Venezuelan Economist Keeps His Funds in Bitcoin, Converting to Fiat When Necessary

  • Venezuelan economist and resident explains how he pays for everyday items using bitcoins.
  • He converts his cryptocurrency (a litlte at a time to avoid detection from government) into local currency to pay for daily purchases.

Carlos Hernández, a Venezuelan citizen and economist, recently revealed that he “keeps all [his] money in bitcoin.” Hernández explained that he does not own any Bolivars, Venezuela’s official fiat currency - as it reportedly suffered from a daily inflation rate of 3.5 percent and an annual inflation rate of 1.7 million percent (during 2018).

Hernández mentioned in his detailed opinion piece (published in the New York Times on February 23) that he doesn’t “have a bank account abroad, and with Venezuela’s currency controls, there’s no easy way for [him] to use a conventional foreign currency like American dollars.”

$6.9 Million Worth Of Bitcoins Traded In A Week

He added that before purchasing milk or any other item, he goes through the various listings on peer-to-peer (P2P) digital asset exchange, LocalBitcoins. When Hernández finds a good rate for his bitcoins, he accepts the offer and then exchanges his cryptocurrency for Bolivars via a wire transfer, using a bank that both him and the buyer transact with.

Hernández noted in his post that the local market for bitcoins “broke a record” on April 17, 2018 as it skyrocketed to $1 million worth of total trading in only 24 hours. Moreover, the South American nation of Venezuela is currently ranked second (worldwide) in terms of total trading volume recorded on LocalBitcoins. During the week ending on February 16, 2019, Venezuela’s residents traded approximately $6.9 million through LocalBitcoins alone, according to data from Coin Dance.

Commenting on the BTC trading activity, Hernández wrote:

That’s saying something for a country in its fifth year of a recession, whose economy contracted by some 18 percent in 2018.

He added that he does not convert “too many” bitcoins at one time - as Venezuela’s government closely monitors transactions in Bolivars. Any amount over $50 that is sent or received could be “automatically frozen” by the country’s authorities, Hernández noted.

"No Evidence" Of Petro Being Used, First Bitcoin ATM Arrives

With the help of bitcoin, Hernández says he is able to cover his household’s expenses. Notably, the Venezuelan economist revealed that his father is a government employee at a printing press and only earns the equivalent of $6 per month in salary. Meanwhile, his brother managed to “escape” Venezuela last year with the help of cryptocurrencies, Hernández wrote.

As CryptoGlobe reported in late August 2018, an extensive four-month-long investigation by Reuters found that there was “no evidence” of the nation’s controversial Petro cryptocurrency being used anywhere. Local residents told the reporting agency that the Petro was not being used for local or international transactions. While Venezuelans may not trust their government or its cryptocurrency, the first ever Bitcoin ATM (BTM) recently arrived in the country. Venezuela’s citizens have also been using other cryptocurrencies such as dash - in order to pay for everyday goods and services.

Billionaire Novogratz: Altcoins Won't Pump Like In 2017 Bull Run, Bitcoin Will Dominate

It appears that cryptocurrency prices have finally begun to recover after enduring an extended bear market which lasted throughout 2018.

As the market capitalization of Bitcoin (BTC) and other major cryptoassets continues to rise, several analysts have been drawing comparisons between what they’re seeing in the current market and what they observed during the historic bull market of late 2017 and early 2018.

Commenting on the recent crypto market price movements via Twitter, Ran NeuNer, the host of the CNBC Africa Trader show, remarked:

The market is running but we still haven’t seen the crazy alt pumps, pumps where coins do 40% in a day...is it coming?

Bitcoin To “Outperform” All Other Cryptos “This Time”

As the bitcoin price begins to recover, there have been many predictions made regarding the anticipated performance of altcoins. Twitter user “Crypto Bitlord” (@Crypto_Bitlord), a widely-followed digital asset market analyst, believes XRP, which currently has a market cap of around $16.3 billion, may trade as high as $10.

However, prominent crypto investor Michael Novogratz believes that digital asset traders are a lot smarter this time, when compared to some of the bad investment decisions they might have made during the initial coin offering (ICO) craze of 2017.

Novogratz, who’s the founder and CEO of Galaxy Digital, a full-service crypto merchant bank, has predicted that in this market run, Bitcoin will “outperform” all other cryptoassets.

On May 16th, 2019, the Bitcoin price surged to a 2019 high of $8,373 according to CryptoCompare data. In response to bitcoin’s recent price movements, Juan Villaverde, the Chief Analyst at Weiss Crypto Ratings, told CryptoGlobe: 

Bitcoin could fall to as low as $4,400. But [if] it does, it will be the best Bitcoin buying opportunity since 2015.

“More Good News For New Bitcoin Users”

Villaverde, an econometrician and mathematician focused on developing various crypto index models at Weiss Ratings, believes bitcoin would be a great buy at a lower price (as suggested above) because of the following reasons:

  • “The usage of Bitcoin is near all-time highs – 450,000 transactions per day. That’s up from a low of 150,000 in April of 2018 and approaching the all-time high of 490,000 in December of 2017.”
  • “Despite the high transaction volume, fees on the Bitcoin network are at their lowest levels since August of 2017 – more good news for users.”
  • “The Bitcoin block size is now greater than ever before, thanks to the Segwit technology upgrade.”

Villaverde further noted that the predictions are “based on studying the time patterns in Bitcoin's rises and falls throughout its 9 year trading history.” He explained that the time patterns have been analyzed by using an “algorithm-based market cycles model.”

The Chief Analyst at Weiss Ratings also mentioned that the bear market “ended on December 15th 2018 and the model confirmed this shift in trend on March 26th of this year.”

He added:

Then, after the rally that took place starting on April 25th, the same model told me a new bull market was now underway. The same model indicated a 30% to 45% correction due as of late April-early May and we seem to be experiencing that right now.