A Bitcoin Reality Check in Venezuela with Jill Carlson, Alejandro Machado & Jamaal Montasser

TRANSCRIPTION

Peter McCormack: Welcome back on the show Jill. Welcome back Alejandro, this is your third appearance.

Alejandro Machado: Thank you.

Peter McCormack: And welcome to the show finally Jamaal! Do you want to introduce yourself? You’re part of this because people will know Jill and Alejandro, but not you, as you’ve not been on m show before.

Jamaal Montasser: Sure! So my name is Jamaal. My background is design and engineering. I spent the last few years working at a company called IDEO, which is a global design and innovation firm, where I spent time working with Fortune 500 companies, helping them figure out what they should design in the future. Then I met these two in the fall of 2018 and I’d sort of stayed out of the Bitcoin space.

I had a pseudonymous Twitter account and that’s how I engaged with the crypto world since around 2012/2013. I never felt like it was a place for design, the way I wanted to play a part in design and these two had an interesting sort of lens and project. I teamed up with them and we founded the Open Money Initiative in the fall.

Peter McCormack: And Jill, you’ve been very careful to try and let people realize that Venezuela isn’t the amazing, exciting opportunity for crypto, that people make it out to be all the time, because I think Bitcoin is sometimes, and I’ve been guilty of getting a bit excited about this!

Jill Carlson: Yeah, there’s so much nuance in the situation and there’s so much nuance in any situation that frankly it doesn’t make for great marketing in either direction. So I find myself, when I’m talking to people about this project, about the Open Money Initiative or just about sort of cryptocurrency in general, I find that I’m just dragging people in one direction or the other.

If I’m talking to sort of the crypto native people who want Venezuela to be this incredible use case for Bitcoin, I’m dragging them back into the reality of like, “no, it’s not saving people. It’s not pulling the population out of poverty.” It is useful in certain scenarios, but it’s not that sort of dream case you want it to be. 

But then on the flip side, whenever I talk to basically anybody else about this, I’m dragging them in the other direction of like, “no, there actually is some utility here. There are some people who are using Bitcoin to survive.” It’s not widespread and so it’s just trying to capture that nuance I think. That’s a lot of what we’re trying to do!

Peter McCormack: Okay. So we’re going to cover your research and the work that you guys are doing as well, as well as the future. But Alejandro, you’ve been on the show twice now. Firstly to explain the history of Venezuela, which was really useful to everybody to understand the relationships between different countries such as Cuba and the families that have had a stronghold over the history of Venezuela. Then you came on recently for an update. Can you just update us on what’s happening in Venezuela right now because it’d be good to hear about that because obviously there’s been some kind of political maneuvering recently.

Alejandro Machado: So recently on April 30th, there was an attempt at an uprising against the government of Maduro and what was shocking about it was that the Head of the Secret Police was in on it, which no one thought about it. Because secret police has had a history of torturing dissidents and very, very close to Maduro and the Cubans. So this came as a complete shock!

Leopoldo Lopez was their top profile political prisoner. He was in custody by the secret police and then he was released and on that day there was a lot of confusion. We don’t really know what went down. There are some rumours that the Minister of Defense, who was a top military guy and the Head of the Supreme Court, were planning to just tell Maduro that it’s time to go and that they were negotiating a transition.

But the deal didn’t happen, it fell through and for some reason we’re stuck in this situation where Leopoldo Lopez is now in an embassy. There are many people who have been either imprisoned by the new Head of SEBIN, which used to be the one who instituted torture and I think it was in 2017, he came into the institution?

So they are doing a reshuffle and they’re doing like an Erdo─čan style wipe out and purge, so that they can regain control. But the government looks very weak right now. So we don’t know what’s going to happen, because the uprising, the one that started on April 30th kind of failed. But hopefully there will be another attempt or some development that will get rid of Maduro.

Peter McCormack: Right, so it’s kind of a stalemate right now?

Alejandro Machado: Right now, yes.

Peter McCormack: Okay. But you feel like it’s getting closer and closer?

Alejandro Machado: It’s really hard to tell. I don’t want to get myself a false hope. I want to stay realistic. I do think that the government looks weak right now, but I know they’ve come back from worse situations!

Peter McCormack: Okay. So I’m aware there’s a number of initiatives being run in Venezuela and I’ve been contacted by a few. But I’ve kind of kept my distance from them all, because what’s been quite interesting here is that you didn’t jump straight in, right Jill, you decided that you were going to step back and do a lot of research first. Can you explain firstly, your awareness of the initiatives that are currently in operation, what successes and failures, what you’ve seen that you’ve liked and you don’t like? Then we’ll start talking about why you’ve decided to do your research first.

Jill Carlson: So there are absolutely a lot of initiatives going on, many of which are super impactful. Bitcoin Venezuela on one end of the spectrum is this non-profit initiative run by a guy named Randy Brito. They do a lot of good work on the ground in Venezuela. On the other end of the spectrum, you have guys like airTM, which is a for profit company, where one of their biggest markets is in Venezuela for the products and services that they have.

So there’s a lot of great work going on there, but you’re right in that, we decided to start with research, as opposed to trying to jump into the situation. For me very personally, a lot of where that comes from is this sense of humility about the situation. Where, as I was mentioning before we hit record, one of the first things people ask me is they’re like, “are you a Venezuelan? You don’t sound like one?” No I’m not Venezuelan!

I’m just some girl who happens to know a decent amount about the economics of the situation, who sees possibilities here and who cares. But I also just think that as a lesson for the technology industry and the crypto industry specifically within that, I just think that you have to start from the problem that you’re trying to solve and you have to start from first principles of that problem.

You can’t go in with a hammer just hoping that the problem there is a nail because what if it turns out not to be? I think that very frequently in the crypto space, we have a lot of really brilliant optimizers, who can take technology and make it incrementally better. But I think that there’s probably not enough of that sort of first principle, start with the problem, work that goes on and that was very much the approach that we wanted to take.

Peter McCormack: Okay. Two questions. Firstly, why non-profit, because I imagine fundraising is one of the challenges here?

Jill Carlson: Trust me, I’ve thought about this! I’m like, “we should have just issued a token!”

Jamaal Montasser: Oh God, I wouldn’t be able to live with myself.

Jill Carlson: I’m joking obviously! In moments of frustration…

Peter McCormack: Is it a lot harder then to raise money as a non-profit?

Jill Carlson: I’ll say we’ve been very fortunate to find alignment with a lot of big, very well funded organizations both within crypto and outside of crypto. That support has been our lifeblood. So we’ve been very fortunate in that way. So it hasn’t been a struggle, no, but certainly when you then look around at the sort of valuations of some of these projects and companies that have issued tokens or are for profit, you do start to question it at times.

But I think the reaction that Alejandro and Jamaal just had, as I said the token thing, I think that that’s really what it comes down to, which is that we wouldn’t have been able to live with ourselves. We wouldn’t have been able to look in the mirror in the morning, if we’d done something that we felt was sort of disingenuous.

Which if you’re trying to fundraise and pretend that you’re a for profit company, when you’re not even sure of what the problem is, when you’re not even sure that you’re going to be the right team to go and solve it, that feels disingenuous in a way that I think that we didn’t want to risk what we’re doing and the credibility of our project around this, on that. So we would rather go what was sort of initially maybe a tougher route, but I think now we’re all kind of grateful that we did go that route.

Peter McCormack: And where did Jamaal come into the picture with all of this? I’ve heard him said, “well, you just walked into his office one day.” What was the…

Jill Carlson: Well, no. So Ale and I started down this road about a year ago. We teamed up with Zooko Wilcox, who was very curious about this situation as well. We did a bit of consulting work for the Zcash company on just sort of market research overall in Venezuela. We realized very quickly that this was all well and good to go and do this sort of market research, but what we really needed to do was much more around sort of design research.

