Money is the killer Ðapp: crypto in Venezuela by Alejandro Machado & Eduardo Gomez (Devcon4)

hey everyone my name is Eduardo Gomes I'm here with Alejandro Machado we're Venezuelans currently working to improve the crypto system and we wanted to talk today about a very important topic which is money is the first step cryptid option in Venezuela living in Venezuela so we in Venezuela there's a vibrant Bitcoin community cryptocurrency community and we all been using cryptocurrencies since to start to survive incredibly hardships like hyperinflation infrastructure in Venezuela has worsened the country is in the middle of the worst economic crisis in the history in its history and essentially everyone in the country is living on past glories like we are now experiencing inflation rates of up to million percent and there's no public expenditure on infrastructure in the country we're seeing things like all the abandoned towers buildings are being used by poor people to live in this picture right here you can see is a Tower of David it's an unfinished building a skyscraper that was invaded by by people to live in this is a state of Venezuela right now and that's what we wanted to address here and raise awareness of Port in Venezuela in five years has tripled doubled and essentially now up to 90 percent of the population is living in poverty the monthly minimum wage in Venezuela right now is about $5 per month of work this of course as means that the whole population depends on the government the government has made itself basically the bank the bank for the population the population depends on the on the government to give them handouts to survive because the wages are so low and they want it that way legality does not equal morality in Venice all of their laws and procedures were put in place by the government that the National Assembly the Congress approved to them that seems like like good things but they're not in Venezuela there's a state-sponsored violence the country since the government cannot repress people I mean they repress people but they cannot do so with the military or the police because it looks bad what they have done is that they have a sponsor their whole paramilitary guerrilla the way they do this is that they have basically put people from a political party and they have funded them they have given their arms weapons resources and these guys show up at any dissident or any protest so it is citizens repressing citizens that are these citizens the case there is sponsored by the government this is exact thing that we're seeing right now in Nicaragua with Daniel Ortega the paramilitaries are running the are running the country there we have been living this since 2000 approximate since 2012 or something 15 years of exchange control Venezuela is one of the few places in the world where we can exactly pinpoint where everything went to hell in this case it was in 2003 when former President Hugo Chavez in a public speaking he expressed his frustration in the fact that he could no longer fund public programs because the government had ran out of money the budget right so since he enjoyed tremendous popular support the Parliament there I proved a lot that could essentially allow the President to ask as much money as he wanted these of course put tremendous inflationary pressure into the economic because the government the government was printing money like crazy another part of this is that the government imposed the year after a currency control mechanism this currency control mechanism means that regular citizens Venezuela Venice ones can not by dollars euros or any other currencies essentially the people the population have to result to a black market to get dollars if they need Venice regular Venezuelans cannot access these these hard currencies and so the the control of the access to dollars the government has it one of the one of the worst aspects of this is that the government has infiltrated all public institutions even private sector because they're the ones who decides who gets the dollar if you're a businessman in Venezuela and you want to invest in the country and you want to purchase dollars to import some goods you have to go through the government and you need connections with the government so these currency control mechanism mechanism has been used by the government since 2003 to seize power and to basically exert influence all over the economy Venezuelans in this scenario they have to resort to the black-market to get their dollars in my case crypto this is the sort of crypto main drive in 2015 I was basically seeking for ways to generate income online get some work done because minimum wage at the time was about $30 per month everyone I was hearing stories of people playing games like World of Warcraft to mine gold and they were selling that gold on the internet and they were making more money that engineers programmers normal employees inside the country so after hearing all these stories I decided what the hell let's do some work on the internet and I joined these platforms things like upwork freelancer fiber to some work things like translation content creation etc the problem with this is that these services they rely on centralized payment system like PayPal Payoneer and other gatekeepers of the international in this case internet money world these platforms also cut so I was getting 70% of of the money by using upward