battling COVID-19, and the efforts of the Maduro regime to block those transactions to prevent emergency funds from reaching Venezuela’s health care heroes.
Twitter: @alegw
Valiu's Bitcoin dollars are changing remittances, starting in Venezuela | Decrypt
Venezuelans bypass Maduro’s blockade using digital wallet provider AirTM | Miami Herald
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