When people say design, they often think just UX. What I mean when I say that is actually much bigger issue. The only people I knew who had this sort of expertise was IDEO and I was lucky enough to know Dan and Tara and some of the other folks at the IDEO team and I got in touch with them and they were like, “yeah, come on in.”

We literally walked into the office and I think the first person I saw was Jamaal and we just got to talking and very quickly realized that there is a lot of alignment both in terms of interest and kind of the ideology of what we’re doing, etc. So yeah, thank God we walked into that office and found him otherwise I think we’d still be sort of floundering around trying to figure out what direction to go with this!

Peter McCormack: Jamaal, can you explain what it is that you do, that helped with the project? What is your background here?

Jill Carlson: All of it. He did all of it!

Jamaal Montasser: So maybe a good place to start is what IDEO does. So IDEO is sort of like the place where the name Human Centered Design or design thinking came from. They certainly didn’t invent it, but they’re sort of a core part of that narrative that’s now in the world, of how important design is. What they’re very good at is taking a very open and messy problem and figuring out a direction, a point of view and so companies like Google will come and say, “we want to create a product for these types of people.

We don’t even know what to do. How do we figure that out? What should we make for them? What matters to them in the world?” So that process that we use is a process that we used for this project, which is about understanding what matters in the world to Venezuelans who are struggling day to day. How do they manage their money? How do they protect their financial health? How do they create resilient communities? How are they doing this stuff? What are their attitudes and behaviors? What do they believe in?

How do you take the hacks that you see, the things that people are doing to survive or thrive and how do you productize those to make them available to more people? So that’s sort of the lens that we use for the project where we’re all interested in Bitcoin, but you have to put that on hold and understand the reality first of what are people doing today? The people that are doing well, the people that aren’t doing so well, and how do you bridge that gap and change the outcomes? It’s agnostic to Bitcoin being used.

Peter McCormack: Yeah. It’s almost feels like you’re doing the work of the government!

Jamaal Montasser: This is foundational research that leads to products, tools and services that are new to the world. We’re in the process of trying to figure out a new future and figuring out this mess, this culture’s just an entangled mess of ideas and narratives. Figuring that out, is a core part of designing things that actually help people in a context that you have no understanding of, that you’re not part of.

Jill Carlson: Can you give a couple of the examples maybe of the things that IDEO has worked on or been a hand in inventing?

Jamaal Montasser: Oh man, where do I start? IDEO has been around since the 70s and the first Palm Pilot was designed by IDEO, the first Apple mouse, the idea of a laptop closing the keyboard and the screen closing. These are sort of foundational products from years ago, but IDEO has transitioned and taken that process that they’ve used to design physical products and now it applies to services and policies and all kinds of things like that.

So I think one of the really cool projects that I like of recent, is that they designed a whole school system in Peru, which is pretty remarkable. IDEO sort of moved from building these discreet tangible products to sort of systemic and policy level problems. It’s the same process of understanding what matters in the world to the people you’re designing for and that’s the place they start.

Peter McCormack: It’s fascinating. One of the strange things is that I can see you are all genuinely excited about the work you’re doing. But at the same time it must be strange, because I guess there’s some conflicts there because you’re dealing with some people in horribly desperate situations as well.

Jamaal Montasser: Yeah, it’s challenging. It is definitely very emotionally intensive work. So every single one of our interviews… We did about 17/18 interviews in Colombia and Venezuela and almost every single interview there was tears running down people’s cheeks. These are people who are, despite many of the people we met who are not living in abject poverty, some of them are doing very well, some of them are doing pretty well and some of them are not doing so good. We had the whole spectrum.

But it is extraordinary the amount of risk that people take to leave their home countries if they’re forced to leave because of violence, danger, safety, lack of opportunity, leaving your entire network, leaving your house behind your car, your business, your family! The risks people take was pretty incredible in every single interview had tears running down people’s cheeks. It was very very challenging.

Peter McCormack: Did you go into Venezuela or was it all on the border?

Alejandro Machado: We went into Cucuta, the border town between Venezuela and Colombia.

Peter McCormack: Is that what the bridge is?

Alejandro Machado: Yeah, there are several bridges there. There’s one that’s very emblematic. That one was closed when we visited because the government decided to shut down the border, which they do sometimes. I think it’s been shut down since then. That was when Guaido’s team was trying to get aid through the human chain in. Unfortunately we couldn’t really travel into Venezuela because they’re not issuing visas for US citizens for example and I have a passport that’s expired, so if I went in I couldn’t go back.

Peter McCormack: Yeah, you explained that before previously.

Alejandro Machado: Well I guess I could smuggle myself out if I really wanted to take a risk…

Jill Carlson: But let’s not do that. Thanks!

Peter McCormack: Do we know what percentage of the population has left Venezuela now?

Alejandro Machado: It’s more than 10% of the population. It’s predicted to be about 5 million people this year. Venezuela’s population is about 30 million. So right now the numbers…

Jill Carlson: 5% just this year right?

Alejandro Machado: So 5 million from let’s say… It’s this tricky because there are different sources for the numbers. But I think that it’s from 2017 to today, which has been like this wave of migration. People talk about migration waves, is around 5 million total that have been leaving.

Before that, it was in the order of hundreds of thousands, maybe 1 million in 2011/2014. We were talking about 1 million people, maybe 2 million, but now that has grown into 5 million or so. The prediction is five, I think the latest numbers, because it takes a while to gather the data, it’s about that much.

Peter McCormack: One of the things that I’ve thought about a few times with regards to Venezuela, and it’d be good to hear your perspectives on this or what you found. But when I’ve seen the issues raised on the news, because it’s covered quite a bit on the news these days, in my head I’m thinking, “this is a country of millions of people. 

There’s going to be hundreds of thousands of businesses, of shops, marketplaces, banks, huge companies, all different kinds of companies like any other country. But essentially as the money’s become useless, I can’t understand how everything hasn’t just completely collapsed?

Alejandro Machado: Yeah, so we went into the research just thinking and wondering why haven’t things collapsed? One of the things we found is that the Bolivar is still very necessary for everyday commerce, which is very surprising. I thought that we would see a Dollarization, kind of like what we saw in Zimbabwe in 2008/2009. But then again, we weren’t there in Zimbabwe. So we don’t know how… At least a majority of people who haven’t lived through it, they don’t know what timeline these kind of phenomenons have.

While we have seen a surge in the use Colombian Peso near the border and we have seen a surge of Dollars in cash, especially during the blackout, there was a lot of use of Dollars cash, because as we mentioned earlier the only thing that people can really pay with cash is maybe some legumes, some vegetables and some public transportation. This is because there’s no electronic transfers or debit cards are too slow for that kind of thing, people don’t have access to that in buses. But people have had to transact more with electronic.

It’s really kind of mind boggling to wonder why things haven’t really collapsed entirely. There’s this inertia, the Bolivar is the most widespread currency, it’s the asset that most people have. So if you want to transact with other people, you need to use something that is flowing in the economy. So that seems to be gradually gravitating towards the US Dollar. But it hasn’t fully happened, this transition.

Jamaal Montasser: I wanted to say that, in a lot of ways you could say the economy has totally collapsed, but there’s almost like two economies. One of the things that surprised us was that there’s this extreme food scarcity, but restaurants are full.

Peter McCormack: Yeah, I heard Jill talking about this yesterday!

Jamaal Montasser: So there’s, in some ways, two economies, where you have this extreme scarcity of not only food, it’s medicine, female hygiene products, anything you can imagine, it’s just extremely hard to find. But then you have people who happen to have access to say a US dollar bank account or they’re connected with the government and they still have this, it’s almost like a shadow economy. Both sides of the economy, are shadow economies!