freelancer and then in Venezuela I had to purchase a PayPal account because the currency control mechanism does not let me cash out those dollars into my currency so I have to I had to buy a verified PayPal account and then I had to I was using a dealer to sell these dollars that was earning people for significantly less to put things into perspective and make it simple I was making like 40% less of my work what I deserve just by using decentralized service systems so I've done in this cryptocurrencies in space everything's in solving CAPTCHAs writing articles and a bunch of other stuff in at the end of 2015 I joined I stumped up on Bitcoin talk for him and I saw there there was some guy who was paying people for solving CAPTCHAs and he was paying with Bitcoin he was paying 0.0015 Bitcoin per thousand CAPTCHAs which equals to 150 Satoshi's per CAPTCHA there was at the time was one point sixty five dollars per thousand CAPTCHAs and I was making like five thousand captures per month per per day yeah and yeah so these this was a nice experience I felt like it was throwing my life away but it was a nice experience because I was earning Bitcoin and Bitcoin was easily tradable in Venezuela we had served Bitcoin exchange which was the main Bitcoin exchange in the country which had instant feared withdrawals something that neither of you guys have even in the US so and there was also local Bitcoin which was gaining popularity back then so then this happened I got rekt by the secret police so in Venezuela there's disappear which is basically the CIA and NSA combined in the country they use these secret police not to protect their country against espionage or something they use as a political tool they imprisoned political descents and basically anyone who is against the government this is a 2018 had just a poor stance he or something so they detained me because I was doing some things in the internet and I stumble upon in an open FTP server of these guys with sensitive information pictures of agents they were doing some internal stuff and they left an open FTP server this is the level of incompetence that we see down there yeah and some of you may believe that this was a honeypot no this was this wasn't honeypot this was intentionally left open so after a month of their Istanbul that that server I got the team by them they raided my house and they took not only means I did police station but my mining rigs that I have for etherium so this was a very bad experience as you may imagine I luckily I got out two weeks after that I spent 15 days in jail and but they stolen many equipment and they never returned it they're probably my name's still my name even by now or see cache or whatever yeah so luckily about one month ago this was all in 2016 at the end of it I finally at the end of the year I finally got a real job in the cryptocurrencies scene I now work for purse darío as a customer support agent I finally be I was finally able to leave the country last month and since then since then I've been pretty much living cash a bank list in Venezuela and in Argentina I'm living I'm living basically with only Bitcoin I have no bank account and it's relatively easy in these countries to exchange money the problem with these countries is that gentlemen there's there we have governments that have decided upon themselves to control every aspect of life they they control the issuance of money and they have no repairs into deleting or increase in the monetary base which the whole population so we are now I'm now living pretty much some cash and Bitcoin in Argentina by using local Bitcoin in Venezuela sadly sir Bitcoin exchange which was which was the biggest description he got shut down by the government so everyone there is now relying on local Bitcoin to make their payments and to try their Bitcoin yeah I know want to leave this stage to Alejandro who is going to talk about more initiatives that he's working on to improve this situation and hopefully we can inspire some of you guys to build tools for the people in Venezuela [Applause] you can also intervene I can stay here yeah we're very lucky to have you here and like to tell us your story and we're really happy that you were able to make it out thank you so here we are this is Def Con we're super excited about the world computer and decentralized applications we are talking about the things that these design / applications could enable money identity governance the real state of things is that money is a beta stage like zero point Oh identity and governance they're coming but still very very early so what we're doing at the open money initiative we believe that access to a free and open financial system is a basic human right and we are focusing on enabling people to get access to free money to open money systems we believe that decent Aliza plication x' will be enabled by the use of money first so what can you do as a Venezuelan that is doesn't have access to to monetary systems that are open that doesn't have access to exchanging your worthless money into sound money you can earn across borders as Eduardo said you can mine you can mine ether you combine Z cash I have friends who are doctors who are earning like five dollars a month if you can mines eke as your ether if you have like a old rig at your house you can earn 200 and that's a lifeline for many many people we want to or more people to get access to to