Last year, one Deimer Gonzalez packed his college diploma, clothes plus a mobile wallet with 1.5 worth of Bicoin savings and fled Venezuela for Argentina. What followed throughout this year provides a microcosm for Venezuelan bitcoin users all over the world.
A mechanical engineer from Caracas and previously an employee at Venezuela’s state-owned oil and gas firm (PDVSA), Gonzalez says those very same savings allowed him to support his parents as he began a new life in the Argnetine capital Buenos Aires.
“I was always able to send money back thanks to my savings, sparing my wages in pesos,” he told Coindesk.
With aroundd $3.7 billion in remittances sent this year, money from overseas is a significantly large source of income for Venezuelan communities. Be that as it may, bitcoin and other digital currencies have taken a major role in facilitating cross-border transactions.
Moreover, migrants are utilizing cryptocurrencies during the exodus process itself, since it is often difficult for jobless immigrants to access financial services in their new destinations.
That is the same scenario with Wolfang Barrios, a trader from Caracas who also revealed his experience arriving in Chile with no savings in the local currency. Barrios said:
“I didn’t have a stable job, enough money or a bank account. I could send the remittances only using crypto.”
Additionally, supporting a family in Venezuela is not a walk in the park, even with dollars. In May, Venezuelan economist Luis Oliveros estimated the cost of living in the country at around $900 per month for a family of five. A basic food basket can cost about $300 a month.
As a matter of fact, the minimum wage in Venezuela is apparently equivalent to $15 a month, though economists believe this rate will not last for long. In Gonzalez’s case, neither his previous $5 monthly wage as a PDVSA employee nor his bitcoin remittances along provide enough to support his family.
“Now I send $50 [worth of bitcoin] and it’s still nothing,” according to Gonzalez, adding that both his parents currently will have to work to sustain themselves, without future plans to move out of Venezuela.
The remittance business
Maybe due to these obstacles, cryptocurrency-remittance businesses could start booming in Venezuela. There’s already one entrepreneur in this space who works for the Peru-Venezuela remittance platform Local Remesas. The businessman asked to be identified only by his first name Jesús.
“We receive between $200,000 and $300,000 a month,” Jesús said, explaining how the platform apparently trades pesos for bitcoin, to be later exchanged for bolivares in Venezuela.
As it has been discovered, the fiat-to-crypto payment processing niche is lucrative in Venezuela.
According to Peru’s Migrations and Immigrations Police, the country is the second choice for immigrants from Venezuela, with more than 865,000 arrivals to date.
Even the Venezuelan government recently introduced its own remittances platform, which utilizes blockchain-based Petro (PTR).
For Jesús, he said the stratagem to exchanging at the best rate is to use direct contacts:
“LocalBitcoins is about 3 percent more expensive than using my own contacts.”
Here’s the caveat
For many of these bitcoin users, though, crypto payments are only a last resort.
A daily inflation rate of 3% and the constant devaluation of the bolivar has made bitcoin exchanging really important for those living in Venezuela. But in other places in Latin America, some bitcoin users prefer to use fiat the moment the situation is sustainable.
Mariluna De La Concha, a Venezuelan cryptocurrency advocate residing in México, said that she sent remittances in cryptocurrency to her family from 2016 until early this year. Now she only sends pesos to her mother.
“It’s not convenient to exchange crypto,” she said. “In Venezuela it has good value due to inflation, but it’s very expensive for me from here.”
Her decision to use those premier-but-compliant exchange platforms was additionally an issue of safety. Instances of fraud have been mentioned anonymously in Venezuelan private chats, where the U.S bank accounts of Venezuelan users get reported and blocked after a transaction.
Another unidentified source told CoinDesk there is even the inkling that exchange platforms’ dealings are being tracked by government officials to extort crypto users.
For Gonzalez, who moved to Argentina last year, the conditions have prompted him to switch to sending remittances back home in fiat currency.
“I’m more of a [bitcoin] holder now,” he said.