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Crypto Adoption Remains Strong in Venezuela Amid Political Chaos

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The political tension in Venezuela has affected local cryptocurrency adoption. While there are roadblocks, many crypto-advocating projects continue to thrive in the country. News.Bitcoin.com takes a deep look at the current situation in Venezuela, crypto adoption efforts and how the recent political crisis affects them.

Also read: Indian Supreme Court Postpones Crypto Case at Government’s Request

Political Turmoil and Economy in Freefall

Cryptocurrency adoption in Venezuela has been affected by the recent political unrest following mass protests organized by Juan Guaido, president of the opposition-run National Assembly, calling for the military to help him end Nicolas Maduro’s reign. With the support of more than 50 countries including the U.S., Guaido declared himself acting president of Venezuela while Maduro insists he has been re-elected to a second six-year term. The incumbent still has the support of a number of countries including Russia and China.

During the years-long freefall of their country’s economy, many Venezuelans have turned to cryptocurrencies. Venezuela’s annual inflation rate reached 1,300,000% in the 12 months to November last year, according to the opposition-controlled National Assembly.

How Political Chaos Affects Cryptocurrency Adoption in Venezuela
Venezuela’s two presidents: Nicolas Maduro (left) and Juan Guaido (right).

Widespread food and medical supply shortages are now the norm, with most Venezuelans struggling to afford basic items including food and toiletries. Although Venezuela is prime for crypto adoption, there are still many challenges in the way.

Crypto Adoption Remains Strong

Seemingly a natural fit for such a failing economy, cryptocurrency adoption is progressing in Venezuela despite some roadblocks. Matt Aaron, leader of Bitcoin.com’s efforts in the country, explained how the recent political situation and ongoing power outages have affected local merchant crypto adoption.

Citing the political unrest, the frequent and lengthy blackouts, and the skyrocketing prices of goods and services due to shortages of basic necessities, Aaron admitted that “It’s really affected the crypto adoption.” However, he emphasized:

I think it’s still strong, it’s just that in the short term, they’re in survival mode in certain parts. But the willingness to learn about crypto has not gone down.

How Political Chaos Affects Cryptocurrency Adoption in Venezuela
A woman cooking during a power outage in Venezuela.

Despite political unrest, Venezuelans continue to trade cryptocurrencies. On over-the-counter marketplace Localbitcoins, 1,137 BTC were traded in the week ending May 4, only slightly less than the 1,228 BTC traded in the prior week. Bitcoin cash data is not provided by this platform but Bitcoin.com will soon launch Local Bitcoin Cash for anyone to directly exchange BCH.

How Political Chaos Affects Cryptocurrency Adoption in Venezuela
Localbitcoins’ BTC volume for Venezuela.

How Cryptocurrencies Help Venezuelans

Many people in Venezuela have found refuge in cryptocurrency. Carlos Hernández, a Venezuelan living in Ciudad Guayana, has shared how cryptocurrencies saved his family. Citing hyperinflation, he divulged:

I don’t own bolívars, Venezuela’s official currency. I keep all of my money in bitcoin. Keeping it in bolívars would be financial suicide.

Ricardo Carasso is a Venezuelan who earns cryptocurrencies from freelance work online. He recently left his country because the constant blackouts made it impossible for him to work from Venezuela. He told news.Bitcoin.com Wednesday that, in the city of Merida where he lived, the power went out five consecutive days in March after it went out for two days the prior week.

“For a number of years now the Venezuelan government has been upholding a currency exchange control that does not let us freely access the international market,” Carasso described. In addition, the U.S. has employed sanctions as a policy tool in response to activities of the Venezuelan government and individuals for more than a decade. “Now that the Trump administration has blocked our financial access to the world even further,” Carasso opined: “Cryptocurrencies are super valuable because they allow us to bypass that … it’s also an asset that can gain in value and … if your minimum wage is less than $10 a month, you can see the potential for growth if you have crypto.”

