How Venezuelans are Using Bitcoin to Counter the Effects of Hyperinflation with Alejandro Machado

Mr Obnoxious - Un pódcast de Peter McCormack

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Interview location: Shoreditch, London, UK
Interview date: Mon 7th May 2018

Despite the recent fall in the Bitcoin price from $20,000 in January back down to $6,000 in March, the price continues to grow year on year, with the price today back over $7,500. These price moves create lots of excitement and bring speculators into the market, yet many still question where the value is? What are the use cases? Who is spending Bitcoin?

Right now, the use cases for western nations are niche, and with the recent scaling issues, there has been a decrease in use as a means of payment. While Lightning Network promises fast and low-cost payments, the question remains whether people will use Bitcoin instead of their debit/credit cards or cash in their pocket. Others argue spend volumes aren't relevant and that Bitcoin is a store of value, but objectors claim that the volatility means it can't be. This though is relative.

On a personal level, I use Bitcoin to pay my mining bills because the transactions are faster and more straightforward than via the bank, but I use Bitcoin for little else. My experience is in a closed loop of activity within the Crypto world. The use case for Bitcoin is broader in collapsing economies, for example, in Venezuela Bitcoin is a lifeline for many struggling with the impact of hyperinflation:
- People using Bitcoin as a store of value to ensure that their income holds value
- Others are mining Bitcoin as a means to earn an income to feed their families

Bitcoin maximalists often discuss hyperbitcoinisation: the transition to an economy where Bitcoin is the primary currency, and with Venezuela, this is a possibility. The strict controls over the use of foreign currency have led to an ever-growing Bitcoin economy in the country. The trustless, censorship-resistant, decentralised nature of Bitcoin makes it an excellent option for a population living through a collapsing economy.

Even the socialist government of Nicholas Madura has recognised the potential of Bitcoin and Cryptocurrencies with the building of government mining farms, able to mine Bitcoin competitively due to the control of the energy system to the launch of the much criticised $PETRO as a way to generate much-needed money for the failing government.

In this interview, I met with Alejandro Machado to discuss the recent history of Venezuela, government corruption, failed socialist policies and the increase in Bitcoin adoption to counter hyperinflation.

Alejandro is a Venezuelan national who left the country in 2015. He writes openly about the failing Madura government for the Caracas Chronicles and is a developer and designer, working on Crypto projects.

Alejandro brings an insight into life inside Venezuela, why he left, how Crypto can help the population and his desire to return to his home country.

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Connect with Alejandro:
- On Twitter @alegw
- His articles at Caracas Chronicles
- His website: https://alejandro.macha.do/

Alejandro's Crypto articles for Caracas Chronicles:
- New Bolichico Subspecies Alert: Petro is the New Derwick
- The PETRO hasn’t raised a dime
- What’s Next for the Worthless PETRO
- Enter the PETRO
- Are Bitcoins the Answer to the Venezuelan Crisis?
- Bachaqueating Bitcoins

Alejandro's other important articles for Caracas Chronicles:
- Leopoldo López Defies SEBIN and Speaks Out in NYT Podcast
- Colombia Held Normal and Peaceful Elections: A Hopeful Tale for your Neighbors
- Contradicting Viewpoints on the Transition: Liberalism Must Come First
- On Mendoza, Hunger and the Potato
- The Counterrevolution will be Doxed
- A Love Letter to the Future

Other Important Articles About Venezuela:
- BBC: How Venezuela's crisis developed and worsened
- Al Jazeera: Is socialism to blame for Venezuela's never-ending crisis?
- Forbes: Venezuela's Inflation Breaches 25,000%
- Forbes: Does Venezuela's Oil-Backed 'Petro' Have The Power To Showcase National Cryptocurrencies?
- Sputnik News: India Declines to Buy Venezuelan Oil With Petro Cryptocurrency Despite Discounts
- News BTC: Officials in Venezuela Begin Confiscating Imported Bitcoin Mining Hardware
- The Atlantic: Big in Venezuela: Bitcoin Mining
- Wired: Where Could Bitcoin Succeed as a Currency? In a Failed State
- The Guardian: Venezuela's new bitcoin: an ingenious plan or worthless cryptocurrency?

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