“Even though bitcoin is volatile, it’s still safer than the national currency,” said one young ‘tech-savvy’ Venezuelan, who as Reuters reports, is looking to bypass President Maduro’s dysfunctional economic controls. “I’m teaching people to use bitcoin to bypass the exchange controls,” said Gerardo Mogollon, a business professor who styles himself as “Dr. Bitcoin Venezuela,” speaks at conferences and appears in online videos to urge Venezuelans to adopt the crypto-currency.
Even small dollar transactions are out of the question for most Venezuelans since capital controls mean acquiring hard currency now means either requesting it from the state, which struggles to satisfy demand, or tapping a shadowy black market.
While bitcoin prices have fallen this year, Venezuela’s own Bolivar has also plunged against the US dollar (and a black market dollar costs 16 times more than the government rate) and so two Venezuelan-born brothers are launching ‘SurBitcoin’ exchange this week to match local buyers and sellers, explaining “In Venezuela, we have a gold fever: a bitcoin fever!”
As Reuters reports, Venezuela offers a glimpse of just how powerful a virtual, unregulated, non-government-controlled currency can be (despite the high volatility)…
The price of a bitcoin price has dropped 70 percent to under $350 from a peak last November, illustrating one risk of the digital currency. But Venezuela’s own bolivar currency has dropped nearly 60 percent versus the dollar on the black market here in the last year.
And a black market dollar costs 16 times more bolivars than the strongest Venezuelan government rate.
“Even though bitcoin is volatile, it’s still safer than the national currency,” said Kevin Charles, 22, who has just completed an economics degree in neighboring Colombia. Many convert the bitcoin immediately into dollars, in any case.
##And this is spreading… with no official commentary on bitcoin from Maduro on the ‘economic war’ being waged against his government…
Due to currency controls introduced by late president Hugo Chavez a decade ago, acquiring hard currency now means either requesting it from the state, which struggles to satisfy demand, or tapping a shadowy black market.
Even small dollar transactions are out of the question for most Venezuelans.
And so the local market for bitcoins is gathering pace in Venezuela…
Tech-savvy Venezuelans looking to bypass dysfunctional economic controls are turning to the bitcoin virtual currency to obtain dollars, make Internet purchases — and launch a little subversion.
“Bitcoin is a way of rebelling against the system,” said one bitcoin trader, Caracas-based software developer John Villar, 32, who discovered the usefulness of bitcoin when he wanted to buy a $10 cellphone battery on Amazon.
Unable to pay for it in dollars, he bought bitcoin off a friend using local currency. He then used the bitcoin to purchase an Amazon gift certificate, with which he bought the battery.
Gerardo Mogollon, a business professor who styles himself as ‘Dr. Bitcoin Venezuela,’ speaks at conferences and appears in online videos to urge Venezuelans to adopt the currency.
“I’m teaching people to use bitcoin to bypass the exchange controls,” said Mogollon, a 42-year-old professor at the University of Tachira’s graduate business school.
Currently, bitcoin trading in Venezuela is between enthusiasts who use internet forums and social media to make ad hoc deals.
Venezuela-born brothers Kevin and Victor Charles, now based in New York, are this week hoping to open the “SurBitcoin” exchange, which will match bitcoin buyers and sellers online.
It is the first bitcoin exchange in the socialist-run country, which already has at least several hundred bitcoin enthusiasts.
“In Venezuela, we have a gold fever: a bitcoin fever!”
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We suspect this capital-control-bypassing use of virtual currencies will only grow.
via Zero Hedge http://ift.tt/1Ewnr8d Tyler Durden