Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Jill Carlson: Open Money Initiative – Free Access to Finance as a Human Right

Episode Date: May 22, 2019

A common meme in the cryptocurrency space is that it has the potential to help people in countries where only the rich and powerful access to global financial markets. But ten years after the Bitcoin white paper was released, just how many “unbanked” people has cryptocurrency helped? Some see crypto as a tool to empower vulnerable populations in places where hyperinflation and strict capital controls make day-to-day survival a nearly impossible challenge. We’re joined by Jill Carlson. Previously at Chain and Tezos, Jill has been writing about the cryptocurrency industry for several years. In 2016 she published a paper titled “Cryptocurrency and Capital Controls” which observes the use of Bitcoin in Argentina. Recently, she co-founded the Open Money Initiative, a research organization which looks into how people use money in closed economies. Their initial focus is on Venezuela where years of economic downturn and strict currency controls have created a humanitarian crisis which has political repercussions well beyond the country’s borders. Topics covered in this episode: Jill’s beginning working at Goldman Sachs in the Latin America market Her journey from trading bonds to entering crypto space working at Chain A brief history of Venezuela leading up to the current situation What it’s like to experience hyperinflation The Open Money Initiative and the organization’s goals How cryptocurrency and specifically Bitcoin is used in Venezuela The political motivations behind the Open Money Initiative The story behind Venezuela’s Petro currency Jill’s podcast with Meltem Demirors, What Grinds my Gears Episode links: Jill Carlson’s website Open Money Initiative Petronomicon (blog post) Crypto Is Not An Asset Class (blog post) What Grinds my Gears podcast Jill Carlson on Medium Jill Carlson on Twitter Sponsors: Cosmos: Join the most interoperable ecosystem of connected blockchains - http://cosmos.network/epicenter This episode is hosted by Sebastien Couture & Sunny Aggarwal. Show notes and listening options: epicenter.tv/288

This is Epicenter, Episode 288 with guest Jill Carlson. This episode of Epicenter is brought you by Cosmos. Cosmos is building the internet of blockchains, an ecosystem where thousands of blockchains can interoperate, creating the foundation for a new token economy. If you have an idea for ADAP, visit cosmos.network slash epicenter to learn more and to get in touch with the Cosmos team. Hi, welcome to Epicenter. My name is Sebastian with you. And my name is Sonny Uggarwal. So today we have Jill Carlson on the show. Jill is one of the co-founders of the Open Money Initiative. Formerly, she was an employee at Chain. And the Open Money Initiative is a body, sort of a research body that is looking into open financial systems and creating a space where more people can have access to open financial systems.

And so Jill is quite active and interested in the situation in Venezuela at the moment, which, as most of you know, is quite dire. And so with this open money initiative and with the help of partners, they are educating people there to learn how to use Bitcoin and cryptocurrency to do simple things like potentially feed their families. And so we talked with Jill for about an hour and a half. about this. It's a really fascinating topic. It gets a little on the sort of like edge of the political spectrum when it comes to like our propensity to try to stay away from political topics. But interesting, not the last. Yeah, a lot of history there too about what happened in Venezuela in the last couple of years. Sebastian, don't you think that cryptocurrencies are somewhat inherently a political topic? Yeah, I think so. I mean,

she said something before the show. which resonated with me, which is that, you know, cryptocurrencies are about a regulatory arbitrage to some extent. I think that's true for some people. I think there are others, and I think I put myself in that category as well, that think that there are actually, you know, applications here that don't necessarily want to circumvent capital controls or regular, you know, are into a regulatory arbitrage.

But, yeah, there is something quite, you know, political about cryptocurrencies, I think, generally. Yeah. And Jill also runs a podcast called What Grinds My Gears. And so, you know, people often ask me which podcasts I listen to. And so basically this three, which is obviously epicenter, you know, I listen to all the episodes that I don't host myself. Planet Money from NPR. And then What Grinds My Gears? I think their podcast is really cool because, like, you know, she runs it with Meltem to Mirrors. And it's very like, you know, they both have a deep history and like finance. And so it's very interesting getting that perspective.

