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Venezuelans turn to Bitcoins to bypass currency controls

reuters.com

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Re: Venezuelans turn to Bitcoins to bypass currency controls

#11

Post by sunshinerag »

aba_sababa wrote: post #9
bsbechtel wrote: post #2

This is why I think a lot of VCs are investing in the Bitcoin space, and I why I think there is an extremely bright future for the currency. Many economists (i.e., Paul Krugman) can't get past the idea that a currency needs to be backed by a state to be a real currency. That's the most ridiculous claim ever...currencies existed long before nation-states ever did. Events like this are proving those economists wrong.

I agree with you in that this is an excellent and demonstrably valuable use case for Bitcoin - we saw the same thing happen in Cyprus with the protests there. I don't think I agree about this meaning there will be a bright future for it. Venezuela and Cyprus are unstable, extremely corrupt governments. Bitcoin thrives in that environment. A bet on Bitcoin seems to be a bet that those kinds of environments will endure…

"The problem is that America isn't actually a corrupt, evil police state ..." ... is it?

Re: Venezuelans turn to Bitcoins to bypass currency controls

#12

Post by natrius »

People have figured out how to hold stable value on blockchains by using them to issue contracts for difference. You can acquire a token that maintains the same value as the dollar, backed by people betting on price changes between the dollar and the blockchain's internal currency.

Volatility isn't a drawback of cryptocurrencies anymore, and it's going to be entertaining when countries with capital controls discover this.

Re: Venezuelans turn to Bitcoins to bypass currency controls

#13

Post by hhm »

natrius wrote: post #12

People have figured out how to hold stable value on blockchains by using them to issue contracts for difference. You can acquire a token that maintains the same value as the dollar, backed by people betting on price changes between the dollar and the blockchain's internal currency. Volatility isn't a drawback of cryptocurrencies anymore, and it's going to be entertaining when countries with capital controls discover…

Any sources about this? I hadn't heard about this before.

Re: Venezuelans turn to Bitcoins to bypass currency controls

#14

Post by markkat »

hhm wrote: post #13
natrius wrote: post #12

People have figured out how to hold stable value on blockchains by using them to issue contracts for difference. You can acquire a token that maintains the same value as the dollar, backed by people betting on price changes between the dollar and the blockchain's internal currency. Volatility isn't a drawback of cryptocurrencies anymore, and it's going to be entertaining when countries with capital controls discover…

Any sources about this? I hadn't heard about this before.

Bitshares does this: http://bitshares.org/

Their BITUSD has been tracking fairly well: http://www.cryptocoincharts.info/pair/bitusd/usd/bter/1-mont...

Re: Venezuelans turn to Bitcoins to bypass currency controls

#15

Post by mpyne »

bsbechtel wrote: post #2

This is why I think a lot of VCs are investing in the Bitcoin space, and I why I think there is an extremely bright future for the currency. Many economists (i.e., Paul Krugman) can't get past the idea that a currency needs to be backed by a state to be a real currency. That's the most ridiculous claim ever...currencies existed long before nation-states ever did. Events like this are proving those economists wrong.

> can't get past the idea that a currency needs to be backed by a state to be a real currency. That's the most ridiculous claim ever...currencies existed long before nation-states ever did.

I think if you examine those economists' arguments further, you'll see it doesn't have as much to do with "OMG where's the state???!" as you seem to think.

As you yourself point out, economies have worked since long before nation-states have existed, so maybe the Bitcoin evangelists might want to recognize that being "like gold but with bits" doesn't change all the economic rules.

Re: Venezuelans turn to Bitcoins to bypass currency controls

#16

Post by spikels »

IvyMike wrote: post #3
bsbechtel wrote: post #2

This is why I think a lot of VCs are investing in the Bitcoin space, and I why I think there is an extremely bright future for the currency. Many economists (i.e., Paul Krugman) can't get past the idea that a currency needs to be backed by a state to be a real currency. That's the most ridiculous claim ever...currencies existed long before nation-states ever did. Events like this are proving those economists wrong.

