Bitcoin Venezuela's Big Business

In the midst of an enormous economic, political and social crisis, the government of Nicolás Maduro is discovering a new enemy that manages to avoid its controls of prices and currencies: digital currencies. The most famous of them, the Bitcoin, is allowing thousands of Venezuelans to survive in a country that will officially enter into hyperinflation this Wednesday. And not only that: the policies of his Executive are subsidizing the "manufacturers" of the digital currency.

One of the great headaches of any government that wants to impose price controls is the so-called "arbitrage", the purchase of products at subsidized prices to resell them at market price outside government control. For example, many citizens bought food and basic goods in supermarkets and resold them. To avoid this, the government forced to take their fingerprints to access the subsidized products. And the inhabitants of the border towns with Colombia resold in the neighboring country the gas, obtained practically free, to be able to buy medicines, clothes or food in exchange, which led Maduro to order the closure of the border for long periods.

But if scarcity and hunger stimulate ingenuity-you need 19 minimum wages to cover a family's monthly basic basket, according to estimates by the Center for Documentation and Social Analysis of the Venezuelan Federation of Teachers-, the appearance of digital coins In recent years has opened a new possibility of arbitration: reselling electricity, which is supplied with large state subsidies, in the form of Bitcoins.

Bitcoin, a digital currency managed entirely by users, is minted through a "mining" process, which can be summarized as a long series of complex calculation processes performed by a computer network to create new digital currency units. In other words, all you need is to have a computer - or several connected to each other - on for days. In return, the user receives new units of the coin, which is changed to more than 700 dollars. In the vast majority of countries, at market prices, electricity expenditure alone eats any potential benefit. In Venezuela, at subsidized prices, not: the difference goes to the user's pocket.

Not only that, but the fact that Bitcoin is anonymous and can be changed to dollars directly through the internet is an escape route from the exchange control system imposed since 2003. According to numerous testimonies collected by Reason magazine, small entrepreneurs Venezuelans use this route to access currencies with which to import materials without having to wait for the government to give them authorization - selling at the official rate of 664 bolivars per dollar is greatly restricted - nor having to resort to the black market, where dollar exceeds 3,700 bolivars per unit.

Meanwhile, private citizens use these currencies to access companies that offer international shipments, such as Amazon, and import food, clothing or everyday goods from Miami to escape the growing shortage suffered by more and more local supermarkets, according to stories collected by the magazine.

In response, the government criticizes the users of this cyber-currency for evading the exchange control system, and denounces that Bitcoin is a currency of "smugglers" and "electricity thieves." In recent months, several people have gone through justice for attempting to carry out mining in Bitcoin, a task to which the Maduro Executive attributes part of the responsibility for the blackouts suffered by the country.

Even so, proponents of the currency say that this use of electricity is "right", since it serves to give "a stable currency" to Venezuelan citizens, something that the Government "has failed to do."