Maduro Also Seeks Solution in Crypto

In an attempt to solve his country’s devastating economic problems, Maduro launched a new currency called the petro in February last year which he initially claimed to be a cryptocurrency backed by oil. However, he later declared that the petro was no longer fully backed by oil but was also partially backed by gold, iron, and diamond. Skeptics are calling his scheme a scam, pointing to several pieces of evidence such as the lack of wallet to hold the petro and the nonexistent block explorer.

Nonetheless, the National Superintendency of Cryptoassets and Related Activities (Sunacrip), the Maduro government-appointed regulator of crypto assets, has been selling the petro at its headquarters and issuing savings certificates to buyers. Recently, a crypto exchange authorized by Sunacrip, Amberes Coin, claims that the petro has been trading on its platform as well as over-the-counter on social media despite having no wallet or block explorer.

How Political Chaos Affects Cryptocurrency Adoption in Venezuela
Petro savings certificates issued by Sunacrip in April.

In January, the Maduro government established the Integral System of Cryptoassets, as published in Official Gazette number 41.575. It empowers Sunacrip “as the top regulatory entity in this matter, reinforcing, in addition, the entire initial ecosystem that since 2018 has been formed to give solidity and confidence to the petro, the sovereign Venezuelan cryptoasset,” Sunacrip wrote on its website. The regulator immediately proceeded to start controlling crypto activities in the country and offering its own crypto remittance service. Scam or not, the petro represents the first time any government has run its own cryptocurrency and related services, thereby creating awareness of cryptocurrencies and legitimizing them to the public.

Two other crypto-related regulations were published by the Maduro government — one on Feb. 4 in Official Gazette number 41.578 and the other in Official Gazette number 41.581 on Feb. 7.

Airdropvenezuela

A number of nonprofit organizations such as Airdropvenezuela are using cryptocurrency to help people in need. The nonprofit’s website states that “Due to artificially-rigged government exchange rates, the banks in Venezuela are not used for remittance, payments, or donations,” asserting:

Venezuela needs better money. Venezuela needs cryptocurrency. Ten dollars can help a family purchase food, medicine, and scarce imported goods.

“Access to digital money can help introduce Venezuelans to cryptocurrencies, online freelancer platforms, ecommerce, investments, donations and other income generating web-based opportunities,” Airdropvenezuela believes.

The project aims to send $1,000,000 in digital money to 100,000 ID-authenticated Venezuelan Airtm users who log into their accounts between Nov. 27 last year and July 31. “The first 100k Airtm Venezuelan users to be verified and have logged into their account during the campaign period will be a recipient of $10 once we achieve our $1,000,000 USD equivalent goal,” the nonprofit announced.

In addition to U.S. dollars, donations can be made in a number of cryptocurrencies including BCH and BTC. They are sent directly to Airtm wallets which connect buyers and sellers to over 200 banking networks and e-money systems globally, including Venezuela’s.

As of this writing, $273,668 have been raised and 62,541 users have been verified, the project’s website reveals.

How Political Chaos Affects Cryptocurrency Adoption in Venezuela
Airdropvenezuela’s funds and verified recipients.

Cryptocurrency totals less than $10,000 will be converted into U.S. dollars upon distribution, Airdropvenezuela clarifies. At the time of this writing, the nonprofit has raised the most in BCH, followed by U.S. dollars and BTC. Donations in bitcoin cash make up more than half of all donations received.

How Political Chaos Affects Cryptocurrency Adoption in Venezuela

BCH donations got a kick start when Bitcoin.com CEO Roger Ver matched them for 24 hours on Dec. 10 last year. “Total funds raised have more than doubled since @Rogerkver announced yesterday that he would match BCH contributions. Congrats BCH community for jumping to #1 place in less than 24 hrs,” Airtm tweeted. “The bigger the network effect a currency has, the more useful that currency becomes. This is a great way to grow the network for Bitcoin Cash and help people in need at the same time,” Ver remarked.

