Feeding Venezuelans Digitally: The Capabilities of Cryptocurrency

By Anya Tang

The internet has long been capable of uniting users to tackle common challenges. For example, users of Reddit, a social media and news site, were able to raise $80,000 almost overnight to construct a fence for an African orphanage. And once more, it is thanks to technology that an emerging issue is being addressed -- Venezuela is in dire need of assistance, and cryptocurrencies are the key to solving the situation.

Venezuela’s government is collapsing, and their citizens are following suit. Children starve on the streets, and their currency is so hyperinflated, not even thieves want it. Venezuelans are paying for their meals using trash bags filled to the brim with Bolivars. In response, President Maduro has vowed to turn around this humanitarian crisis primarily through the implementation of their own cryptocurrency, the oil-backed ‘Petro’. Except, with the government controlling all mining, and the centralized nature of the Petro, it isn’t really a cryptocurrency. The Initial Coin Offer (ICO) is little more than a glorified, governmental GoFundMe -- how could cryptocurrencies possibly help Venezuela in any way?

Similarly to Zimbabwe, Venezuela is facing an extreme inflation issue. However, Venezuela’s fate may be slightly different. (Source: Adam Selwood, Flickr)

It turns out that the Petro is not the best approach to aiding Venezuelans. However, the Nano Community has managed to overcome the traditional roadblocks of foreign aid. Through a project coordinated by David Hay, several cryptocurrencies -- the Nano Community in particular being a prominent example -- have dedicated their efforts to helping feed an entire community in Venezuela. To better understand how this happens, and why the Venezuelan Petro didn’t quite have the same effect, we’ll take a look at the two primary focal points in Venezuela’s situation: the contradiction of centralized cryptocurrency, and the unconventional approach to conventional foreign aid in an increasingly interconnected world.

The decentralization of cryptocurrencies like Bitcoin are why they work so well in comparison to the centralized cryptocurrency Venezuela is trying to implement. The Petro will only cause more problems rather than solving them. As the world’s first state-issued ‘cryptocurrency’, the Petro is oil-backed, and only purchasable through the government. Already, issues are apparent. A little more digging reveals that the Petro isn’t even a functioning cryptocurrency, nor does it vaguely resemble a currency in any shape, way, or form.

The Venezuelan Petro is designed to evade sanctions through its ICO, and simply cannot support its citizens in the way that the Nano community is doing so. The Petros can only be bought with Dollars rather than Bolivars, making them extremely difficult to acquire. Not only that, but they can only be used to pay taxes. Which essentially defeats any sort of purpose the Petro might even begin to hold. Venezuelans might as well be trading Monopoly money at this point.

The Petro isn’t even ‘oil-backed’ -- the government decides the value of the Petro depending on how they calculate the value of their oil. Essentially, you’re banking the worth of the Petro on a government infamous for its corruption and unreliability. (Source: Mike Eaves, Flickr)

So, if the Petro can’t feed these families, who can? David Hay’s project has managed to do that, and so much more. By integrating Venezuelan citizens into the world of cryptocurrency, foreign aid suddenly becomes easier to access -- and, much like Redditor u/surfer1978 put it, “Someone sent the guy 0.5 Nano and he received 0.5 Nano instantly, nothing less.” The instantaneous nature of Nano and its zero-fee transaction methods make it prime for foreign aid. Traditional methods of foreign aid have long been flawed and difficult to enforce, with Nobel Prize winner Angus Deaton pointing out that aid is capable of keeping bad governments in power. With misspent foreign aid, the resources often end up going to the wealthy or the government, and only further widens the wealth gap in the countries that need help the most.

However, the decentralized nature of cryptocurrencies and their instantaneous transferral methods make them the perfect resource to help Venezuela. David Hay, the founder of the project himself, noted in his vlog about feeding Venezuelan communities, “The one thing I kept hearing again and again from people was that they don’t want handouts. They want solutions. They want progress.” And this solution started with Reddit user ‘Windows7733’.

A Venezuelan citizen, Windows7733 received a month’s salary worth of cryptocurrency -- a meager donation to Americans, but something capable of so much more to him. The user then went on to work with the Nano Community in order to raise more funds, and spread the word. They ended up raising around $600 to help Windows7733, and with just $80, he was able to buy 102 kilograms of food. By gradually incorporating the use of Nano into the Venezuelan economy, hundreds upon thousands of lives could be transformed in the same way that Reddit helped Windows7733.

Windows7733 posted to Reddit, “NANO could change their lifes [sic] and I will help them to know and use NANO. This is already improving and chaging [sic] their lifes [sic] for better!” Instantaneous. Immediate. Completely free of corruption. Cryptocurrencies -- and education -- are reflective of how technology has made it so much easier for people all around to world to help each other. By connecting the world digitally, solutions come to us in real life. The Venezuelan people cannot rely on their own government to provide them with a solution, and so the Internet is stepping in. Armed with the resources to feed his community, Windows7733 declared, “This morning someone came to my house and asked me for food and of course I gave them some kgs. Her face was pure joy.”