Editor’s note: Alejandro Machado and Jill Carlson have been researching the practical viability of cryptocurrency as a tool to overcome economic repression and hyperinflation in Venezuela. Carlson is a cryptocurrency consultant and former Wall Street executive. Machado is a computer scientist and product designer.
Many of us have heard that cryptocurrency can help people survive in Venezuela. Some of us have even heard anecdotes of refugees leaving Venezuela with nothing but their cryptocurrency holdings as savings. But to what extent do these anecdotes reflect people’s realities there? And where are there opportunities to provide more help?
Last summer, the Zcash Company brought us on board to tackle these questions. Overall, we found that while a few thousand tech-savvy, ambitious people are mining, earning, and saving in cryptocurrencies that hold their value better than the (hyperinflating) Venezuelan bolívar, the lack of awareness and poor usability of today’s systems are significant barriers to use for most.
Research through engagement
We conducted research, often by engaging with people on the ground in Venezuela to receive cryptocurrency as remittances or donations. One opportunity area we tested was in donating to established humanitarian organizations operating within Venezuela, which struggle to receive donations from outside of the country due to capital controls and foreign exchange bans. However, we faced major challenges around education, usability, and exchange while onboarding these charities. They don’t know what cryptocurrencies are, don’t think of them as money, don’t know how to store them safely, and don’t know how to exchange them into bolívares – a necessary step for dealing in the local economy these organizations are embedded in.
Open Money Initiative
Out of our work with the Zcash Company we have developed a non-profit product research and development lab called the Open Money Initiative. We are working on tackling problems of education, usability, and exchange to enable cryptocurrencies to become a tool of freedom in areas of financial repression.
By nature, these goals are longer-term. One question we hear a lot is: What can we do today?
Donate to crypto-savvy immediate-relief organizations
The Bitcoin for Venezuela Initiative has been receiving cryptocurrency donations and cashing out funds for the local bolívares strategically to turn them into concrete benefits for those in need, like soup kitchens. They partner with local nonprofits, tweet pictures for accountability, and are mindful of the need for privacy of the recipients, as the government has a history of sabotaging aid efforts.
Given their three-year track record of responsible behavior, giving to the Bitcoin for Venezuela Initiative is a good option for those who wish to donate with confidence, knowing that funds are immediately deployed to help people in need.
Support businesses that distribute cryptocurrency
There are several ventures betting on making cryptocurrency more widespread among Venezuelans. They’re collecting funds from the cryptocurrency community and distributing them to end users.
AirdropVenezuela is an initiative from remittance startup AirTM that aims to give $10 in cryptocurrency to every verified user from Venezuela. The platform allows people to move money between different networks (e.g., PayPal, Payoneer, Bitcoin, Zcash) and Venezuelan bank accounts. They’ve signed up thousands of users in the country and have been fighting government crackdowns.
Criptoconserje works with Venezuelan migrants who just made it across the border to Cúcuta, Colombia. They give away paper wallets loaded with a few dollars’ worth of cryptocurrency and teach people how to use them to buy basic goods through local merchants that they’ve partnered with.
The projects listed above bring meaningful relief, but in order for cryptocurrency to truly have its promised impact, a significant part of the population needs to be able to earn a consistent income and acquire essential goods with it.
We believe this requires a long-term, industry-wide effort in understanding the people living under a lack of economic freedoms. Stay tuned as we continue our research, now under the Open Money Initiative, and share our findings with the community.