150 Merchants Onboarded so Far

A growing number of merchants in Venezuela are now accepting bitcoin cash thanks to an initiative by Bitcoin.com to make the process easy for them. At the North American Bitcoin Conference in February, COO Mate Tokay unveiled the company’s ambitious goal to onboard 500 merchants per month to accept bitcoin cash.

Aaron confirmed that, while there are other projects Bitcoin.com is indirectly affiliated with, his primary focus is getting merchants to accept BCH, elaborating:

We’re focused in Caracas, have around 150 merchants so far … we’re teaching them how to use bitcoin cash, how to convert to dollars and bolivares, and to show them the advantages.

He proceeded to outline the benefits of accepting the cryptocurrency for merchants such as instant transactions, being able to accept payments without a payment processor, and avoiding high credit card processing fees of about 6%. In comparison, paying with BCH only incurs a network fee that is usually below one cent.

How Political Chaos Affects Cryptocurrency Adoption in Venezuela
Store owners in Caracas accepting bitcoin cash.

“We have a support network on Whatsapp and Telegram” so “store owners can come to us with their questions,” Aaron continued, noting that shop owners have many questions about accepting bitcoin cash. He believes that this support structure sets his efforts apart from other similar initiatives, emphasizing that the first step is getting merchants to accept BCH before convincing more people to use it and considering other projects such as remittance payments. “So many things to do, we’re just in the very beginning,” he concluded.

To start accepting bitcoin cash, store owners simply download the Bitcoin.com Wallet which has now been downloaded over 4 million times. Merchants accepting BCH can be found on the Marco Coino map.

Feeding Venezuelans With Crypto

Another organization that relies on cryptocurrency to help Venezuelans is Eatbch. The nonprofit takes bitcoin cash donations and coordinates the purchases of ingredients to serve meals to people in six Venezuelan states. Eatbch celebrated its first year anniversary on Feb. 11. The organization also has a similar initiative in South Sudan.

How Political Chaos Affects Cryptocurrency Adoption in Venezuela
Children in Venezuela fed by Eatbch.

During blackouts in Venezuela, Eatbch directs donors to visit Venezuela.Bitcoin.com to make donations. Funds sent to Eatbch can be easily tracked using the Badger wallet. BCH enthusiasts can also donate to the merchant adoption campaign in Venezuela. 100% of the donated funds will be used to help increase bitcoin cash adoption in the country through activities such as signing up merchants and educating them how to use the decentralized currency for commerce and remittance payments.

Victories in the war for cryptocurrency adoption in Venezuela may best be described as hard-fought, but lessons being learned by the local crypto community are plentiful. Regardless of how the political turmoil plays out, most every Venezuelan has learned the value of their money and now knows about cryptocurrencies, largely due to the Maduro government’s efforts to push the petro. Many of their lives have been touched personally by the efforts and projects like the ones listed above. It seems to be only a matter of time until crypto’s broad acceptance in the country finally arrives.

When do you think cryptocurrencies will finally be used by the mainstream in Venezuela? Let us know in the comments section below.


Images courtesy of Shutterstock, the BBC, ABC News, Coin.dance, Sunacrip, Airdropvenezuela, Airtm, Bitcoin.com, and Eatbch.


Do you want to start accepting BCH? Download the Bitcoin.com Wallet and start accepting bitcoin cash today!

Tags in this story
accept bch, BCH, Bitcoin, BTC, Crisis, crypto, Cryptocurrencies, Cryptocurrency, Digital Currency, Juan Guaidó, LocalBitcoins, matt aaron, Merchant Adoption, Nicolas Maduro, Petro, Political, Venezuela, Virtual Currency
Kevin Helms

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

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New Proposed ETF Would Mix Bitcoin Futures With Sovereign Debt

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A brand new proposed exchange-traded fund (ETF) would spend money on bitcoin futures – even though handiest as a part of a bigger set of extra conservative investments.