Like, you know, our podcast tends to be very technical. They approach crypto from just a very just like financial perspective and getting, it's a really interesting podcast. I definitely suggest people check that out. Yeah, I've listened to one or two episodes and I'm going to add it to my list. So you were at New York Blockchain Week. Last week, I was trying not to pay too much attention to that because it just seemed like a whole bunch of craziness. But yeah, how was that? What was that like?

Yeah, I was at New York Blockchain Week last week. And it was a pretty, you know, interesting event or week, you know, lots of meetings and stuff. I know a lot of people like think New York Blockchain Week has become somewhat of a, you know, craziness. And like, you know, a lot of people don't like it. I actually, you know, I like it a lot. I think it's like the one week where you get the entire crypto industry in like one city together. And even in like the same event, right? Like, you know, so like consent, coin desk consensus is like the centerpiece of this entire thing.

And then around it, you have other events. Like you have the magical crypto conference, which is a very Bitcoiner-esque conference. you had Ethereum, which is like consensus thing. You have token summit. And then at CoinDess consensus, it's kind of where everyone amalgamates together. And like, how often do you get like Bitcoin maximalists in the same room with like Heath heads within the same room as like XRP army people? And it's like when you get that, you get this cool.

Like, you know, for example, I know many people may be familiar with that famous bet between Joe Lubin and Jimmy Song about like, you know, in five years, will there be, I think they made it a like some high amount. Like, I don't know on top of my head, but like I think like 60 Bitcoin or something about like, will there be at least five Ethereum DAPs with like over like 100,000 daily active users? I don't remember the exact numbers. But it's like something like that. And so it's like, you know, you get cool bets like that happening and just cool conversations

across, you know, we get this all the time on crypto Twitter. but like it's cool to get those like real life interaction that you really only get when you get all the people in the same room. And I also went to the magical crypto conference, which like, you know, I, you know, tend to find myself more at more like Ethereum-like events and stuff. And it's really cool just chatting with a lot of Bitcoiners there and kind of like, you know, there's some things about the magical crypto conference that were like the talks were really good. And then there's some parts that were like, oh, okay. They actually rented a live bull in the conference. Like, there was a bull there. Oh, I think I saw this.

Yeah. Yeah. It was weird. I don't know. It was like, you know, there were like no student discount tickets, but we're going to use all this money to like rent a bull. I don't know, in the middle of Manhattan. Some of the things are weird.

But the people there were really cool. And it's very interesting. Just like a generally different crowd than I normally hang out with. Like a lot of the people there didn't even know about Cosmos. They had no clue what it even was. And so I'd actually often introduce myself with like epicenter because people actually know epicenter, but not Cosmo. So that was very interesting. Oh, that's funny.

Like, yeah, in a room full of Bitcoin maximalists or people who are really into Bitcoin, how many of them actually are aware of some of these other projects sometimes, yeah. I tend not to travel, you know, across oceans to go to conferences. But if you recommend it, maybe I'll consider it. next year. Yeah. Way less lambos this year. That was nice. No lambos outside.

Okay. Maybe we need another bull around. Yeah. That happens. All right. Well, thanks for that update. And with that, let's go to our conversation with Jill.

Hi. So we're here with Jill Carlson. Jill is the co-founder of the Open Money Initiative. Previously, Jill was at Chain and also worked at Tezos. And so today we're going to talk about a whole bunch of things, including her interest in financial regulation circumvention in Venezuela, or otherwise known as trying to help people in Venezuela who are struggling to put food on their

table, which has been in the news lately and how crypto is playing your role there. So, hi, Jill. Thanks for joining us today. Hey, thanks for having me. So before we get started and start talking about things that will probably attract unwanted attention by a lot of people online and sort of like people who don't agree with certain political views. Let's first talk about you and a bit of your background and how you got involved in crypto and got interested in the stuff in the first place. Yeah, sure. So I, let's see, how far back do you want me to go? As far back as you'd like to. Okay, so let's see. I grew up in Boston. I went to school and studied history and then I did exactly what every good liberal arts major does and I went to work on Wall Street. So my first job out of school was as a bond trader at Goldman in New York. And specifically I was trading Latin American debt and derivatives. So I was trading the bond through the debt that these countries had issued, including. Venezuela, also including Argentina, Mexico, Brazil, Colombia, Latin America.

