TL;DR: Letters from Venezuela is an exclusive CoinSpice series, an inside look from a reporter on the ground, documenting the South American nation’s last stand among sanctions, political unrest, international condemnation and concern, economic collapse, and the specter of cryptocurrency possibly demonstrating its main use case. In this installment, the bolivar is completely devaluated; two brothers scammed more than $150K, proposing crypto investments; and a BCH transaction was shown as if it was made using the state-backed petro.
Bolivar Defeated: Government Pushing the Petro
The Venezuelan Bolivar, official fiat currency for the country, has not had a very good year. Even after suffering a monetary reconversion, where the government took five zeros off to make it more manageable (100.000 bolivares converted to 1 “sovereign” bolivar), inflation and devaluation have taken a heavy toll on it and the citizens of the troubled country. Since one of our last reports in August, the price of the bolivar has gone from 17,000 VES to 44,200 VES, losing more than double of its original value in 4 months, an unthinkable situation for any first world country.
The government through its central bank has tried to push the bolivar/dollar pair down, injecting international currencies to create false liquidity, according to reports from local press. But, as Venezuela is severely limited by economic sanctions, this has not yielded good results. More than 50 million euros have been introduced into the market, but according to financial sources, the rise of the dollar is unstoppable. This has also created a distortion in the purchasing habits of Venezuelans who now use dollars more than the national currency.
A study by Ecoanalitica, an economic analysis firm, concluded how more than 50% of the purchases made in the country were paid using dollars. Bloomberg published recently there were more than 2.7 billion dollars in the country, more than all savings in the bolivar. This is the reason why the government is pushing the petro to counter demand for dollars that seem to be rising every second. However, the use of petro is still difficult for the population, so the President Maduro announced the launch of an electronic card.
Electronic Payment Card Proposed for the Petro
Maduro announced at a public rally he was prepared to issue an electronic payment card to facilitate handling of the national cryptocurrency. “I know paying with Petros is not easy. Even for me, it has been difficult sometimes,” he stated. While he did not announce the date of the payment solution’s release, he said there were “pretty things” waiting for the people this December. Previously, the government also announced that Christmas bonuses for workers and pensioners would be paid in petros through a system associated with the “Motherland Card.”
The petro has been widely criticized, and was sanctioned by an Executive Order from the Trump administration after it was discovered that Russian officers were involved in its creation of the cryptocurrency as a way of evading economic sanctions. If the petro payment card comes to fruition, it will be the first government-built cryptocurrency system using also a national cryptocurrency for commercial payments.
Petro Divisa Twitter Account Posted Bitcoin Cash Payment as if it was Petro
Despite the president recognizing paying with petros is not easy, there is an interest in promoting a different idea by petro-related social accounts, as it was the case with Petro Divisa. The advocacy group posted a bitcoin cash (BCH) ayment as if it was made with petros. The video showed a woman making a BCH payment with the Bitcoin.com wallet in less than one minute, but the Petro Divisa account explained it as an illustrative example of how paying with petro is quick and effective.
¿Cuales son las ventajas de tener un aplicación #PetroWallet en el movil para pagar con Petros?
✅Rapidez en el pago
✅No requieres documento de identificación
✅Facilidad en su uso
✅Bajas comisiones de uso
✅Transparencia y facilidad de Fiscalización
— Petro Divisa❁ (@PetroDivisa) December 6, 2019
However, they were quickly called out, as the payment is really from a girl in Thailand. After researching the available apps, Twitter users familiar with the cryptocurrency argued there is no mobile wallet app for the petro, and the only way of paying with it is using exchanges (not a safe practice) or using the official PetroApp, but it requires personal information to register, a no-no for some people wanting to handle their cryptocurrency anonymously.
Two Brothers Detained for Bitcoin Related Scam
As cryptocurrencies are more and more relevant in the country, there are also people using this newfound relevance to scam and rob, using the idea of crypto assets. Venezuelan intelligence detained two brothers scamming people by enticing them to invest in bitcoin. The brothers preached the great revenue investing in bitcoin would bring, and took money from interested people to supposedly trade with it. But the truth was they took the money for themselves and disappeared.
The Núñez Flores brothers started with the scam with their inner circle of friends, and then expanded using the internet and social networks, where they preyed upon people looking for “get rich quick” schemes. Local press reported they stole more than $150K. This is the first cryptocurrency scam reported by Venezuelan authorities. But with the rise of crypto, the poor understanding of it and the economic crisis will surely foster more of these incidents in the future.
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