Venezuela has collapsed for all practical purposes with people now scrambling for water as a national electricity blackout enters its sixth day.
“It’s like Jumanji here,” Pedro Martínez said. “Except instead of elephants and lions running around it’s the national guard and colectivos,” with collectivos being leftist Venezuelan community organizations that support the disputed president of Venezuela, Nicolás Maduro, and his party.
Money has become street trash in the country (pictured). Respirators in some hospitals have stopped working as back-up electricity generators fail to function. Aid is not being allowed in, and overall the situation is simply tragic.
There is now intermittent power in the capital, but some neighbourhoods have been in the dark since last week. With a war of words pretty much in full swing, can bitcoin separate fact from fiction?
First, there’s suggestions that the recent sharp drop in bitcoin transactions was due to some start-up ending some testnet. Something we might have entertained if there wasn’t a sudden recovery:
Looking at the above and considering what has been reported about recent events in Venezuela, one can reasonably conclude that there was a sudden drop due to virtually the entire country going dark.
The shock of the electricity blackout would have focused Venezuelan minds towards far too basic needs, thus bitcoin transactions drop to 212,000 on March 10th from about 370,000 a day.
Then, the new reality is no longer quite a shock. Generators are turned on, DIY solutions are found, plus there appears to be some return of electricity, albeit intermittently.
That could allow individuals to power their phones or laptops which then can run on battery, so you get some return to semi normality with about 295,000 bitcoin transactions processed on Monday.
We’ll have to wait and see what future data will say to form a fully conclusive “verdict” on whether we can sort of see what’s going on in Venezuela through blockchain data, but this chart is very interesting:
Bitcoin was transferrin about $5 billion a day, but then that drops to circa $2.6 billion on March 10th. It then recovers to above $4 billion, kind of tracking the total number of daily transactions.
Bitcoin transfers here are not necessarily a move of bitcoin from one individual to another. Considering the very low fees of practically free bitcoin transfers, one might move the coins through a mixer, or might move the coins two times or three times to get to someone else. Withdrawing them from an exchange for example, sending them to a new address for privacy, and then sending them to the end point.
That could, however, apply to all transactions. So if this fall in activity was due to the Venezuelan electricity blackout, then they are handling close to 50% of all bitcoin activity.
That is astonishing, but not incredible. This is a country where Maduro went on national TV to say you can buy Petro with bitcoin or eth. This is a country that effectively has no working fiat money. This is a nation to which many in this space have donated cryptos in what to us looks like small amounts, but what in Venezuela must have created a buzz.
In other words, bitcoin may have gone mainstream in Venezuela not just in awareness, but in actual usage.
That would make sense. If you send fiat from abroad to Venezuela, whether that is in dollars or other national currency, it would be converted into VEF based on the official conversion rate which is completely detached from the real value of Venezuelan money.
If instead you’re sending bitcoin, then the receiver gets the real monetary value of it as you’re outside gov or bankers or their conversion rates.
Meaning bitcoin here might not be something you could use, but something you effectively have to use for practically there is no other choice.
Bitcoin trading volumes have halved in Venezuela for the week ending 9th of March. The electricity blackout began on or around the 6th, so the circa 1,000 in bitcoin trading volumes on the peer to peer exchange Localbitcoins is about half of the week.
This of course is far more direct evidence of what is going on in the country as far as basic infrastructure, like electricity, is concerned.
That suggests bitcoin can be a very public method of global factual information in any country where it has some reasonable usage.
One can’t therefore deny that there was a significant electricity blackout in Venezuela or that bitcoin has considerable usage in the country.
Depending on what future data says, it may be the case one can’t deny the electricity situation is improving either. Making this open finance a global shared truth in an age when even facts are sometime in dispute.
“It’s like Jumanji here,” Pedro Martínez said . […]