Zcash is throwing Venezuela a lifeline after a crisis that has seen its local currency deteriorate significantly. This is a culmination of events that started with a plea for help to Zooko Wilcox, the CEO and founder of Zerocoin Electric Coin Company (ZECC) from someone in Venezuela. Mr Wilcox has been following closely as what he calls “a humanitarian crisis of the first order” unfolded in Venezuela. The message he received was later to be followed by many others. All these messages pointed to the fact that people in Venezuela desperately needed Zcash to help cushion them against the deteriorating value of their local currency.
Humanitarian Crisis Hurts Currency
It is notable that apart from the alleged humanitarian crisis that was unfolding in the country, the country’s monetary policy has gone through hyperinflation to a point that the Bolivar, the country’s national currency, is nearly worthless. As such, they were looking for way through which that could store value through the traditionally stable US dollar but this was hard to come by. The trick here would involve changing Bolivars to Dollars as they shield their identities.
Government vs the U.S. Dollar
The government, however, seems to have stopped short of banning the dollar as seen from the fact that the official exchange rate discourages legal ownership. This has drove many Venezuelans to the brink, and they are now buying the dollars on the black market, storing them under the proverbial mattress. This is where Zcash, the privately-focused cryptocurrency comes to the rescue. In response to the many requests he received, Wilcox decided to take action last month by getting into partnership with a Mexico-based peer to peer exchange, AirTM in promoting Zcash as an optional intermediate for anyone hoping to convert Bolivars to Dollars.
Slowly but Surely
As much as the adoption of Zcash among the 168,000 users has been slow thus far, this partnership is just in its initial stages. According to Ruben Galindo Steckei, the CEO and founder of AirTM:
We’re just helping zcash get access to the people who need it most. Not necessarily the people in the States who like privacy, but the people in Venezuela who have been oppressed.
Remedy for Stability
AirTM was founded in 2015 with a specific focus on helping users struggling with hyperinflated economies as with the case of Venezuela, to store their value in the U.S dollar – which is historically known to be stable.
Last month, Air TM conducted $5 million in transactions all over the world and is registered by the Financial Crimes Enforcement Network as a money services business.
In Comes the Petro
Even as this team-up happens, the government of Venezuela is looking for ways to circumvent various sanctions by introducing its own cryptocurrency, dubbed the Petro. This crypto is reported to have raised as much as $5 billion courtesy of a sale that happened in January. Wilcox however, believes that the Venezuelans do not trust the Petro as much as they do the Bolivar.
Zcash is an open source decentralized system where the supply and behavior of the network are part of an open global consensus, whereas the petro is part of a construct and under the control of the Venezuelan government,
It is fair though to note that Zcash is not an ideal store of value per se, as many people would want to believe. It is volatile just like any other cryptocurrency.
What do you think about Wilcox’s move to introduce Zcash in Venezuela? Is this an ideal remedy to its deteriorating national currency? Let us know of your thoughts in the comments section below.