to this you can also earn across borders and you know Eduardo talked about this briefly as well you can have systems that where you can earn money by trading your labor for cryptocurrencies that then you can exchange for for others typically the setup is you mine a coin or you earning a coin and then you cash out to Bitcoin because liquid coins the most liquid cryptocurrency in Venezuela the local bitcoins volume is around a million dollars a day and it's very easy to if if you know how to navigate the local bitcoins interface which nobody like not everyone does but if you if you do know how to it's relatively you it's it almost like earning and foreign currency and being able to trade back and forth so you you are almost getting access to this open financial system and you can almost say that you are banked you can also store your value because if you just keep the money in bolivars you are subject to 98 percent depreciation in in the year or something that you can also defeat extortion I have friends of friends who have crossed the border recently and instead of getting harassed at the border and getting seized they could just carry a pass or in their head and when they cross the border you don't have bills with you who you how do you have some bills and then they can just seize a part of that but they can't seize what you have here or what you have in your phone if you protect it well and we can provide on stop of humanitarian aid the government has a history of boycotting humanitarian aid because they believe that all aid is CIA agents I want to disrupt their operations and they deny their the extent of the humanitarian crisis so if we're able to give people the tools and 45% of anis one's own a smartphone if we're able to give people the tools to store cryptocurrency and to get cryptocurrency into the hands of people getting people that live outside Venezuela to send cryptocurrency to their families that are earning in Colombian pesos or in solids or in dollars you can get money that is sound money or real tradable money into Ana's whele and then they're able to use it as money then we can provide a lot of weight for the people that are still there so what are we doing at the open money initiative we creating campaigns for awareness and education we have a wiki that's in Spanish in English and we expect this to be the hub for Venezuelans to come and really learn about practical uses of cryptocurrency we're not going to explain how the blockchain to work we're not gonna explain you know high-level concepts metallics papers are not gonna be here probably but what we want is for people to use like just products and services that are relatively simple so we explain how to use opera how to use some other wallets and how to gain access to this open financial system we were focusing on usability so we're developing some wallets and some tools that people can use to send for example dye to each other using things that they were use like what's up we are experimenting with air drops and onboarding in border cities we have like partners it's a project called cryptochrome said hey is where they took this picture in cucuta and they are experimenting with different ways that people can get paper wallets and and can pay with them and get used to the idea of cryptocurrencies and how can you help so please first of all leave out your values if you really believe in decentralization you have to be aware that there's enemies to these decentralization x' there's people and states that don't really care much for freedom and just try to try to be coherent with what you do design for those who need crypto today and in this case we believe that Venezuelans are very much at the forefront of this Argentinians also experienced very high inflation in Iran they also experienced high inflation so just look out for those cases where money like the need for money is really really pressing think about privacy privacy don't don't put stuff on the blockchain that you may regret pudding I think really really hard about privacy talk to the privacy experts talk to the zkh community to the Monaro community and you port for example is a great project that really really cares about privacy talk to them and then unlocked by paying people in crypto if you if you only are limited to paying in certain banks and or certain countries you're going to deny yourself from like this huge pool of talent that lives in Venezuela and elsewhere that can earn money in crypto directly and then finally support us we are very lucky to come with the support of these organizations especially shout-out to the Z cash company which was supported us from the beginning and we are pressing forward with the research and our experiments and please reach out to us here if you were still interested thank you thank you let's have a couple questions people over the closest coz hey guys first of all thanks for you must be very courageous courageous to do what you're doing with the project and to stand here in front of the world and speak about it thank you my question is more along line so I'm in verges and sent to get a picture of what it's like in Venezuela with all the challenges that yours are facing does that mean that the market adoption are much higher so the the grandmothers the kids do they know things about like how to use private keys how to make sure that yeah ID well address is a private account and you