Over the past two years, many bitcoin believers donated cryptocurrency to initiatives in Venezuela, often holding up the small nation as the pinnacle example of the technology’s potential.
The truth on the ground is much more nuanced.
The fintech startup AirTM distributed roughly $300,000 worth of cryptocurrency donations to 60,829 ID-verified Venezuelan e-wallets throughout 2019. The donated crypto came from entities like GiveCrypto, the Electric Coin Company and the artist Cryptograffiti.
“To incentivize donations, the largest donor did receive a piece of the mural,” Cryptograffiti told CoinDesk, describing the crowdfunded mural project.
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The muralist’s crowdfunding campaign made up the bulk of bitcoin (BTC) donations, which in total represented less than 12% of funds donated to AirTM’s Venezuelan users. The bulk of donations were assets such as bitcoin cash (BCH), zcash (ZEC) and dai (DAI) and amounted to roughly $5 per donation. AirTM’s data shows few users chose to withdraw the crypto donations, opting instead to keep it inside the AirTM system.
According to an AirTM user survey, only 57% of recipients engaged with the funds. For some, even converting crypto to AirTM credits (AirUSD) inside a custodial user account was too much hassle.
For those who did access the funds, more than 2,000 Venezuelans said it was helpful for buying food. (You can see the full survey results here.) They typically did this by using AirTM to cash out bolivars as needed, using the digital wallet provider like a bank. Others used it as savings.
“So far I only use this crypto in AirTM,” one such user, Neysa Hurtado, said in an interview.
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Even bitcoiners like freelance engineer Geraldo Meneses, who does hold a small amount of crypto in his own wallet, preferred to use most of the donated crypto as AirTM credits.
“Bitcoin is a way to charge for my work,” Meneses said via WhatsApp. “AirTM is my exchange platform and personal bank.”
Future banks
Meneses said he used the extra bitcoin from this charity campaign to buy medicine for his mother, which was expensive and had to be shipped from abroad.
Before the coronavirus crisis, he said it was possible to ship medicine from Europe within roughly two weeks, but now it can take up to a month. So having the capital to order in advance is important.
“Many people are looking for ways to exchange dollars and cryptocurrencies,” he said. “The most cunning [exchangers] try to defraud innocent people.”
This was the benefit AirTM offered. Customers trusted the platform and knew how to use it, although few know how to operate zcash or bitcoin wallets. One new AirTM user, attorney Michael Barráez, said this was his first time learning about cryptocurrency. He said he might buy some bitcoin to hold for himself, as savings.
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“When democracy is back and the U.S. sanctions are over, our economy will flourish again,” Barráez said.
Even if users have the skills to use cryptocurrency, some of them still prefer to manage most of their money with the option for recourse that a company provides. Others don’t want to hold a highly volatile asset at all.
“I could see that the money [AirUSD] did not devalue,” first-time crypto user Jannet García de Rivas, an experienced engineer who works in the tech industry, said about why he converted the crypto donation.
Bottom line
If Venezuela offers an example of bitcoin usage, then it appears there is user demand for bitcoin-friendly services provided by a regular fintech company.
In short, people trust the service provider, even if they may occasionally choose to hold a small amount of bitcoin themselves. The service provider makes it easier for them to transact with bitcoin across borders or liquidate it. Other users, with specific needs, require lots of planning and preparation in order to use bitcoin directly and be their own proverbial banker.
“There is still so much work to be done in order to have bitcoin adoption in the region,” Cryptograffiti said. “For example, we had a random selection of refugees participate who just happened to be in the area, many of whom didn’t even have email addresses. In order to be the most effective, we could have tried to target a particular subset ahead of time.”