Every transaction feels like a drug deal, because it’s virtually illegal. There are product quotas, price fixing, all of that stuff that basically people are not abiding by because if they did abide by it, they wouldn’t be able, as a business to say, make money, you’d go out of business immediately. So you basically have two economies. One is in shambles and then one is still running where people are bulletproofing their cars for $25,000 and initiating a US dollar bank transfer to pay for that.

Peter McCormack: One thing that’d be helpful I think for some people is to properly understand inflation and Jill, I think you’d be great at explaining this. So we hear about a million percent inflation, but trying to understand what that means is quite hard. So firstly, could you quantify that? Could you also explain how an economy gets to the point where it hits such ridiculous levels of inflation and are other examples of countries who’ve managed to reverse this?

Jill Carlson: Yeah, so inflation is a very ugly beast, but inflation is also actually in many ways necessary for economic growth. So in the United States, we run at about 2% inflation annually and that is considered actually quite healthy. Now I know some of the Bitcoin maximalists listening to this are cringing, but per general accepted economic truth that is reality, 2% is roughly fine. If we dip much below 2%, actually things can start to slow down. The economy can start to slow down. Growth starts to slow down.

People don’t want to spend their money as much and spending drops. Obviously economic growth can also take a hit. Now if you go much above 2%. So people will start to talk about inflation fears. If we get up to like 3%, 4%, or 5% inflation, that becomes a bit scary, because then suddenly the US dollar or whatever currency it is, it’s losing value at a rate that’s hard to keep up with, with your own spending and with the economic growth that’s happening in the overall economy. Now we complain about 2.5% or 3% inflation in the United States and most other developed countries.

Now again in Venezuela, they’ve already surpassed 1,000,000% inflation and it’s now projected that we’ll be at 10,000,000% inflation. So you hear about all different sorts of ways of quantifying this, for example if you had $1 million five years ago, then you’re left with just a handful of dollars today. We talked to one woman in particular, who told us how when she left Venezuela, when she emigrated to go to Colombia, she took her life savings with her. But when she went to convert, she wound up with about $3,000.

This is her life savings. She was fairly well off woman in Venezuela and her life savings amounted to $3,000. As Jamaal mentioned, that was the point in the conversation where I started to well up and tears started to come because she was talking about, “this was the money that I was going to use to send my kids to university and it’s amounted to $3,000 now here today.”

The other image that I find very helpful just in trying to conceive of what this even means, is that if you’re a shopkeeper in Venezuela, you’re not calling around just daily and changing the prices on your goods. You have to go around by the hour. You can’t go around fast enough and change all of the prices in your store to keep up with inflation. It’s as though your money is just melting in front of you.

Peter McCormack: So does that picture actually happen that people talk about? People going around the store and re-pricing constantly?

Jill Carlson: More or less! One of the dynamics Venezuela, and I’m sure we’ll get into this further, is that it’s mandated that you use the Bolivar and so it’s very difficult for you to advertise prices in US dollars or in Colombian Pesos or indeed in Bitcoin or anything else that we might think people want to use, because if a government official comes around or police from the national guard, they can choose to enforce that.

What they’ll probably do is they’ll fine you and then just use that to line their own pockets. So you don’t want to put prices up in US dollars and so it tends to be the case where there is actually just this understanding between the merchant, the shopkeeper, and the potential customer that the price that’s up is not still good and you have to come up to the register and basically find out what the new price is.

Interestingly though, then we would talk to these shopkeepers and they would then go into the back room and get out their books and show us that they were doing all of their accounting in US dollars, because that was the only way that they could still make sense of it. People tend to think in US dollars, but they still list the prices in Bolivars.

Peter McCormack: Because one of the things I was trying to imagine, is that if they keep re-pricing every hour, once they’ve sold the goods, then they’ve got to spend the money quickly because it becomes immediately useless!

Jill Carlson: Yeah exactly. So we touched on this concept of the hot potato, where as soon as it lands in your lap, you’ve got to pass it on. But critically, as with hot potato, you’ve got to catch the potato at some point to still be in the game. No one wants to be the person sitting in the circle who never gets passed the potato. You need the Bolivar to survive.

But as soon as you have it, you’ve got to spend it as quickly as you can, either to get it into some other currency, if you can find someone who has access to that, which is still quite scarce or you’ve got to spend it on good, that is not going to go bad. So we’ve heard the stories, anecdotes of people actually using things like eggs to store their value because that’s one thing they can still get. If they go out and spend the Bolivars that they, as the merchant or whoever it is has received, then the eggs are going to store the value better than that.

Jamaal Montasser: One of our participants had this analogy where he’s like, “you got to tie your donkey or your donkey is going to run away.” So he’s referring to getting paid. If you get paid and if you don’t tie your donkey, meaning convert your Bolivar to a better store of value, your donkey runs away and your profits gone.

Peter McCormack: How does a country go from say 2% inflation, maybe you can get to like 10%, that’s obviously not great. How do you actually get to 1,000,000%? How is the exchange rate tracked and how do you actually know it is 1,000,000%? I’m trying to understand in my mind how this is actually happening in reality.

Jill Carlson: So there’s a whole host of reasons why countries go through this. In the case of Venezuela, it’s largely due to the fact that it was a socialist economy. It is an economy that was largely reliant on oil and the price of oil dropped. So suddenly you have this combination of socialist policies that are promising certain things to people and the coffers starting to run dry. 

So what can you do in that situation? You can either change your policies, which is politically very challenging or you can start to print money. I’m happy to let Alejandro speak a little bit more to that, but just in terms of how you get from point A to point B, it, it can happen shockingly rapidly, as has happened in Venezuela.

Alejandro Machado: So we spoke with Frank Muci from the Harvard Growth Lab and he had this way of looking at the situation that I thought was very interesting and very accurate. I think what happened was that, for years, the policy people at the government, they were told that if they printed money and if they had these policies of price fixing and just closing off the economy and having these exchange control, they would face consequences.

But this was in the 2008/2009 period where Chavez was still around and the price of oil was booming. So they continuously listened to experts that told them, “hey, this is going to happen. This is going to happen. This is going to happen.” Since they faced no consequences, they just disregarded everything. 

So they kept the same policies and they didn’t realize when the price of oil came down, that they couldn’t keep running those policies and by then they were stuck, because they wanted to keep them for political reasons and they just thought they were invincible. So when things started going badly, they just couldn’t react and they don’t know how to react anymore.

Peter McCormack: Wow, okay. So let’s get into the research. Can you just start by explaining to me what is the average day like for somebody in Venezuela now? I expect there’s probably different examples, there’s different people, because you’ve talked about a two tier economy, but give me the most common examples of standard life.

Alejandro Machado: So we spoke with a variety of people. We want it to seek extremes. We talked with a student in Caracas who was a 22 year old doing an internship, she was finishing her career, her major and she was using Bitcoin. She was mining Bitcoin in her house and that income had supplanted the entire family’s income because her father lost his job and her mother was working as a teacher, but obviously not making enough.

So it turned out that she had the miners running in the basement and she was renting out space to other people who were mining and charging 15%. So that income became the family’s income and whenever she needed to use the money, she went into LocalBitcoins and she used some of the money that she had in her miners and traded it for Bolivars and deposited it directly in her mother’s accounts so she could do the shopping. So we spoke with people that had that kind of profile, that of the Bitcoin user.

We also talked with people that were not at all interested or not even aware of what Bitcoin was. A lot of people associated Bitcoin with the Petro and therefore with scams or things that don’t work. So I think on average, you asked me about the average person, if I had to pick a point, I would say the average person doesn’t know about Bitcoin or has heard of it at least, I think most people have heard of it. But they think it’s a scam or they think that it does something that doesn’t apply to them, that doesn’t work.

