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.

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Chinese Court Rules Bitcoin Is Legally Protected Virtual Property

The Hangzhou Internet Court, in China, has recently ruled bitcoin is seen as virtual property in the country, and as such is legally protected.

The ruling came in a case in which the plaintiff, Mr. Wu, sued the Shanghai Technology Company, which allegedly operated the FXBTC cryptocurrency exchange on Taobao, a leading Chinese online marketplace, and sold bitcoin back in 2013.

Wu reportedly bought 2.675 BTC for 20,000 yuan, about $2,900, back in 2013 from the exchange. In 2017, during the cryptocurrency market’s bull run that saw bitcoin hit a near $20,000 all-time high, the buyer wanted to access the funds, but found out FXBTC closed and could no longer get to the BTC.

According to Beijing News, the plaintiff claims the Shanghai Technology Company didn’t warn it was closing the platform nor gave him a chance to access the funds afterwards. The store likely shut down as between 2013 and 2017, the Chinese government made it illegal to trade cryptocurrencies, which in turn forced Taobao to stop vendors from selling cryptos on its platform.

While the plaintiff failed to prove Shanghai Tech was the vendor that sold him the bitcoin and lost the case, the court did determine bitcoin is legally protected virtual property.

According to Dovey Wan, this was seen as a bullish signal in China and chatter on Weibo, a Chinese microblogging platform similar to Twitter, seemed to point to this as the reason behind bitcoin’s recent price surge.

According to CryptoCompare data, BTC rose 4.8% in the last 24-hour period, and is currently trading at $10,300. Earlier today, bitcoin jumped from a $9,400 low to as much as $10,500 before facing a small correction.

Notably, this isn’t the first time a Chinese court defends bitcoin. As CryptoGlobe covered late last year, an arbitration court ruled bitcoin should be protected as property by law, and clarified at the time Chinese law doesn’t forbid owning or transferring bitcoin. Earlier this year, a prominent Chinese lawyer argued owning and occasionally trading bitcoin is legal in the country.

On Twitter, Wan clarified that while holding bitcoin as private property is legal, trading the cryptocurrency “in a systematic way” isn’t.