know you don't want to share it so that people can see all of your balances and just I know just generally a picture of MA Kurt yeah so adoption has still increased in the country sadly we're not at the point where people are paying each other with crypto at the optioning Venezuela mostly means that people are using cryptocurrency to store the wealth to put an example what I was doing I was I was getting paid directly in crypto which I hope and that was a point I we made before I hope that more companies who pay their workers in crypto I see a lot of you here companies like Consensus coinbase and in a lot of cases these big companies don't pay their workers in crypto they're unlocking themselves away from talent that are living in this camp in these countries they can get so adoption in Venezuela looks like this people are using cryptocurrencies to restore the wealth to freely transact I use it on a regular basis what I was doing is I was exchanging each week due to hyperinflation I was exchanging Bitcoin each week into local currency to spend and using using local currency believers with the bank account but like I said I was exchanging weekly the the currency we're far away very far away from massive adoption what we need in Venezuela is you see two easy-to-use interfaces apps exchanges sadly the bottleneck right now is that we only have one Bitcoin exchange centralized Bitcoin exchange which is local Bitcoin and there's the decentralized alternatives RC are still very hard to use normal people don't want to think about all of that stuff so that's what we're hoping to see yeah it's also it's worth bearing in mind that adoption Venezuela is probably at 1% or it's certainly less than 5% of the population are using cryptocurrencies to put everything into perspective is just very niche activity that we are just very lucky to be a part of both me and Eduardo we we got into cryptocurrency and that we understand its benefits but the majority population doesn't understand when they think of cryptocurrencies they probably think of the petrol scam that the government was trying to push so we still don't know or we we we have a lot of work to do in terms of public perception of cryptocurrency in terms of awareness in terms of yes it's it's a bit about teaching people how to store private keys maybe it's about doing that a little bit as well but also lowering the bar like what's up I think what subs might might go to example all the time because no one is was sending encrypted messages before whatsapp came around and not no one knows how what's up really does it to like actually encrypt your message and it appears in unencrypted on the other side they manage the protocol like people don't care about protocols people care about products so if you design products that normal people can use people will use them so yeah we're gonna do just one more question unfortunately and then we're gonna move on and ice I made eye contact it was actually the person to your right haha yes so you mentioned a lot of sort of philosophical challenges and people thinking more you know at those fundamental levels but are there any technical challenges that you feel you know if these are solved that it's gonna take things to the next level for your kind of situation well yeah technical challenges exist first one is well when I suppose relatively is say a small country it's 30 million 30 million evidence mine is like 3 million that reason to left and so I guess that there's this project called play this project that has been developed by the pale blue foundation they want to do this big airdrop to Venezuelans they want to send millions of dollars in bitcoin to Venezuelans that the technical challenge is to build wallets that are censorship resistance resistant that can run on very poor hardware so Venezuelans have old phones we're talking about Android 4.0 phones so the technical challenges are programming applications wallets that can run on these tiny few resources that Venezuelans have and keeping stuff decentralized enough so that no one can really stop it and creating liquidity this is not it's more like an economic challenge rather than a technical a computer science challenge but as I said I believe that money is at zero point zero stage it's it's its beta it's like an experimental cancer treatment for someone who's like really ill and it's something that we might as well try because there's no alternative like some people say oh it's too early like people don't have access like krypter krypter is still in a very early stage but I really disagree because there's there's really no other choices the way we there's this is the one shot that we have at trying to solve the problem in a way that is peaceful and you know it gives people really access to to monetary systems that are open so and people already put up with a lot of bureaucracy if you want to send money into the country you have to like basically give the birth certificate of your grandmother and a whole bunch of other records like we requisites to to like be able to retrieve your money and then the government ends up taking a 56 percent cut of what you send so there were bars already so low and it's just what the my main point of this talk is that money is so broken in Venezuela that even if we don't have fully functioning money it's going to work well enough for most people or better so it's going to empower them you