Jill Carlson: The higher level thing that I would point out here is there is certainly no average Venezuelan as you point out. There’s this huge inequality and disparity of just what day to day life looks like for a given person. But there’s also no average day in Venezuela, because one of the big takeaways of our research is that, I kind of went in hoping that, “okay, if we find like a handful of these hacks that people are using, then people will be able to use those hacks repeatedly.”

But in fact people have to repeatedly reinvent the ways that they’re surviving and the hacks that they’re using and that’s because the conditions are changing so quickly. Every day you wake up and you don’t know what fresh hell you’re going to find. Is it going to be, the power is out today? Is it going to be, okay the power is back on, but the Internet is out.

Is it going to be that the National Guard has come to your local shop and enforced something and that’s going to cause some shortage that’s localized to you in your area. You just don’t know every single day you wake up, what’s going to be happening then.

Jamaal Montasser: I was going to add one other thing is that… It’s a pretty dire situation, but there’s also a lot of resilience we saw in the face of all this. People are banding together. One of the interesting things that we saw was that these networks of people are replacing traditionally static government and stores.

So if you want to procure goods, you go to your WhatsApp group, you go to your family and that’s how you find, say milk powder or something else that you’re looking for. People are also starting to work second jobs, because the income from their primary profession doesn’t pay enough because it doesn’t get adjusted for inflation.

We met a professor of immunology actually who is writing papers for students in foreign countries on the Internet, despite her expertise and her PHD, because you can’t make enough money from her professorship. This is very common, is that the traditional jobs that people had, aren’t paying enough, so they take on second jobs. People don’t go to stores to buy stuff, they go to their networks.

Peter McCormack: So is the gig economy been very helpful to people in Venezuela or is it still niche?

Jamaal Montasser: Not in the sense of gig economy…

Jill Carlson: Not in the sense of like Uber driver.

Peter McCormack: I mean like online services?

Jill Carlson: I think absolutely. I think that it’s important to point out though, that while things like this are in many ways a lifeline, it’s in no way a sort of optimal situation. This professor, it kind of broke my heart as she was talking about it. She’s helping kids in the United States and Panama write these papers, like undergrads and she’s a tenured professor!

She’s like, “yeah, all I really want to be doing is my own research. But instead I’m helping these kids online.” She also actually had a Bitcoin miner set up, but she emphasized to us, she was like, “I don’t really care about Bitcoin. I’m not not interested in this. It’s just something that I can do in order to make a bit more money. I would much rather be spending the time that I’m spending maintaining this ASIC on my research. This isn’t a passion project for me.”

Alejandro Machado: I think it’s helpful to also realize what happened in Cuba. Also when the government instituted these policies, that Cuban government and Venezuelan government are very close ideologically and in results of their policies as well. In Cuba, to survive, you need to have access to foreign currency. So they invented this convertible Peso that has some matching with the Dollar.

So if you want to have a family in Cuba and you want to have a life, you need some kind of access. So if you work at a hotel, if you have access to the tourism industry, which is big in Cuba, if you can work as a taxi driver or if you can dabble in goods and resell goods, that’s the only way that you can make it work. Venezuela is increasingly becoming bad. You need either to have a service that is valuable, you can be a driver for foreign diplomat or people who are doing business in Caracas.

You can either be reselling goods, that are scarce and therefore your savings are in goods. You can either be a money changer and use maybe your network in the United States and Colombia to make it work and make a living in foreign currency and you keep your savings there. But you need some kind of access to the outside economy in order to really survive ,increasingly so.

Peter McCormack: How much real poverty is there now in Venezuela that people actually just cannot work because there’s no work for them and cannot feed themselves or their family? How desperate is the situation? How widespread?

Alejandro Machado: Very. I think the latest estimates are about 90-94% poverty and this is the reason why we’ve seen this massive wave of migration. This is the reason why people are leaving and while you would still think, “oh, only 10% of it has left?” But it’s still a massive amount. We’re talking millions of people! We’re talking about a crisis about the size of the Syrian refugee crisis and it’s usually people, the strongest people in the family that leave. So it’s very widespread. It’s not just one section of the population is leaving. Every family has someone that has left and is trying to send money home.

Peter McCormack: Almost like going away to represent the family?

Alejandro Machado: Yes, to represent and to really get some money for the family. Like I just said now, you need some kind of access to the outside world, in order to make it work. So like Cubans have relatives in Miami that send them money, Venezuela is increasingly becoming bad and this is why the government has also been trying to capture remittances that people are sending.

Jill Carlson: I think it’s worth just emphasizing that point, that when we say you can’t move money in or out of the country, that’s very literal. Western Union kind of sucks. It’s kind of rent seeking, you have to pay for high fees etc. But even something like Western Union, it just doesn’t exist in Venezuela. There’s no way to transfer money in sort of legitimate or in the sort of main economy.

It is all running through this underground economic system and very frequently what will happen is if you went to Colombia, say if you’re the breadwinner of your family, you went to Colombia and you’re trying to transfer money back home to Venezuela. You have to find a money changer who’s banked in both Colombia and in Venezuela and that money changer will accept your Colombian Pesos and then through her or his Venezuelan bank account, transfer the equivalent in Bolivars to your family.

So it’s always this very convoluted, you’re doing two moves within two systems to get money in or out of the country. Just as you can imagine, a real mess and because this is happening in a sort of underground economic way, I want to emphasize often these transactions go fine, but there’s this huge element of risk associated with it, because if something goes wrong, if your money changer scams you or exit scams you, then you have no recourse.

Peter McCormack: I also heard you talk, in your talk yesterday, you mentioned that the access to basics is really limited. So for example, it’s very hard for women to get hold of say tampons. What is the real reality of this and what is the impact on these women?

Jill Carlson: Yeah, it’s that! One of our associates, James, who did fantastic research with us while we were on the ground there in the field. He spoke with some women who had recently come over the border from Venezuela to Colombia and he said that the moment in that conversation that stood out to him most was when a few of them broke down into tears because they were so relieved.

They were telling him they were so relieved to be able to get across the border and find tampons and feminine hygiene products again. But it’s not just that it’s the sort of meme that people point to, but it’s actually a harsh reality, is even toilet paper. So you’ll see these sort of memes or cartoons, Venezuelans have fantastic sense of humor, thank God! But you’ll see these cartoons of Maduro, the president, holding up toilet paper, because there’s such toilet paper’s scarcity there.

Just take a minute, if you’re listening to this and just try to imagine going through a day without toilet paper and we’re not talking about just the very, very low absolute destitute ranks of society. This is lawyers, doctors, bankers, who also don’t have access to these products

Jamaal Montasser: And also no running water and also flakey electricity and very slow Internet. So not only access [Inaudible] is a big thing. It’s a big part of why we are so screwed. But lately it’s also the services. You can’t just can’t rely on service.

So sometimes people don’t go to work because they need to take care of a kid or they need to wait until the electricity comes on to do something that’s important or you have to flush the toilets or you got to do stuff that if the environment keeps changing, you can’t predict what you’re going to do.

So it’s not only about being able to predict the price, it’s not only about the economy, like “oh what price do I use to for… How much do I charge for this particular product and how much is it going to cost me to replace it?” But also time management, you have to figure out how much time things are going to take you and it’s impossible to to estimate in some cases.

Peter McCormack: How much exploitation is going on within the country and I mean in exploitation in terms of people scamming people? You mentioned potentially the money transmitter scamming, but also maybe exploitation of women and children in ways that are probably really sad and desperate?

Alejandro Machado: We saw a lot of that in Cucuta. Cucuta has always been a complicated place because border towns usually are very fast paced, dynamic and very strange in some ways. We saw a significant number of women who were offering prostitution services. They were charging something like 7,000 Pesos, which is less than $3! Many of them looked underage and many of them looked destitute and they’re just competing in this market. They’re offering whatever it is that they think they have or they have to be able to survive.