> Paul Krugman [...] can't get past the idea that a currency needs to be backed by a state to be a real currency. I've not read everything he's said on bitcoin, but I've never seen him explicitly make that argument. Do you have a link?

Krugman hasn't been that clear about why he doesn't like bitcoin. Apparently he mostly does not like it because it is favored by Libertarians. He has endorsed the views of Brad Delong (an econ blogger with similar views and style) that a currency needs to be backed by a taxing authority and/or central bank (i.e. a government):

http://krugman.blogs.nytimes.com/2013/12/28/bitcoin-is-evil

Re: Venezuelans turn to Bitcoins to bypass currency controls

#17

Post by josu »

The problem here is that nobody wants Bolívars (the Venezuelan currency), since it's almost imposible to convert them back to USD or any other currency. A sales manager for Marriot was telling me that in Caracas they charge 40$ a night if you pay with USD or 300$ if you pay with bolívars. So the only people that would be willing to exchange bitcoins for bolívars would be people who live in Venezuela. So I assume that supply of bitcoins in Venezuela is really scarce, and their price should be on pair with black market dollars, so probably 6-7x the international price.

The only way around this would be if Venezuelans were to mine their own bitcoins, but given that most of the mining equipment is sold either in USD or BTC, it's just a catch 22.

So no, there is no bitcoin economy in Venezuela and as long as they keep their strict capital controls in place, there won't be any kind of economy in Venezuela.

Re: Venezuelans turn to Bitcoins to bypass currency controls

#18

Post by dragonwriter »

spikels wrote: post #16
IvyMike wrote: post #3

Earlier quoted context omitted.

> Paul Krugman [...] can't get past the idea that a currency needs to be backed by a state to be a real currency. I've not read everything he's said on bitcoin, but I've never seen him explicitly make that argument. Do you have a link?

Krugman hasn't been that clear about why he doesn't like bitcoin. Apparently he mostly does not like it because it is favored by Libertarians. He has endorsed the views of Brad Delong (an econ blogger with similar views and style) that a currency needs to be backed by a taxing authority and/or central bank (i.e. a government): http://krugman.blogs.nytimes.com/2013/12/28/bitcoin-is-evil

You're not reading very carefully. The argument De Long makes in the excerpt that Krugman endorses is not that "a currency needs to be backed by a taxing authority and/or central bank", it is that, for a commodity (currency or not) to serve as a stable store of value, it must have something providing both a ceiling and floor for its value, and one of those (the floor) is not immediately apparent for bitcoin.

This is very different from your argument about government, as is evidenced by the fact that his two counterexamples of things where the ceiling/floor combination are available and specifically identified are the US dollar (a government-issued currency) and gold (a commodity which is not backed by a taxing authority and/or central bank.)

Re: Venezuelans turn to Bitcoins to bypass currency controls

#20

Post by Torgo »

dragonwriter wrote: post #18
spikels wrote: post #16

Earlier quoted context omitted.

Krugman hasn't been that clear about why he doesn't like bitcoin. Apparently he mostly does not like it because it is favored by Libertarians. He has endorsed the views of Brad Delong (an econ blogger with similar views and style) that a currency needs to be backed by a taxing authority and/or central bank (i.e. a government): http://krugman.blogs.nytimes.com/2013/12/28/bitcoin-is-evil

You're not reading very carefully. The argument De Long makes in the excerpt that Krugman endorses is not that "a currency needs to be backed by a taxing authority and/or central bank", it is that, for a commodity (currency or not) to serve as a stable store of value, it must have something providing both a ceiling and floor for its value, and one of those (the floor) is not immediately apparent for bitcoin. This is…

Actually I think he is right and you are wrong in this case. The section of DeLong's essay that Krugman quotes in his article though is the claim that Bitcoin was designed as a weapon against government central banks and their ability to tax, and to monitor citizen financial transations. The article "Bitcoin is Evil" was written not to ask "does bitcoin work" but "is bitcoin morally bad or good?" And Krugman says "bad" because he believes it would undermine the government's ability to use monetary policy to achieve various goals.
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