When the going gets really weird, many Venezuelans, it seems, are turning to crypto bartering.
As hyperinflation in Venezuela continues to cause the economy, and indeed wider society, to crumble, its long suffering and now desperate citizens are turning not just to US dollars, euros, Columbian pesos, Brazilian real and, increasingly, Bitcoin, to just buy food and other daily necessities. They are also using somewhat bizarre crypto tokens as food bartering tools.
According to a study by the country’s opposition-controlled National Assembly, inflation in Venezuela reached an incomprehensible 1,300,000% at the end of last year. The national currency, the bolivar continues its death spin plummet. A Reuters article from February said that the black market rate for bolivars was 228,000 per dollar. In 2010 the official rate was 2.15 to the dollar.
Washington has now announced that it is has drafted plans to pump US dollars into the country through banks and smartphones if the regime of Nicolas Maduro fails. Maduro doesn’t exactly appreciate the US “interference” and now Russian troops are on Venezuelan soil. To say its a mess somehow misses the point.
For some, the answer is an odd cryptocurrency called the nano. Previously known as the raiblock, the nano has gained prominence by advertising itself a zero-fee way method of transferring value almost instantly.
The odd part is that, unlike most cryptocurrencies which are issued via sale offerings, “airdrop” distributions or by mining, these raiblocks were given to people for free if they could resolve “captchas”, the tests made of images or letters used in computing to determine whether a user is a human or bot. These captchas were hosted on so-called “faucets”, that was actually a website, where upon completion the user would be issued free tokens.
Weird? Apparently not for people that are living in the insanity that is today’s Venezuela.
“There were a lot of Venezuelans working to resolve captchas on these faucets to earn raiblocks, and that created a community of people who supported it,” Fabián Escalona, a member of that community in Venezuela, told Asia Times.
“Nowadays, there are cryptocurrencies that deduct you a small fee for transferring value, but nano can do it fast and without fees. It is important that if we are going to have a global currency, it has to be a fee-less and a near-instant one, and this is because there are certain regions in the world where 20 cents is a lot of money, people in those regions would need a fee-less cryptocurrency,” says Escalona.
That community says it has now set up digital trading platforms – effectively bartering systems – for individuals, merchants and businesses, and this, in turn, has brought in outside help from the wider crypto world. Global nano users are now making donations to desperate Venezuelans. Last year, one Venezuelan wrote he had managed to trade 29 donated nanos for “102 kilograms of food, including cornmeal, meat, rice, sugar, beans, sauces and avocados.”
The minimum wage in Venezuela is 18,000 bolivars, according to Reuters. Using the government exchange rate, that’s six US dollars. According to the street rate – the only rate that counts – that’s less than 10 cents. To put things another way, last year pensioners in the country started receiving their state pension payments in the much-criticized petro, the government cryptocurrency based on the NEM blockchain.
Like Iran and Russia, Venezuela has turned to crypto to circumnavigate US economic sanctions that hamper their ability to export oil. Supposedly backed by the country’s oil reserves, the petro has roundly been described as actually “worthless“. It might still serve as some kind of trade mechanism but it seems less stable as a means to let the country’s elderly buy their rice.
So to get fed, increasing numbers are chasing those captchas instead. An online group started last year called Nano Chat Español is growing rapidly, says Escalona, and now has around 800 members, with the majority of them Venezuelans. “Nano can be used as a store of value to protect you from hyperinflation,” says Escalona. “It is an alternative to the national currency.”
What happens next is anybody’s guess.