It wouldn’t surprise me that in Venezuela and Caracas for example, there would be women also doing this to survive, because as Jill and Jamaal mentioned earlier, there’s two economies. There’s the very rich and well connected and the people who are in ties with government, they still have access to Dollars and access to products. So I can imagine that a lot of that is going on in the cities of Venezuela as well.

Jamaal Montasser: It may also be worth mentioning, that the dire situation is a situation that even the police officers are facing, the people that are supposed to enforce the law in Venezuela. The people you rely on for your safety when things go wrong, aren’t there because they’re also desperate and they’re also taking extreme measures and breaking the law. So in moments where the power goes out, we would hear stories about everyone being inside, because everyone’s too scared to go outside.

They’re hearing gunshots and people yelling outside. There is a lot of stories of violence and in a lot of ways we came away feeling like there’s this sense of it almost feeling like Lord of the Flies and this PTSD that people must have and must be experiencing, it’s not trivial. It’s a very real thing and it’s compounded on top of the extreme scarcity of very basic products, as people are feeling this fear of just being outside.

Alejandro Machado: Anarchy isn’t pretty, it isn’t actually pretty!

Peter McCormack: What about the positives? Were the things that you saw that raised your hopes? Are there things that you saw that were able to put a smile on your face or see any kind of potential positive future?

Jill Carlson: I mean, one thing that I really came away from it with and that I want to emphasize to people is that while yes, on the one hand it’s Lord of the Flies, it’s Mad Max, it’s this really ugly state of anarchy. On the other hand, there are still systems within that that are working and functioning really well. Those are often of course family units working together, groups of friends, even alumni networks, of universities collaborating to be able to source goods, to source medicine for each other.

There are so many stories of, “oh, my neighbor comes over every day and checks on me and brings me bits of food and then I’ll watch his kids in return” and things like this, of just this real collaboration and this real trust that it takes in order to survive. In some cases and in many ways continue to live a normal sort of existence or something resembling a normal existence, in very not normal, very extreme scenarios.

So there is hope as well, and I mentioned this already, but just the sort of sense of humor that people have. There were certainly tears in every interview, but generally there was also real genuine laughter as well.

Alejandro Machado: Maybe I want to emphasize as well the role that digital networks have in all of this, like Jill mentioned. These are obviously the most salient aspect for us, because we’re doing human centered research, is people caring for each other and touching each other, seeing each other at a human level. But also the fact that WhatsApp exists and that it’s still operating in Venezuela normally. 

WhatsApp doesn’t take a lot of bandwidth to operate, you can send messages, you can send voice notes and that connection that people still have with, I mentioned their family members who left. That ability to communicate is very, very important for resiliency and for having the groups scale a little bit. But that also carries risks like we mentioned, if you’re transacting and especially when it comes to money, if you are part of an alumni network and you have a money changer there that helps you out, that might be okay.

But if you go to a broader, like a Facebook group, that has composition of people that you may not know about and you’re desperate and you will need to send money right away, you trust one of these people and these people might exit scam you. There’s something that we have to contend with.

People are in a situation where not everyone has the connections that they need, to get access to the product or the money that they have. We need to invent systems that leverage the trust that people have in each other and elevate it, in a way that they feel empowered to not only communicate with each other but also be able to transact safely with each other.

Peter McCormack: Okay, wow! There’s a lot to take in.

Jill Carlson: It’s a lot to take in! We felt this way. You mentioned earlier, this sort of dissonance between, we’re talking to people experiencing this tragedy, we’re very enthusiastic about trying to help, trying to serve the situation and want to mention, for the listeners of this, for you Peter, it is a lot to take in. There were so many moments throughout this process where we were just kind of like, “whoa, okay, I need to just sort of take a step back and digest and take a second with it.”

Peter McCormack: Okay. So let’s go back. What you said to me earlier Jill was that you had to find out what the problem is and I’m sure the there’s multiple problems. But what did you distill the problems down into?

Jill Carlson: So as you say, there were a lot of different problems here to solve. The important thing actually is that I’ve discovered sort of through the process of doing this design research process, it would be so nice to think that it’s as simple as coming away with just a handful of questions that we can then go back and answer. But really what we’ve come away with are these insights, these sort of nuggets of, “okay, what does it take to survive today? What are the hacks that people are using today?

How can we think about adapting those or scaling those or making those accessible to even more people? Then also the design principles that we would have to bring to this. So I’ll give just one example to give sort of a semblance of this, which is one insight that’s really stood out to me, is that a lot of the problems that people are facing, are really about having access to these different financial silos.

So folks in Venezuela, they tend to be banked at about 7 or 8 different banks just within the country. The reason for this is the following, as we mentioned, most of the economy runs on bank transfer. So if you get up to the cash register at a merchant, it’s not actually a cash register in most cases. In most cases it’s the merchant giving you their bank information so that you can make the bank transfer. Now if you don’t happen to be banked at the same bank as the merchant, then you can’t do that transaction.

You have to maybe turn around to the guy behind you in line and say, “hey, are you banked at both my bank and his bank? Can I send it to you and can you send it to him? And we’ll do this multiple hops thing?” But this, I mean it’s fractal almost.

Peter McCormack: It sounds a little bit like the Lightning network!

Jill Carlson: Yeah, it actually is, completely! This is kind of where I’m going with it actually, is that you find this all the time, whether it’s within the country, people using these multiple hops to get to what they need and to be able to do an exchange, whether it’s on a more macro scale trying to do these transactions or trying to send money in or out of the country.

Again, you’re using a money changer who, yeah if you will, has channels open in both Colombia and Venezuela and maybe the United States. So that was kind of a real nugget of insight to me. There where, I can then think about inspiration, whether it’s within crypto with something like the Lightning Network, or whether it’s even outside of crypto with just being able to extract across these different silos, a bit like what actually airTM is working on.

But then the even bigger question is, “okay, what is the actual human experience of that like? And through what lens do we then need to think about building this product and for whom?” Because it’s going to look very different if you’re building it from the merchant’s perspective, who’s trying to receive, from the customer who’s waiting in line or from the woman or man who’s in Colombia trying to send money back to her or his family.

Peter McCormack: I can’t help but think though, we’ve talked earlier about a lot of people see this as a great opportunity for Bitcoin and I kind of get the sense of why people would think that, because if everybody had a mobile phone with an app, with the ability to just send money back and forth to each other, that would make life a lot easier. But I can’t help but think that something like Bitcoin is still not great because it’s so volatile and perhaps some form of Dollar stable coin would be much better for people and almost some form of Venmo style relationship that people have with each other?

Alejandro Machado: Yeah, so we thought the same. People, what they tell us they want is the Dollar. But if you think about it, what is the Dollar? When you have Dollars in your bank account in the US, that is a Dollar. But also if you have a Dollar in cash, that’s also a Dollar. If you have airTM Dollars, that’s also a Dollar and PayPal Dollars, it’s also a Dollar. The Dollar doesn’t exist. There’s a lot of different representations of the same thing and they are siloed.

Some people have access to PayPal, some people have access to a bank account in the US and these things, they don’t represent the same thing. They trade differently. So if you want to sell your PayPal Dollars in Venezuela, you get less money, you get less Bolivars, than if you would sell you Zelle Dollars.

Jill Carlson: Or even five $20 bills are actually more valuable than a single $100 bill in Venezuela. Because if you want to go and spend your $100 bill, you can’t get change back. You can’t get change in Dollars! So it’s more likely that you’ll be able to spend the $20 bill in one go. Also, just to your point, there are all of these sort of differentiations between the medium of what you’re using, in addition to just the asset.