Right. So that was, that was a good experience. It got me deep into the wild world of economics, political economics. I started to become acquainted with all kinds of issues that countries can have when they're experiencing inflation, when they're defaulting on their debt, when they can no longer pay back their loans. Very interesting stuff. Now, how I got into cryptocurrency was actually through this lens and through this same experience of trading sovereign debt. So I had these colleagues who would be on the ground in these various countries who I would catch up with every day, every morning. They would give me kind of the local color of what's going on, et cetera.

And in particular, I had a colleague who was based in Argentina in Buenos Aires. And he calls me up one morning. And at the time, Argentina was going through a debt default. They were also experiencing very high inflation, not hyperinflation, but high enough that it was having an impact. And he calls me up one morning and he says, Jill, you'll never guess what. Like, I finally managed to get my money offshore. This guy didn't work at Goldman. So he didn't have like a U.S. bank account. And Argentina at the time also had very strict capital control. in place, meaning that you couldn't move your money freely in or out of the country, in or out of the peso if you lived there. In fact, there were people using suitcases to get it across the border, like on boats out from Argentina to Uruguay at the time. That was one of the sort of basic things that people would do to try and get their money out.

And he says, you know, I found like a safer, easier way to do this. And this is back in 2013. and I'm like, what? You can probably see where it's going. And he says, oh, well, I bought, I bought Bitcoin with it. And I at the time was very skeptical. It's like, this isn't backed by anything. I don't think you want to trust this. I don't think this is a good idea. You know, as far as I know, this is just something that people are using to buy drugs on the internet. But he pulled me kind of kicking and screaming down the rabbit hole. I ended up buying some Bitcoin. Again, this was early 2013, so I kind of wrote it up in the first type cycle and it went from,

you know, a couple hundred dollars to over a thousand dollars. I wrote it back down. It was like, I'm a huge idiot. I was right all along. But more than anything else, I was kind of inspired to say, okay, if I'm going to own this thing, I'd better understand actually what it is, how it works. and so that's when I started to really dive in and start to learn about it myself. So that was kind of my intro story. Cool. And so how did you get involved with Chain, who at the time were just starting off, I guess? Yeah. So actually, before I joined Chain, I went to grad school. I pulled the old grad school ripcord. And I went to go study development economics at Oxford. At the time, I was

I thought that I wanted to go to a master's degree. I thought that I was going to study a lot of this very straight and narrow stuff that I had been sort of experiencing firsthand from the trading desk about sovereign debt sustainability, all of these sort of dry topics and economics. But by the time I got there, I basically went into my professors and I was like, so I know that I wrote up this proposal on sovereign debt sustainability in leftist countries and blah, blah, blah. But really what I want to study now, what I want to write my dissertation on is this Bitcoin thing. And as you can imagine, my sort of stodgy economics department professors at Oxford were less than impressed.

I got a lot of sort of rolled eyes and, you know, this is unprecedented, a lot of skepticism. But did it anyway. Realized pretty quickly that a PhD was not in my future, at least anytime soon. So started applying to pretty much every crypto company that I could find out there. This was 2015, early 2016. And I didn't hear back for most of them. And then the ones who I did hear back from, I got the classic, like, yeah, you know, you don't have any experience.

