I met Alejandro V almost two months ago. Betancourt at Room77 in Berlin. When I asked him where he came from, and he replied with “Venezuela”, I was directly curious what he had to report. I consider the first-hand assessment to be very valuable. Alejandro told me that he is the founder and CEO of Mango Markets, one of the three crypto exchanges in Venezuela. I just had to interview him.
Alejandro, what’s the Bitcoin news in Venezuela right now?
The country is paralyzed and bankrupt. Every industry is declining strongly or is already dead. The few people who still have a job get so little pay that the bus ride to work is not worth it. Even the public transport network is slowly coming to a standstill because the maintenance and repair of buses and trains is too expensive (many spare parts have to be imported). The roads are deserted – a mixture of insecurity, the number of unemployed, the people who have left the country, and the reduced number of vehicles (new cars have not been sold for years). Read more Bitcoin news on: Bitcoin News Trader Review 2018 » Full Scam Check
Most people spend their day waiting in queues to buy substituted food that is sold sporadically in different places in the city before there is nothing left. The rest of the people have to rely on remittences received from family members in other countries. The latter group buys food from the first group for much higher prices. The sale of substituted goods on the black market is also called “bachaqueo”.
How could this Bitcoin formula happen?
The origin of the Bitcoin formula crisis lies in the Bitcoin formula. For years the oil price was high – significantly higher (up to 150 US dollars) than the average 40 US dollars per barrel of the national budget. The government was to finance the entire oil barrel from USD 40, with the difference going to the executive for “discretionary spending”. Some of the money was used to finance populist initiatives such as giving away washing machines and food – especially during election time. State spending was excessive, although not much was passed around. The rest of the money simply disappeared.
When the price of oil plummeted, a spending government had to deal with a people drunk on free goods. To keep up with expectations, they printed money (Bolivar). The government employs over half the workers (including state-owned companies) and the monthly salary was freshly printed cash.
Inflation and hyperinflation are ongoing problems. To “tackle” this, the government had introduced currency controls for the last 15 years. The exchange rate between Bolivares and the US dollar was arbitrarily high and only accessible to people with good connections to the government. The rest of the economy operates on a black market. The main problem with a black market is that it is inefficient and insecure. There is no way to determine the actual exchange rate. Most people rely on ominous websites that update their prices manually every two days. Fraud is widespread and is not reported because exchange with foreign currencies is already a punishable offence.
What role do crypto currencies play in this fiasco?
While the population quickly loses confidence in the bolivar and has to suffer under state restrictions, crypto currencies are rapidly gaining popularity. The main feature is the limited amount of money and the possibility to send the money quickly and cheaply worldwide (opening a foreign bank account is not easy). Many Venezuelans are just receiving remissions in crypto currency, which they need to survive. Many people also mine to make a living.