Alejandro Machado: And then what we found is that liquidity and the convertibility of the money and using something that people believe has value, which is very close, we’re touching the definition of what money is and why people care about money, is what matters. So if I were to invent a stable coin that I swear is pegged to the Dollar and maybe there are reserves for it and so on, that’s fine.

I can create this like closed ecosystem, this closed economy where people can transact in “Dollars”, but as long as people can’t cash those out and actually get product or get access to Colombian Peso or to Bolivars or to Dollars in Zelle or Dollars in PayPay, you need ramps. The ramps and the convertibility of the money is the most important thing.

This is why Bitcoin is one of the most impactful, phenomenons in Venezuela today, because Bitcoin, through it’s development and since it is the oldest cryptocurrency and there has been this great product, LocalBitcoins that has been operating in Venezuela for quite a while, there is this liquid market between Bolivars and Bitcoin and that allows people to transact almost as if they were using the Dollar.

If you want to get access to the Dollar and you don’t have a US account, you can get access to LocalBitcoins and it only takes a few keystroke. Obviously you need some technical sophistication, you need to be interested in Bitcoin in the first place. But if you have all of this and all these things you can learn on the Internet.

This is why we see people that are mostly younger, mostly more tech savvy that are interested in this, but there is a vehicle today technically that exists, that can give you exposure to a currency that doesn’t depreciate. Even though Bitcoin may be very volatile, it certainly is a better currency than the Bolivar.

Jill Carlson: The important thing about Bitcoin in this context as well, I just want to emphasize, is the liquidity aspect of it, it’s the fact that it’s globally liquid, it’s global in nature and so you can use it as this back end kind of conduit currency to get from one to the other, without necessarily having to be banked in all of these multiple hops that you’re trying to go through.

We saw this and we did a study with a money changer actually, who at the time was using cash in suitcases in order to manage his liquidity, manage his float between the different banking silos that he was hopping between. So he would bring cash from Miami back to Colombia in a suitcase. We were like, “why don’t you try using Bitcoin?”

We challenged him with this and there were some hurdles, there were some problems, but the thing that we found was that it could serve as something of an escape hatch for him in moments of illiquidity or sort of market displacement, Bitcoin was the global globally liquid currency. So it’s less about Bitcoin being perfectly decentralized or perfectly censorship resistant, because very often the sites and services that people are using around it, they’re not perfectly decentralized, they’re not censorship resistant, but it’s globally liquid.

Peter McCormack: So it’s interesting when you talk about all the different currencies people are using, the Bolivar, the Peso, the Dollar, the different versions of the Dollar, and also some crypto. It’s kind of that barter economy that maximalists have a massive issue with cryptocurrencies. So your seeing a real world example of how multiple currencies are a problem.

Jill Carlson: Yeah absolutely. It’s not the first time I’ve thought about this sort of parallel, “oh, this is a little bit like all of the shit coins out there that we’re all going to have to be like oning and offing between.” But I think that the lesson is that it does kind of work. You can make it work, but is it optimal? Probably not. In this scenario, one of the big insights, again that we’ve taken away from it, is that people are going to find these shelling points.

Another favorite crypto word, shelling point! But people are going to find these shelling points, these sort of points of aggregation, which in Venezuela tend to be the Bolivar still, that is still the primary medium of exchange, the US Dollar, sort of the thing that everyone wants, in particular US dollar cash or US dollars through access to a US bank account.

Then to a much lesser extent, too a much less pervasive extent, but I think in many ways and no less meaningful extent, Bitcoin, I think has the possibility of becoming yet another one of these shelling points because of its globally liquid nature.

Peter McCormack: So it’s very cool that you’ve and very interesting that you’ve kind of come to this Bitcoin conclusion, because obviously I’ve seen in the various times I’ve been researching this, say for interviews with Alejandro, I’ve seen Dash is doing a lot of work there. I’ve noticed EOS is doing some work there. I’ve noticed is people are promoting different cryptocurrencies and stable coins, but actually is that a problem having too many? Is it confusing?

Jill Carlson: I would say the Petro is confusing to people. So the Petro, just for context is this, “cryptocurrency”, a token, what have you, that the Venezuelan government issued about a year and a half ago and now everyone in Venezuela is aware of the Petro, they’re aware of it as again “cryptocurrency.” If you speak to the average person, you ask them, “what do you think of cryptocurrency?” They’re going to say, “oh, it’s all a scam.”

My response to that just like, “I don’t totally disagree with you. But why do you say that?” Then their response is, “oh, the Petro” and so that’s caused quite a lot of confusion, because they’ll think of that, even before they’re thinking of Bitcoin. I would say that that’s the thing that stood out the most. Many, many people have heard of Dash as well. We didn’t happen to speak to many who’d used it or any who’d used it actually. But we’re a small sample size, we’re not looking for statistical significance.

Alejandro Machado: Yeah and we’re aware of projects that are interesting, that are using Dash. There’s a group, who has this protocol Dash Text. They are pushing the idea of paying for things using SMS with Dash, which carries a lot of risk, because the keys are being handled by someone else and not you. If you want to be able to handle your own keys, you need a smart phone, you can’t use the SMS protocol. 

This also is very, very prone to be censored or taken over, because the government obviously has influence. Influence would we be putting it mildly, with the telcos. They could stop messages, they could steal your money potentially if they wanted to. So there are some projects that are trying to do some work and I commend some of the work that’s been done. They’re trying to kind of undo the bad perception of cryptocurrency by the Petro, which may turn out to be a good thing.

They have signed up some merchants, they are known for exaggerating their claims a little and not super excited about that contributing to the confusion. But I think there are some efforts being led there. EOS, I’m not super aware. I know that Gift Crypto did some work with them, but we don’t know enough about it. But yeah, in general, I think it’s good to try out things, but not so good to exaggerate the claims.

Peter McCormack: What is the access to technology like in Venezuela? Because we’re talking about people who are desperately poor, but do they still manage to have access to mobile phones?

Alejandro Machado: Yeah, so we’re talking about, I think Jill put it very well, this was when we met, when we presented at IDEO, we had this slide that said “Venezuela is stuck in 2014.” So in many ways, the last year where people had access to a salary that could pay for a phone was around 2014/2015. So people who got phones there, which is not an insignificant amount, still have them and if it’s a phone that’s long lasting, some phones are obviously better than others.

There’s a lot of Motorolas, there’s a lot of Samsungs. There are about 4.5 million phones that have Android 4 and Android 5 versions. So we’re talking about very old Androids and if you were forced to use a cell phone, of these models, you would think it’s terribly slow, but it runs WhatsApp. It runs a basic browser and it’s not impossible that a version of AirTM or a version of LocalBitcoins could run on these things and if you allow people to transact with each other securely, I think you would be empowering a lot of the people who don’t have access today, we will be doing a great service to the economy and to the people and potentially you’d be helping to save lives.

The numbers are tricky and phones get stolen. Phones can’t get replaced often because… In India for example, you can get a new phone for $50 and you can run a decent version of Android. In Venezuela, since there are import controls, it’s very difficult to do business there. There’s a lot of corruption. It’s significantly harder. So if you want to get a decent phone, maybe around $150. 

There’s a lot of Chinese models that are questionable and there are a lot of nuance. There are a lot of points that make it difficult for people to access phones. But talking, just today, it is worth the effort to tailor really old phones, so that millions of people will have access to products that they don’t have today. Like I said, if you can run WhatsApp on a phone, you could definitely program something that allows people to use money.

There’s no excuse to not do it. Obviously it takes longer and it’s more technically involved. You have to hire engineers that are more willing to spend the extra effort into targeting these are old platforms. But we’re talking about millions of people here, that would still reap the benefits of the people focusing on them on their devices.

Jill Carlson: It’s worth mentioning that Venezuela is just the land of contradictions. We talk about how people actually have pretty good access to internet. Electricity is practically free, it’s subsidized by the government. It’s the one thing that you can get. Then in the same breath we’re talking about power outages and internet outages.

