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Venezuelans turn to Bitcoins to bypass currency controls

reuters.com

51–60 of 98 posts

Re: Venezuelans turn to Bitcoins to bypass currency controls

#51
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…

> The problem here is that nobody wants Bolívars

how do you pay your taxes?

Re: Venezuelans turn to Bitcoins to bypass currency controls

#52
post #30

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…

would they sell "things" for bitcoins?

But what is there to sell? Every industry has received incredible shock from the economic situation, there are no dollars to import material goods from the outside so that they can support themselves. Besides, I can't think of anything other than oil that others would be interested in buying.

Not sure if I understood your question correctly, sorry if this doesn't answer it!

Re: Venezuelans turn to Bitcoins to bypass currency controls

#53

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…

Have you ever tried to buy bitcoins with our annual internet allowance ($300 per year on online purchases with credit card)? That's one way to get an instant 1000% profit (the official rate is Bs.11 per $ and the black market rate has been swinging between Bs.98-100 per dollar.)

I think holding USD in Venezuela is much more valuable. Most people wouldn't know what to do with bitcoins in the country. With USD, you can sell them in the black market and get bolivares instantly. You can live pretty comfortably here with $200 per month.

It's worth noting that the president, Maduro, had the brilliant idea that by blocking all the sites that report the value of the dollar (like dolartoday, posted by fellow venezuelan climber_mac) in the black market, he would somehow solve all our economic problems. Now you can see why our economy is gone to hell.

Re: Venezuelans turn to Bitcoins to bypass currency controls

#54
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-…

Actually, the 6.29 exchange rate is only for importers of medicines and food, which are mostly government friends and cronies who are becoming multi-millionaires by buying dollars from the govt at Bs.6.9. Then they claim they bought food from a foreign company (which they also own in Panama or somewhere else) and they sell it back to the govt at Bs.80-100 per dollar and they pocket the difference.

Or they buy dollars at the 6.9 rate, claim they are importing farming machinery for $2-3million. Then they buy one tractor for $50k, pay off the corresponding govt official, and keep the difference. And I'm not making this up. They recently tried to arrest 2 or 3 guys on this (they probably didn't pay enough) and they just fled to Miami and Panama.

If you come to venezuela, bring dollars. You will always find someone that will buy them at the black market rate of almost Bs.100 per dollar. You could live like a king here with $1000 for quite a while.

Re: Venezuelans turn to Bitcoins to bypass currency controls

#55
post #45
post #24

Earlier quoted context omitted.

Bitcoin's adoption continues to increase. Make no mistake about this. It is far from having "petered out": http://avc.com/2014/10/bitcoin-adoption-metrics/ More and more people in China, Venezuela, etc, are using it to bypass currency controls. The problem was the media was hyping Bitcoin and making it sound like it would become instantaneously popular overnight. Instead, it is a process that will take some time. Tha…

I'm probably the one that's wrong here but I thought because it was considered property and not currency you only had to pay taxes when it was used. In fact your IRS linked PDF seems to agree with me.

It is considered property, however, when mined it is treated as property received as compensation for services rendered (i.e., verifying transactions in the block). Consequently, it is treated as income at its fair market value when received.

Re: Venezuelans turn to Bitcoins to bypass currency controls

#56
post #28
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…

The point is you get a fair, unregulated, market exchange rate of Bolivars to USD (or Euro or Yuan or whatever) via bitcoin currency. At whatever that rate is based on supply and demand and you can transact at that rate. Currency controls mean "we the govt. say our currency is worth x USD and you must transact at that rate" which kills the market and means zero USD sellers. I'd expect the USD to Bolivar rate via bitc…

Exactly, in Argentina the situation is similar. The problem is that no body wants bolivar (or pesos) at the official rate because is unfair.

Bitcoin can help to make that more fair and here is an example. An example is a person that works for a company abroad from Venezuela . If he does what is supposed to do, he will get paid in dollars but with a wire transfer but the local bank gives bolivar at the official rate only and won't be able to buy dollars back.

On the other hand there is always another person that needs to get dollars, to travel or to pay something.

One way to solve this issue is with Bank accounts abroad, the first person get paid on an account in a bank outside Venezuela, then he wire to the second person acc abroad. In exchange the second person pay in bolivar at a good rate to the first one. In the black market it sometimes call "wire dollar" or cable dollar.

Bitcoin can makes this easier because is more tangible, you can meet someone at any place and move the bitcoins from phone. It requires less trust between the parties.

The money always go where it wants to go, there is no way to regulate.

Re: Venezuelans turn to Bitcoins to bypass currency controls

#57
post #53

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…

Have you ever tried to buy bitcoins with our annual internet allowance ($300 per year on online purchases with credit card)? That's one way to get an instant 1000% profit (the official rate is Bs.11 per $ and the black market rate has been swinging between Bs.98-100 per dollar.) I think holding USD in Venezuela is much more valuable. Most people wouldn't know what to do with bitcoins in the country. With USD, you can…

I have never bought bitcoin with the allowance. In case anyone is wondering, the government sells each Venezuelan $300 per year at the official exchange rate. This is the only amount that we're given without having to go through a lengthy process that typically involves having 'friends' within the government to pull strings for you. People usually buy Amazon gift cards with the money.

It's too scary to put your money in another volatile currency - I suppose people prefer dollars because they are stable and can be spent on popular e-commerce sites.

Re: Venezuelans turn to Bitcoins to bypass currency controls

#58
post #22
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…

Your forgetting about counter party risk: http://www.investopedia.com/terms/c/counterpartyrisk.asp Any time you hand something of value to someone with the expectation for future gain it's a risk. Suppose they setup two independent companies one makes major bet's ignoring price drops and another major risks ignoring price gains. By ignoring the risk they undercut the market. If the market is sable they make money. An…

All bets require a margin to be escrowed on the blockchain. If the bet goes bad, it gets margin called. The bets are also fungible—holders of blockchain "dollars" can trade them freely instead of relying on the original backer of the bet. There is effectively no counterparty risk.

Re: Venezuelans turn to Bitcoins to bypass currency controls

#60
post #58
post #22

Earlier quoted context omitted.

Your forgetting about counter party risk: http://www.investopedia.com/terms/c/counterpartyrisk.asp Any time you hand something of value to someone with the expectation for future gain it's a risk. Suppose they setup two independent companies one makes major bet's ignoring price drops and another major risks ignoring price gains. By ignoring the risk they undercut the market. If the market is sable they make money. An…

All bets require a margin to be escrowed on the blockchain. If the bet goes bad, it gets margin called. The bets are also fungible—holders of blockchain "dollars" can trade them freely instead of relying on the original backer of the bet. There is effectively no counterparty risk.

Just to be clear there are only two types of actual US currency out there. The paper stuff and a leder of what 'banks' (or governments etc) control maintained by the FED. So, now you have a seperate DB not actual cash or physical currency. Which means you have counter party risk. Now if the US government can decide to insure 3rd party's which is almost as good as cash but as anyone that has delt with a banking error knows there is a world of difference between cash and IOU's.
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