In the year since the COVID-19 pandemic first disrupted almost every aspect of our lives, many things have happened within the crypto ecosystem around the world. So, what was the last year like for crypto in Venezuela?
Even before 2020, Venezuela already had a number of companies accepting various cryptocurrencies as payment; however, significantly more people have switched to take over this form of payment in the past year. This includes everything from the hotel sector to famous pizza chain Pizza Hut announcing that it will accept Bitcoin (BTC), Litecoin (LTC Dash and other cryptocurrencies as a means of payment.
Mid-2020 crypto exchange Cryptobuyer and payment processor Mega Soft announced they would form an alliance to allow approximately 20,000 merchants using their services to accept cryptocurrency payments through the Cryptobuyer Pay solution developed by the exchange.
Another important milestone was in September 2020, when a The Bitcoin node was connected to Blockstream’s satellite network – a first for Venezuela. The result of a joint effort by Cryptobuyer and crypto education provider AnibalCripto, the node was launched despite the logistical constraints imposed by COVID-19-related lockdown measures. Likewise, those responsible for the node announced that this was the first step towards building a mesh network that could process Bitcoin transactions without the need for an internet connection.
Despite the ongoing economic crisis crypto mining is growing in Venezuela. According to the Cambridge Bitcoin Electricity Consumption Index, Venezuela contributes most at the bitcoin hash rate of any country in Latin America, meaning a significant amount of computing power is generated in the country.
Venezuela introduced a new piece of legislation focused on the country’s mining industry in September 2020. In addition to the introduction of a mandatory register and the introduction of new taxes for those working in mining-related sectors, the new law introduced the controversial “Pool de Minería Digital Nacional” (National Digital Mining Pool). Under this new requirement, it will be mandatory for miners to contribute their hashing power to a new state-sponsored mining pool.
Overall, there is no real clarity on the mining pool yet, meaning how the law will be enforced is not really known, and it has not yet been revealed exactly how Venezuelan miners will have to participate.
While it seems paradoxical to see such a level of support for cryptocurrencies from a government that is often seen as quite a limiting factor on its citizens and their freedoms, there have been several crypto experiments in the past year, including plans to Venezuelans pay for passports with Bitcoin using payment processor BTCPayServer.
Although President Nicolás Maduro’s government ultimately did not implement the passport plan, its vision of cryptocurrency use did not diminish. For example Maduro proposed a bill against sanctions in September 2020, to use cryptocurrencies to bypass the various sanctions imposed on the country and in hopes of boosting the use of cryptocurrencies in various business activities.
More specifically, there were reports that Maduro’s administration was using Bitcoin ease trade between Iran and Turkey, two of the state’s main geopolitical allies today.
In November 2020, it was also reported that the Venezuelan military decided to open the Centro de Producción de Activos Digitales del Ejército Bolivariano de Venezuela (Digital Assets Production Center of the Venezuelan Army), a center housing ASIC mining equipment designed for demonstration of work cryptocurrencies to generate ‘non-blockable’ financial income, according to the military leaders who inaugurated the facility.
All of this progress on the part of the Venezuelan state in the crypto ecosystem has been the search for solutions to circumvent the sanctions imposed by the United States on Maduro, his cabinet and senior military officials.
However, the US authorities have stated that this is the case monitoring Venezuela’s cryptocurrency operations, and in June 2020, they even added their cryptocurrency superintendent – the highest authority on the regulation of Venezuela’s crypto ecosystem – to U.S. immigration and customs enforcement. Most searched list
Record number of bolivars locked in Bitcoin
Bitcoin’s surging rise in price has been linked to the rapid devaluation of Venezuela’s fiat currency, which has resulted in a record number of bolivars being exchanged for BitcoinIn the first week of December 2020 alone, peer-to-peer exchange LocalBitcoins saw 5.85 billion bolivars exchanged on the platform. By the first week of February, this number had risen to 8.56 billion bolivars.
The complicated political and economic situation in Venezuela has led the government to consider alternative solutions. In the middle of this scenario, blockchain technology and cryptocurrencies in particular emerge.
Maduro isn’t alone in seeing cryptocurrency as a way out of troubled waters. One of his main opponents, Juan Guaidó – who chairs the National Assembly and is recognized by some 60 countries as the legitimate president of Venezuela – has the stablecoin USD Coin (USDC) to circumvent financial restrictions imposed by the Maduro government to send humanitarian aid to Venezuelans.
The money used by Guaidó came from assets seized by US authorities from the US-based bank accounts of Venezuelan state-owned companies and various members of Maduro’s government.
Opinions within the ecosystem
To better understand what it felt like on the ground within Venezuela’s crypto ecosystem, CoinTelegraph en Español spoke with some of the key actors involved in the various events that have set the tone over the past year.
Jorge Farias, CEO of Cryptobuyer, was of the opinion CoinTelegraph en Español that the use and acceptance of crypto as a means of payment in Venezuela is becoming a reality: “The global and local situation has meant that, thanks to the pandemic, companies and individuals are looking for payment alternatives that do not involve interaction or physical presence of people. “
Ernesto Contreras, head of business development at Dash Core Group, said Dash’s plans to expand into national chains were halted due to the spread of the pandemic. In addition, during the lockdown period, “We saw how delivery offers grew, operating in a 100% digital environment, and various services such as Dingo, Piido and others have joined in accepting Dash and cryptos.” He further added:
“Despite the tremendous difficulties posed by the Coronavirus, the crypto ecosystem continued to hit major milestones in Venezuela in 2020, contributing to a global environment becoming increasingly digital, and with a positive trend for cryptocurrencies in the world, more doors that are of great importance to the growth, acceptance and use of Dash and cryptos. “
Javier Bastardo, host of the Satoshi and Venezuela podcast, told CoinTelegraph en Español that “Venezuela is still one of the most active p2p exchange markets.” However, he believes the trend has not yet peaked. In addition, he believes that FOMO – the fear of missing out – is not influencing the situation as much as it did in 2017 and that a steady influx of people who heard about cryptocurrencies in the past are only now choosing the market. He also added that another factor that has dominated the past year is the willingness to pay directly in cryptocurrencies, ultimately driving continued adoption.
Anibal Garrido, CEO AnibalCripto, said CoinTelegraph en Español that “Venezuela has made an important contribution to the development of the ecosystem.” He further added that:
“The difficult situation of COVID-19 has provided us with a great learning experience: NOT to depend on physical presence for the harmonious development of our society.”
He added that the local mining law sets a precedent for other countries to evaluate and consider. He also mentioned the integration of crypto payments into retail chains, along with advances in providing fast, secure fiat-to-crypto exchange processes.
Mariangel Garcia, community manager for Binance Spanish, believes that “Venezuelans were shaken out of our comfort zone, companies were forced to start a digital transformation and now many users can see how many options are plentiful that did not exist before.”
She went on to tell CoinTelegraph en Español that this translated into the widespread adoption of Binance’s proprietary cryptocurrencies in the country, as well as a surge in demand for its peer-to-peer platform. For Garcia, this means that “thousands of Venezuelans have found financial freedom in our products without restrictions.”
She concluded, “Venezuela is the only country in Latin America with an inclusive vision of crypto adoption, which is a good start.”
Jorge Farias, CEO of Cryptobuyer, unfortunately passed away shortly after the interview.