The reality is it’s sort of a Schrodinger state. It’s all of these things existing simultaneously where there is free electricity when it’s on, but the infrastructure is degrading fast and so it’s becoming a spottier and spottier. It is a deeply impoverished country, where one in three people has an Android and there’s actually better access in many ways to banking. There is, for sure better access to online banking, than exists in the United States.

Why? It’s because the system is so broken that you have to have access to online banking. If you don’t, then you can’t go out and buy goods and services and I think that’s exactly right, that it is basically just frozen in time in 2014. If you think of Cuba and how Cuba we think of as sort of frozen in time in the 1950s, Venezuela is frozen in time in 2014.

Peter McCormack: How long are the power outages? How long can they last for?

Alejandro Machado: Well we had a really big one that lasted for about four days. That was nationwide. That was really terrible.

Peter McCormack: But does that then take out the phones, because you can’t charge your phone?

Alejandro Machado: Yes, exactly. Also the substations, the cell towers. They also have batteries, massive batteries. But when they run out, they run out and then you don’t have coverage. So we’re talking about, if there are massive events like this particular blackout, like in the beginning of March, people were disconnected for a while. People couldn’t talk to their families. It was a moment of big tension. I was very worried. But usually at least for now, the normal situation is that a blackout would last four hours, five hours.

So it’s manageable because you can still manage, I say with a position of absolute privilege here because I can’t imagine having to endure that everyday, like a blackout that’s not only five hours long but also unexpected. So we’re still at a point where people can have access to charging phones occasionally and sending messages occasionally. That is still appealing to design for and then to cater for. We’re not talking about a situation like Cuba where no one has access to internet. In Cuba, it’s very, very difficult to have access to a phone or to have access to internet.

It’s terribly expensive and this is by design. The government wants it that way and I’m sure the Venezuelan government would want it that way too. But they also are very used to using WhatsApp and they’re used to using these services. Blackouts are also very regional. So like the CTO of Maracaibo in the West of Venezuela is faced with constant blackouts and it’s very hot.

People can’t sleep at night. So they have to sleep in the rooftops. It’s terrible for some people, but it’s something that… I just want to emphasize that I don’t want this terrible situation to trap us into a cycle of inaction, like “oh no, it’s too late to do something for Venezuela.” I think it is not.

Peter McCormack: Are mobile phones a requirement though, to be able to deliver some kind of solution and help to the people?

Alejandro Machado: So I work with technology. My background is technology and design and I think that the smartphone is one of the most powerful tools ever invented. The ability to just have computation in your pocket, just grants you so many magical powers, it’s telepathy basically, you can talk to people that are very far away. I obviously always take inspiration from WhatsApp and what they’ve done.

This ability to talk with people that are in your network or even like Facebook groups. So there’s no reason why you couldn’t expand that into the realm of digital money, but we need to cater to the very specific design principles that we have uncovered and the situations that people are going through. I do think that without… If you take that away, if you uninvent the smartphone or if it gets to a point where people don’t have phones anymore, there may be some products that you could design for.

For example, in Africa, there’s M-Pesa. In Kenya, this is very, very common and people don’t usually have smartphones, they have regular phones. But there you have the collaboration with the government and the telecom companies. If you have to face a hostile actor, that can potentially take over people’s funds, like I was just mentioning Dash Text as an example of this. Then it is much preferable to be able to count on a network where you can hide. The internet is that network.

You can encrypt the packages, if you use https and if you use certain kinds of connections, you’re hidden from plain view. If you use WhatsApp for example, the government can’t know that you are sending messages to potentially provoke an uprising. This is a political realm and in the economic realm, if you’re sending money from one place to another, the government can’t track that or are they potentially couldn’t track that if you use something like Zcash for example.

If you use something like maybe even Bitcoin, I don’t think the government today has the resources to get into every individual case and to hire chain analysts and these things to really crack down on it. First because it’s still small for them to really care right now and second maybe some of them are using it to move money around as well.

So we have to capitalize on the fact that the government is using many of these systems, for communication, for many things and the fact that they are trapped using them, means that we can empower the common person to be able to use these same systems for their personal empowerment.

Peter McCormack: Okay, before we start going into the conclusions and the next steps for you, how much other research have you done to other countries where… And is the work you’re doing now in consideration where this could be rolled out to other places and other countries where people have a need or you just entirely focused on Venezuela now?

Jamaal Montasser: So for this project we are entirely focused on Venezuela, but often you find inspiration in other places that’s applicable in the places you didn’t originally research. So certainly if we were to do research in Zimbabwe, the research would overlap. But for this project it was entirely focused on Venezuela.

Jill Carlson: I think we all share a vision though as well, of at some point, probably not in the future, but at some point, going to other geographies. Something that I’ve thought a lot about, is that there’s this whole spectrum out there. You have places like Argentina that are experiencing high inflation on the order of 40%. But nowhere near the types of controls or policies or what have you in Venezuela.

Then you have sort of even more extreme scenarios in many ways, places like Cuba or Iran. So you can start to map this sort of spectrum and of course, there are so many other things that go into it, around sort of culture and history and so on. But that’s something I’m really interested in exploring. I think we all are over the course of the long term.

Peter McCormack: Okay. So what were the design conclusions you came to? Can you distill that into like five design principles you’ve come to? Or is it a framework? How did you conclude the work?

Jill Carlson: So we’ve come at it from a number of different angles and we’ll be sharing a lot of this content over the next few weeks. But I’ll speak first to just some of the design principles. So we want to be able to build systems that are going to be resilient. We mean that both very literally, in the sense of resilient in the face of low bandwidth situations, internet outages, power outages, but also then systems that will be able to adapt with people, as the situation continues to develop and change, not just in terms of infrastructure, but just in terms of the problems that they’re facing.

We also want to build systems that are going to instill confidence in people. So I think in cryptocurrency we get very obsessed with this notion of creating this perfectly trustless system, of replacing trust, eliminating it and minimizing trust. But in many ways, what we found was that there are still trust systems that are working today in Venezuela. Often again, it’s amongst sort of family units or friends or extended networks, digital networks. But as we start to extend the trust further and further out, it becomes harder and harder to be confident in your counterparty in whatever it is that you’re doing, whoever it is you’re relying on.

So the question I would ask and challenge people in this industry to ask, is how can we instead of trying to eliminate trust, actually elevate the trust in these systems. Then the final thing I mentioned earlier about the sort of silos that we encountered. How can we create systems that are more open? How can we create systems that enable people, if you don’t immediately have access to another silo, how can we either open up a tunnel between those two silos or use multiple hops of individuals?

Again, elevating that trust between them, in order to get from one silo to another. So those are kind of three of the broad themes that we’ve walked away with, is the resilience needed in these systems, that we want to elevate the sort of confidence that people have in these systems and each other. Then also how can we open up these systems between each other?

Alejandro Machado: Is this going to be delivered as a combination of product and education? And what’s the mix?

Jill Carlson: For now it’s education. For now it’s just the research. We are certainly working with some of our sponsors, some of our partners. I want to mention we are a completely neutral organization. That was part of the reason for making this be a non-profit. We definitely did not want to be the people going in and shilling our product, based on this absolute human tragedy.

But we are working with some organizations within the crypto space and also open to working with organizations outside of the crypto space, on how they can steer their own product directions and their own business strategies to be in real service to people on the ground there. So that’s sort of the immediate steps. I’ll say the outpouring of support, just from the crypto community, from the world in general, has been incredible as we’ve started to share some of the insights that we’ve gathered and some of the research that we’ve done.

So I think one of the big challenges for us over the next couple of weeks, is figuring out how we can open up this platform, so that it’s a two way street, of not only just us sharing the research, but also then starting to collaborate and just open it up as something that anyone can contribute to. So stay tuned for what we come up with on that!

