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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

#31

Post by imaginenore »

josu wrote: post #17

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…

It's true. Try and find an online exchange willing to exchange Bolivars (VEF) to USD. If you are a bitcoin seller, what can you do with Bolivars other than spend them in Venezuela?

Xe.com exchange rate is currently 1 USD = 6.29 VEF

So you would expect 1 BTC to be worth around 350*6.29 = 2,201 VEF.

Yet on localbitcoins Caracas they sell for more than 20 times that much:

https://localbitcoins.com/places/570916/caracas-ve/

It seems like a tremendous arbitrage opportunity, if only there was a way to sell Bolivars.

Anyways, if I am ever to travel to Venezuela, I will come with Bitcoins.

Re: Venezuelans turn to Bitcoins to bypass currency controls

#32

Post by imaginenore »

climber_mac wrote: post #29

I am from Venezuela. In case you are wondering how terrible the Venezuelan economy is right now, think about this: Our biggest denomination bill (100 Bolivares) is not enough to buy $1 USD [1]; in january 2013 you could buy $14 USD for the same amount. Also think about the fact that Venezuela has the largest proven oil reserves in the world [2]. I'm not even going to try to explain the currency exchange and control m…

> because no one will want to sell for Bolivares

What about tourists? You should encourage tourists to bring bitcoins.

Re: Venezuelans turn to Bitcoins to bypass currency controls

#33

Post by [deleted] »

climber_mac wrote: post #29

I am from Venezuela. In case you are wondering how terrible the Venezuelan economy is right now, think about this: Our biggest denomination bill (100 Bolivares) is not enough to buy $1 USD [1]; in january 2013 you could buy $14 USD for the same amount. Also think about the fact that Venezuela has the largest proven oil reserves in the world [2]. I'm not even going to try to explain the currency exchange and control m…

[deleted]

Re: Venezuelans turn to Bitcoins to bypass currency controls

#34

Post by imaginenore »

cjensen wrote: post #5

That's interesting, but I'm pretty sure a physical dollar bill is more useful. A physical dollar can be used to make purchase stuff locally without a computer, and is easily accepted for a sale. In the example given in the article, the only reason the first guy in the article uses bitcoins is to buy an Amazon gift certificate (denominated in dollars) to buy stuff mail order. The only real lesson to be had from the Ve…

Is there lack of computers? Everyone has a smartphone these days. And bitcoin works over SMS, so you don't even need a smartphone.

Re: Venezuelans turn to Bitcoins to bypass currency controls

#35

Post by imaginenore »

GFK_of_xmaspast wrote: post #25
narrator wrote: post #10

Bitcoin isn't a bad way to save money if you can't set up an offshore bank account. Sure beats the local currency.

How far off its peak is it again? 75%?

The dollar is around 99% down off its peak. So?

Yo just chose some arbitrary timeline that bitcoin looks bad at. That's bad logic.

Re: Venezuelans turn to Bitcoins to bypass currency controls

#36

Post by cesarb »

pessimizer wrote: post #6
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.

A currency just has to be backed by something. Money laundering is something. Drug trafficking is something. The fact that Venezuelans are using it to launder money is not "proving those economists wrong", it's making those economists wrong. And the more mainstream it gets, and the more tracked it gets, and the harder it gets to buy what you want with it without leaving some sort of record, the more it reverts to its…

One use for Bitcoin is "Paypal replacement". There are situations where that use being traceable is not a problem; for instance, I have no problem making public the fact that I pay for a LWN.net subscription, and in fact, the LWN.net site itself reveals it every time I post a comment there.

Therefore, if what you are saying is valid, Bitcoin's natural value is above zero.

Re: Venezuelans turn to Bitcoins to bypass currency controls

#37

Post by climber_mac »

imaginenore wrote: post #32
climber_mac wrote: post #29

I am from Venezuela. In case you are wondering how terrible the Venezuelan economy is right now, think about this: Our biggest denomination bill (100 Bolivares) is not enough to buy $1 USD [1]; in january 2013 you could buy $14 USD for the same amount. Also think about the fact that Venezuela has the largest proven oil reserves in the world [2]. I'm not even going to try to explain the currency exchange and control m…

> because no one will want to sell for Bolivares What about tourists? You should encourage tourists to bring bitcoins.

Tourists generally don't go to Venezuela because the country is extremely unsafe. The capital, Caracas, is ranked as the second city with the highest murder rate in the world [1]. There is an extremely low regard for life - petty criminals will kill you for your phone.

However, we do have some of the most unreal places on the planet! [2]

[1] http://www.theguardian.com/world/2014/jan/12/violent-crime-m...

[2] http://1.bp.blogspot.com/-4ghbtqN0bRY/TyV8kLJVivI/AAAAAAAABX...

Re: Venezuelans turn to Bitcoins to bypass currency controls

#38

Post by dragonwriter »

Torgo wrote: post #20
dragonwriter wrote: post #18

Earlier quoted context omitted.

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 "ba…

> 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

No, the section of DeLong's writing that Krugman quoted didn't deal with that, it dealt with the ceiling/floor issue I described; this was in the section of Krugman's piece discussing the postivist evaluation of bitcoin's ability to function as a stable store of value.

What you seem to be describing is the excerpt of Charlie Stross's work that Krugman quotes in the shorter bit at the end where Krugman is discussing normative evaluation of bitcoin's purposes.

Charlie Stross and Brad DeLong are two different people, and Krugman cites them for very different purposes. (One about bitcoin's purpose and one about bitcoin's functional properties.)

Re: Venezuelans turn to Bitcoins to bypass currency controls

#39

Post by mattm »

climber_mac wrote: post #37
imaginenore wrote: post #32

Earlier quoted context omitted.

> because no one will want to sell for Bolivares What about tourists? You should encourage tourists to bring bitcoins.

Tourists generally don't go to Venezuela because the country is extremely unsafe. The capital, Caracas, is ranked as the second city with the highest murder rate in the world [1]. There is an extremely low regard for life - petty criminals will kill you for your phone. However, we do have some of the most unreal places on the planet! [2] [1] http://www.theguardian.com/world/2014/jan/12/violent-crime-m... [2] http://1…

It's a shame. I visited Caracas and Isla de Margarita for about a week 10 years ago. It's a very beautiful place and the people I met were very friendly. I hope the situation improves. Would love to visit again!

Re: Venezuelans turn to Bitcoins to bypass currency controls

#40

Post by StavrosK »

climber_mac wrote: post #37
imaginenore wrote: post #32

Earlier quoted context omitted.

> because no one will want to sell for Bolivares What about tourists? You should encourage tourists to bring bitcoins.

Tourists generally don't go to Venezuela because the country is extremely unsafe. The capital, Caracas, is ranked as the second city with the highest murder rate in the world [1]. There is an extremely low regard for life - petty criminals will kill you for your phone. However, we do have some of the most unreal places on the planet! [2] [1] http://www.theguardian.com/world/2014/jan/12/violent-crime-m... [2] http://1…

Damn, that's a nice waterfall. Not "worth dying over" nice, but close to it.
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