You're not technical. You know, we're not really hiring for like biz dev and operations roles. you don't have any product experience, blah, blah, blah. So I spent about six months banging my head against the wall. But one of the companies that I had my eye on the whole time was chain, which at the time, as you mentioned, it was going through this sort of pivot from being basically Bitcoin developer tooling to being focused on blockchain for Wall Street, blockchain for enterprise, which felt like kind of a good fit. given my background of working on Wall Street. And it actually wasn't until I came across on Facebook of all places. One of my friends from college, Dan Robinson, updated his like where he works on Facebook to chain that he had just joined chain. And remember at the time, like I was not working in

the space. I didn't really know people in this space. And so I reached out to Dan, of course, and I was like, oh my God, you're into this blockchain thing. I've been really into Bitcoin. Like, I wrote this whole dissertation on it. Um, and he hopped on the phone with me and he was like, oh, I think the chain is actually hiring. Um, so they, they brought me in and, and the rest is history got to work with Adam and that whole team, uh, for, it was only a little over a year. Um, in many ways it felt like longer because I think I learned so much while I was there. But, Yeah, I had the pleasure of starting off my blockchain career at chain. And then you kind of left chain after a while and you were working on a couple other projects,

like, you know, you worked on Tesos for a little while and stuff. And so, and I know kind of like, you know, I think what you also got like a lot of popularity as well within the entire space. You've written like a lot of really, yeah. You had like a lot of really good posts. I think that like, you know, kind of like took a lot of like stuff. I was like, especially, it was like, right in like 2017. There's a lot of hype going on.

And like, you kind of like broke down things and these blog posts are like really, um, easy to understand. And so, you know, could you like give us like a quick brief like, what's your thesis on blockchains and, you know, you talk a lot about how like to think about blockchain assets and stuff. So what's your brief thesis on this? Yeah. Well, I mean, I guess first of,

give the background of how I ended up with these theses and these thoughts, which is that I basically spent several years at this point going down rabbit holes, I think mistakenly often of like, oh, I really want this thing to work and it feels like there's something here. And having to sort of learn from first principles, like where there is a there there and then where there's really not. And actually during my time at Oxford, I worked with a colleague, we were hell-bent on starting a crypto company or blockchain startup or whatever. And especially for me, being, not coming from a computer science background or whatever, like, I had to learn everything, right?

And so I think that that has, that's been a huge detriment in a lot of ways. But I hope that if anything, it's given me the ability to think somewhat clearly about this space and also to be able to express it. in a way that's accessible. But so what is my thesis on Bitcoin and cryptocurrency? I think that the first thing that people get a little bit confused about is it's very easy to want to apply this technology to anything and everything, right? Like we're going to have blockchain for health care records and identity and, you know, heads of lettuce being tracked on it, whatever. And I think fundamentally what you have to accept is that it really comes down to just being about assets. It comes down to being about value. And in particular, it comes down to digital assets, digital

tokens or units of value. And right then in there, you can rule out just like a lot of the use cases that people talk about. Now, I think that there are aspects of blockchain technology that are applicable to these things like public-private key systems, you know, distributed computing. Like these are all good things. But and permission databases, you know, whatever you want. Like you can take aspects of this. But probably if you're trying to solve a problem with healthcare records or identity, what you're talking about is probably not sort of canonical blockchain technology as I would talk about it. So that's kind of, I would say, my over-er searching thesis on the space.

So applications that kind of surround the use of assets, like, you know, let's say we're talking about like Dex's, for example, do you think, you know, that's also on the right path? I do, yeah, Dex is the future. That's sort of my catchphrase. So I think that all of these applications built around assets become suddenly very interesting. Now, I think that they become interesting probably in still very sort of specific, possibly very niche use cases today. So use cases where you need some sort of censorship resistance or some level of openness that doesn't exist today, i.e. the ability to move sort of across different siloed systems or else areas where you have sort of existing trust issues. that exist today.