Peter McCormack: So are you not directly looking to build products? Are you more wanting to encourage other people with your research to build products and solutions with Venezuela?

Alejandro Machado: So one of the things that we have found, is that it takes tremendous effort to cater to people, to build liquidity especially. This is something that is a massive undertaking. If you need a product that people will actually use, you need to have the resources and in some cases, even the peer to peer network of people who are already trading. If you want to have impact today in Venezuela, you need to have an existing platform.

So examples of those existing platforms today airTM, LocalBitcoins and not a lot more. There’s obviously people doing [Inaudible 01:25:39], like the people who are sending money, they are networks of money changes in Colombia and Venezuela. So we could potentially work with the people who are already have the network’s set up. We don’t have a product that we want to promote or to shape today. But certainly we’re open to with organizations like LocalBitcoins and airTM.

If there are consortia of money changers that also want to explore the use of cryptocurrency or want to just design a product that may not have to do anything with cryptocurrency, but they want to open up the access and maybe start sending money in Pesos or in Dollars to Venezuela, that would alleviate the situation of having to find Bolivars here and there and then have the hot potato and so on. We’d be really open to all of that. So where we’re at this point, is we are sharing research and very soon we hope to be working on more product direction, but yeah, stay tuned for that.

Peter McCormack: Okay. Just to reiterate, you’ve obviously mentioned Bitcoin a lot and you keep talking about Bitcoin. So despite, we talked about earlier Jill, everyone getting over excited, you do see Bitcoin playing a very important role in helping people?

Jill Carlson: Yeah, I think for me, a lot of this research actually, to be honest, grew out of a bit of an existential crisis that I had around a year ago. I was looking around, I was standing there at Consensus, and I was looking around and I was like, “oh my God, what is going on here? What is this all about? Is there even anything real here?” I’d been working at the up point for four and a half years in this industry in various capacities.

I was just like, “this is not why I got into this.” For me, a lot of this research that we’ve done and what a lot of this project has been about, is me just asking that question, “is there something here?” For me, I’m walking away from it saying, “yes.” I don’t think it’s necessarily what people think it is. It’s certainly not a panacea. But is Bitcoin helping at least a small subset of people? Yes, specifically today, I think it is Bitcoin.

Yeah, it absolutely is. Now does that mean that crypto solutions are the right way to go, to solve all of these different problems? Absolutely not, obviously. Cryptocurrency is not going to solve shortages of soap and tampons in Venezuela. But I do think that there is something there and that’s an area that I’m very interested in continuing to explore. I’m grateful to work in an industry that’s interested in exploring that.

But well beyond that, I just hope that our research can inspire products and services, whether they’re leveraging Bitcoin or DAI or Dash or whatever it is. Or whether they’re just using run of the mill centralized technologies, whether they’re running on things like WhatsApp.

Peter McCormack: So what are the most important things that you would like to see start happening now? You’re obviously going to get it out there. You presented it yesterday. I expect you’re going to be doing a lot of presentations now. What are the actions you want to see happening?

Alejandro Machado: Well, we just just want people to focus more on Venezuela and in a more informed way. So if our research, is useful to companies and institutions, we would really like that! We would really like our voice and the voice of Venezuelans and then the situation that they’re living, to be more fully understood by the people who are designing the protocols and designing the products.

Because oftentimes there is a mismatch between what they believe should happen and what actually is happening on the ground. That mismatch doesn’t let them see or doesn’t let them shape product in a way that is very useful for people. So we have all these great ideas about making trustless this, trustless that, there’s kind of like, “oh, let’s make a new government” and those are really fun ideas. They could be really cool experiments and I’m all for that. But if you want to have an impact today, I think it’s worth taking the time to understand what’s going on and to really cater to what people are actually living through.

Jamaal Montasser: People are often… They’ll hear stories about Venezuelans or will come back and tell people stories. The response that they sometimes get is, “oh, they should just use Bitcoin.” To me, hearing that is just as obtuse as seeing a woman in Burkina Faso carrying water on her head for 20 miles and saying, “why wouldn’t you take an Uber? Why are you going to walk all that distance?” I think bringing this research is setting the context for products.

Products aren’t just singular discrete things that just work on their own. They’re part of a broader system of people, of culture, of narratives, of emotions, of networks. So when people are like, “oh, just use Bitcoin,” if you were to give Bitcoin to someone in Venezuela, all you’ve succeeded in doing so far is giving someone Bitcoin. You haven’t changed their outcome. So even the nugget around, well actually people still have to use the Bolivar.

That means your design is going to be very different, because you’re now designing for convertibility. You’re designing because people need the Bolivar to be able to transact, which is different than just saying, “use Bitcoin. Here’s a wallet. Here’s some Bitcoin.” That doesn’t change the outcome. So I think having that systemic knowledge of the context is super important, if you’re really truly interested in changing outcomes.

So a lot of our research, we see it as influencing perception of Bitcoin, how it can be used, what it’s for, to the people within the industry and the people outside the industry changing product. So shaping people’s point of view on what’s worth building and for who and hopefully influencing policy around these things. These are tools that are very important for survival for some people in the world.

Peter McCormack: Wow, okay! So what’s coming up now? What’s going to be happening for you guys over the next… This week obviously you’re going to be at Consensus. But week, month, few months, what’s coming up?

Jill Carlson: We’ll be speaking at consensus later today. I was lucky to be able to present at Magical Crypto yesterday. We’ll also be going to the Oslo Freedom Forum, which is put on by the Human Rights Foundation later this month. Alejandro will be speaking there. So a lot of the very short term stuff is just around sharing this and then longer term, as we mentioned, it’s about collaborating with individuals, entrepreneurs, organizations to serve those goals that Jamaal just mentioned.

Peter McCormack: Okay and people listening to this, what can they do? How can people help? What kind of actions do you want to see?

Jill Carlson: So I want to thank you Peter, because you actually and your podcast played a pivotal role in all of this, because I recorded with you almost exactly a year ago last May, when I was in the throws of this existential crisis I mentioned.

Peter McCormack: When we got stuck in an elevator!

Jill Carlson: We did, yeah! We got stuck in an elevator. It was in Mayfair though, so there are worse places to be stuck! But it was, I believe shortly thereafter you recorded with Alejandro and so we listened to each others podcast and were like, “oh wow, we have really similar interests. Let’s chat, let’s collaborate.” That was a huge part of how he and I connected initially and then of course we walked into IDEO and dragged Jamaal down the rabbit hole with us. Yeah, so credit to you! Thank you.

Alejandro Machado: Yeah, thanks for being a great platform connector.

Peter McCormack: Thank you! Thank you so much!

Jill Carlson: Yeah. So follow along. Check out our website, openmoneyinitiative.org. You can follow us on Twitter as well @makeopenmoney and stay tuned because we’ll be coming out with some various ways that you can all start to participate and contribute. It’s going to take a village, it’s going to take an industry to make a dent in any of these things. But really looking forward to sharing more soon!

Peter McCormack: Brilliant. Well listen, look, it’s been worth the wait, thank you so much for coming on again. I think super interesting. I’ve learned a lot from this. Actually one of the things I’ve learned most from actually probably from you, Jill, when you’ve purposely on Twitter, tried to temper people’s excitement about something, I’ve kind of felt myself going down that route.

The excitement of seeing the real world Bitcoin usage, not because I want it to go up, so I can be rich. But I think tempering that has been, I think it’s been really useful because sometimes we see some really idiotic remarks on Twitter about Bitcoin in Venezuela. I think that’s been super helpful. So look thank you all for coming on and anything I can ever do to help, let me know.

Jill Carlson: Thank you Peter!

Jamaal Montasser: Thanks Peter!