The Open Money Initiative, a Human Rights Foundation-sponsored field research project focusing on Venezuela, has found an opportunity for international organizations like the World Bank to use bitcoin to provide aid to Venezuelan citizens in need.
Currently, humanitarian organizations cannot directly send money into the country due to the government’s objection to foreign aid. However, they can take advantage of bitcoin and privately transfer aid money in the form of digital assets, said Human Rights Foundation CSO Alex Gladstein.
International organizations and non-profits can simply convert their fiat currencies into bitcoins and send the assets to local marketplaces, he explained. Local operators will then convert the received bitcoins into Bolivars and use them to purchase food and whatever supplies that the Venezuelan population is in dire need of.
According to Gladstein, there are currently many peer-to-peer marketplaces in Venezuela that can be used to trade between fiat and bitcoin. LocalBitcoins is one of the most popular ones, observing more daily trading volumes than those of the Caracas stock exchange, he said.
However, Gladstein said, the challenge lies in the fact that high-profile organizations like the World Bank are unwilling to adopt this approach in fear of angering the Venezuelan government.
“We could meaningfully get a lot more resources into Venezuela today if major aid organizations would consider Bitcoin and sending it in Bitcoin, but they won't,” he said. “Meanwhile, people suffer. It's just unfortunate.”
Besides political resistance, the proposed plan to send aid through bitcoin could also suffer from a lack of access. For example, the Open Money Initiative learned that earlier this year, LocalBitcoins was available only on laptops and not on mobile phones. Added to the context of Venezuela, where not everyone has a laptop and power outages are frequent, the scope of services that LocalBitcoins could provide was largely limited.
Gladstein told The Block that the Open Money Initiative is working to overcome both political and accessibility problems by engaging organizations and private companies in this movement.
“It's really important to show that things like Bitcoin are making an impact and can be useful tools to help people,” he said. “[It’s important] to get out of the bubble of the cryptocurrency industry and to show the mainstream that this can make a difference.”