Reality Shares ETF Trust, a department of Blockforce Capital, which already introduced one ETF with blockchain products, filed a Form N1-A with the U.S. Securities and Exchange Commission (SEC) Monday in partnership with NYSE Arca, taking a look to release the Reality Shares Blockforce Global Currency Strategy ETF.

If authorized, the fund would spend money on a portfolio which incorporates “high-quality, short-term sovereign debt instruments listed for trading on U.S. exchanges and denominated in U.S. dollar, euro, British pounds sterling, Japanese yen and Swiss francs,” in addition to bitcoin futures, cash marketplace mutual price range and/or different coins equivalents, in step with the submitting.

The fund would spend money on cash-settled bitcoin futures contracts, moderately than bodily settled. In different phrases, when the contract expires, the investor would obtain the money an identical of its worth, moderately than precise bitcoins. According to the submitting, “the fund will not invest directly in bitcoin.”

The proposal explains:

“The Adviser initially constructs the Fund’s portfolio by investing approximately (i) an equal-weight of 15 [percent] of the Fund’s net assets in Fixed Income Securities denominated in each Fiat Significant Global Currency; (ii) 15 [percent] of the Fund’s net assets representing notional exposure in Bitcoin Futures and (iii) 10 [percent] of the Fund’s net assets in Money Market Instruments for margin and/or cash management purposes, each as measured at the time of purchase (the ‘Target Portfolio’).”

Reality Shares’ submitting is going on so as to add that “the Adviser seeks to reallocate the Fund’s assets approximately to the Target Portfolio on the business day following the date that one or more of the Significant Global Currencies moves by more than 20 [percent] up or down from its original 15 [percent] portfolio equal-weight, calculated as a percentage of the Fund’s net assets.”

Initially, Reality Shares plans to spend money on the bitcoin futures presented via the main Chicago futures exchanges, Cboe and CME, even though it could search for different bitcoin futures merchandise sooner or later.

Bitcoin ETFs

Reality Shares’ proposal comes at the heels of 2 bitcoin-specific ETF filings made via Bitwise Asset Management and VanEck/SolidX last month. While Bitwise’s proposal used to be additionally filed via NYSE Arca, VanEck and SolidX are running with Cboe BZX Exchange.

The VanEck/SolidX proposal is famously just like an previous proposal that many was hoping will be the first bitcoin ETF authorized. However, the firms pulled the previous version after the extended U.S. government shutdown, pronouncing on the time that they had been not able to continue discussions about the proposal with the SEC.

Both of those bitcoin ETFs range from Monday’s submitting in that they don’t come with sovereign debt tools.

The SEC has now not but revealed Reality Shares’ rule trade proposal on its web page, indicating that it has now not but begun inspecting the product. Once the proposal is revealed within the Federal Register, the SEC could have at maximum 240 days to resolve whether or not to approve or reject the rule of thumb trade proposal.

T-bill image by the use of JHerbstman / Wikimedia Commons

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Central Bank of Laos Issues Warning Against Using Cryptocurrency

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The central bank of Laos has warned the public against the use, purchase or sale of digital currencies, local news outlet Vientiane Times reported on May 21.

The Bank of the Lao PDR has issued a warning to financial market participants and the public against cryptocurrency transactions as they are considered illegal in the country. The bank previously banned financial institutions from conducting any operations with cryptocurrencies, as well as making investments in such an asset.

The bank is purportedly concerned about the anonymity of the sender and receiver in a cryptocurrency transaction, which it worries increases the risk of digital assets’ use in money laundering. A source familiar with the matter told Vientiane Times that authorities do not have a relevant security system to protect cryptocurrency owners.

While some countries like, Canada, Malta and Switzerland have embraced the new asset class to varying degrees, officials around the globe are still expressing skepticism toward crypto, while some hardliners call for outright bans.

In the United States, where the legal status of crypto can vary state-to-state, California Congressman Brad Sherman recently called for a full ban on cryptocurrencies. Sherman claimed that crypto presents a threat to the power of the U.S. dollar to affect world economic developments.

In April, Cointelegraph reported that the Indian government was considering a complete ban of cryptocurrencies under the Prevention of Money Laundering Act since it could purportedly be used for money laundering. The Ministry of Corporate Affairs reportedly stated that cryptocurrencies are used in fraudulent schemes to “defraud gullible investors”.

That same month, news broke that Pakistan — which banned cryptocurrency trading last April — is implementing new cryptocurrency regulations in an effort to improve its track record in fighting financial crime. The move was reportedly in part a reaction to demands from international monitoring body the Finance Action Task Force, which has repeatedly voiced concerns about cryptocurrencies’ role in terrorist financing.

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Founder And CEO Of China’s Blockchain-Based Uber, Kuaidi Dache, Shows Concerns Of EOS Use

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Founder-and-CEO-of-Kauidi-Dache-Shows-Concern-About-Use-of-EOS

Founder-and-CEO-of-Kauidi-Dache-Shows-Concern-About-Use-of-EOS

Founder And CEO Of Kauidi Dache Shows Concern About Use Of EOS

  • CEO of Chinese tax hailing app criticizes the lack of decentralization in EOS.
  • The EOS blockchain network focuses on scalability above decentralization, which has earned it many critics.

Everyone has an opinion of cryptocurrency, whether it is about the industry as a whole or of the market. Weixing Chen, who founded and runs a taxi-hailing app called Kauidi Dache in China, recently commented about one particular crypto asset – EOS. In a statement from Weibo, Chen stated that he was worried about EOS and assets like it in their prioritization of scalability.

The statements were translated, as Chen said that he takes no issue with the technological advancements. Instead, the issue is found in “fraudulent propaganda,” according to the translated text. Chen referred to Million TPS and Next Generation Operating System as examples. He has quite a reputation in the venture capital sector of the Chinese economy as an anti-EOS figure.

Right now, EOS has a valuation of $5.8 billion, and it holds the record as the largest initial coin offering (ICO) to ever occur within the crypto industry. With no live product, the token managed to raise up to $4 billion in May 2018. The following month, the EOS blockchain protocol launched with 21 individuals to produce the blocks on the blockchain ledger with data from the transactions and smart contracts. These individuals are known as “block producers.”

Since the launch, EOS has become increasingly popular amongst users of decentralized applications (dApps). DappRadar reports that the EOS blockchain network is the host of the top three dApps right now, but that has not stopped experts from criticizing how decentralized the network is. The network primarily focuses on offering substantial scalability, along with a high capacity for large transactions, offering plenty of benefits to dApp developers.

Nick Szabo, a pioneer for smart contracts, stated that EOS makes it possible for anyone to freeze funds that users assume belong to them. Further explaining, he said, “Under the EOS protocol you must trust a ‘constitutional’ organization comprised of people you will likely never get to know. The EOS ‘constitution’ is socially unscalable and a security hole.”

This criticism came after a controversial article came out regarding the governance system of the blockchain network. The article says that an inactive account, after three years, can be put up for auction. All of the proceeds from that auction are “distributed to all Members according to the system contract provisions then in effect for such redistribution.”

The CTO of EOS, Dan Larimer, said in October 2018 that the high transaction capacity of EOS is based on the fact that the platform doesn’t solely focus on decentralization. He pointed out that the platform wants to focus on fighting censorship and for “robustness against being shut down.”

https://twitter.com/bytemaster7/status/1120028298573164544

Only the market can decide if prioritizing scalability for EOS is the right approach, but clearly, EOS is gaining interest in the market, or developers would not use the network with such abundance to develop their dApps. The flexibility and capacity for large transactions is appealing, but Chen and investors like him don’t condone the lack of decentralization.

Bitcoin was based on decentralization and ensuring that the public could have a currency that is not ruled by any one country or other entity. Still, the dApp market is new, and it is hard to tell which of the protocols amongst Ethereum, EOS, Cardano, TRON, and others are the right one. Presently, it is impossible to compare dApps to centralized applications, as the last 24 hours alone only show 10,000 users participating.

As of 2:00pm PST, the EOS token is trading at $6.36 after increasing by 1.14% in value in the last 24 hours.

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Ontology releases design for lightweight multichain solution

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Ontology, a high-performance public blockchain project, and a distributed trust collaboration platform, recently released its design for a lightweight and safe multichain system and cross-chain solution.

The solution uses the Ontology blockchain as the main chain, and supports both side-chains whose architecture is the same as the Ontology main chain and side-chains whose architecture is different from the Ontology main chain.

The design allows for interaction between the main chain and side-chains, and also between side-chains. The main chain manages side-chains using a multichain management contract, and the cross-chain interaction between source chain and target chain is done through a cross-chain management contract.

The proof of cross-chain interaction is done through synchronizing key block headers and other state information.

Those interested to read more, can find the full Ontology multichain design paper on GitHub.

Last year, Ontology set up the research institute in order to focus more on the research and development of core blockchain technology and strengthen the ability to explore, reflect on, and apply emerging technologies, as well make contributions to the entire industry. At present, there is more than 10 R&D personnel in the Ontology Research Institute.

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Watch Out! $375,000 of Cryptopia’s Stolen Ether on the Move

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By CCN: Whale Alert, an account which automatically and manually notes large crypto transfers for Twitter followers, stated this morning that slightly more than $250,000 of stolen Cryptopia ether moved today.

$250k Parked, $125k Moved to EtherDelta

1,000 ether moved to 0x7d90b19c1022396b525c64ba70a293c3142979b7, an address which holds no other tokens. Roughly the same amount of ether previously left the wallet. The Cryptopia hacker seems unable to decide what to do with them.

Interestingly, within the past hour at press time, one of the addresses associated with this one moved 499 ether to EtherDelta. Address 0x338fDf0D792F7708d97383EB476e9418B3C16ff1
made this transaction to the exchange which was previously fined for dealing in unregistered securities.

Cryptopia lost around $15 million in a major hack earlier this year. More recently they’ve gone into liquidation and warned customers not to expect all of their funds back. Reportedly, the exchange could not meet its debt obligations as a result of the hack, which saw its user interest, trust, and volume plummet. One question is why user funds would have been available to the exchange for satisfying debts, as most eloquently stated in this tweet:

The exchange initially reported a theft of less than $3 million, but Elementus, an upstart crypto analytics firm led by Max Galka, discovered that the loss was much more damaging than that.

The exchange then announced a “rebate” plan from which it has more recently backed off.

Hacked Funds Still Moving After Cryptopia Enters Liquidation

The attackers have yet to be caught, but the timing of the recent movement of funds is interesting, to say the least. Any time that an exchange is hacked, people suspect an inside job. That being the case, it’s interesting that on the very day Cryptopia’s official liquidation begins, hundreds of thousands of dollars of its stolen funds begin moving to decentralized exchanges.

Previously, a lot of the tokens had already been sold off on decentralized exchanges.

The funds noted by Whale Alert were still parked by press time. There’s no stopping the holder from continuing to trade them unless decentralized exchanges as a whole decide to “freeze” those funds, which presents its own set of problems for the crypto ethos.

The relatively small exchange’s hacking started the year off with a negative tone and was followed up by the much larger-scale hack of Binance, which has come to be considered an institution. Binance rocked the world a little more when CEO Changpeng Zhao considered the notion of paying miners to thwart his attackers. Other exchange antics such as Bitfinex’s investigation by New York State and the subsequent $1 billion launch of its LEO token continue to cast doubt on the viability of centralized exchanges in decentralized ledger technology.

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