So, I mean, one example that I'll give, and I'll steer this example a little bit away from the sort of Venezuela censorship-resistant stuff, because I know we're going to spend a lot of time talking about that. But as the junior kid on a trading desk, I spent a ton of time actually dealing with our back office, dealing with our middle and back office. So these are the folks who do the real work at these big investment banks. right? They're sitting there reconciling all of the trades, making sure that the trades that you've done have gotten cleared and settled properly, making sure that you had the right counterparty on them,

making sure that you actually got delivery of the bonds that you're selling to somebody else. And this stuff is a mess. It's spaghetti. And it all relies on one central third party, or at least in bond space it does, which is the DTCC. And for every... every country you have your own central securities depository or every region, right? Now, all of these central security depositories, they basically act as this third-party intermediary that every single trade has to be routed through. There's never any such thing as J.P. Morgan just giving direct delivery of the bonds to Goldman Sachs, right? Or only very rarely and only in very bespoke cases. And so this was one of the things that actually initially stood out to me

about this technology is even forget the censorship resistance thing for a second. If we could find a way where you didn't have to have these literally like 10,000 people at every given bank who are keeping track of the books and records and making sure that the Goldman Sachs ledger matches the DTCC's ledger, matches the JPMorgan ledger and so on and so forth. Like I think that there is something there. I think that we're still long ways off from our technology, this sort of next-gen financial technology, blockchain stuff, being anywhere close to being able to compete with the existing system. But that's one of my sort of like galaxy brain visions of where it all could go. Yeah, I think that makes a lot of sense. And having worked for a couple of years at an enterprise

startup was working on and building traceability systems for enterprise. I've come away from that experience with having learned that perhaps the use cases that a lot of people are looking at that aren't in the financial space or aren't like tracking assets probably won't be the ones to pan out first. Maybe the use cases will start to emerge once the sort of more asset tracking type of use cases emerge and are stable. But yeah, definitely, I think, like, defy and distributed finance, and to some extent, you know, as you say, like simplifying these back office systems are probably the ones that are on our horizon. This is one of my weirdest takeaways of working in this space is that it turns out the world has a really hard time keeping track

of stuff. There are so many of these issues, whether it's on Wall Street or in supply chain or other big enterprise issues, like the world has a really hard time keeping track of ownership and assets. Who would have thought? This episode of Epicenter is brought to by Cosmos, the internet of blockchains. Cosmos is live and we couldn't be more excited to see so many projects already building on it. Blockchain technologies are evolving fast and development shouldn't be one fits all. As a DAP developer, you need the tools that will allow your DAP to scale, grow, and evolve over time. The Cosmos SDK is a user-friendly, modular framework which allows you to customize your DAP to best suits your needs. It's powered by tenement core, an

advanced implementation of the BFT Proof-State protocol. Cosmos takes care of networking and consensus and allows you to focus on building your application in your language of choice. Ethereum smart contracts will be supported soon, and the SDK makes it simple for you to connect to other blockchains in the Cosmos network. If you have an idea for a DAP and would like to learn more about the Cosmos SDK, or if you'd like to connect your existing DAP to Cosmos, visit cosmos.network slash Epicenter. For Epicenter listeners, the Cosmos team will reach out to answer your questions and help you get started. We'd like to thank Cosmos for those support of Epicenter. So moving now to the central topic here, which is Venezuela. So you mentioned that you were

working at this training desk, trading bonds in South America. Did you have an interest for, you know, Latin America and South America before this? Or did you sort of start to get involved and interested in the political situation there with this experience? It was really only through that experience. I, to be honest, I don't even speak Spanish. I didn't know basically anything about Latin America until I showed up for the job. And then, of course, I became intimately familiar with it. But, I mean, even on the trading desk, like, there were a decent number of other folks like me who had no real sort of background or specific interest in Latin America, but there were also a decent number of people who, you know, were from Mexico or Chile or Peru

or wherever, right? And the nickname for me on the desk actually just became Gringa, which means like white girl. So no, I had no real background in it. But obviously, this is kind of a rabbit hole that I've now gone down for me deep. And so how does that inform, you know, your views? So obviously you're dealing with financial assets that are being traded between banks and these banks are looking to make the best returns on these assets. At the same time, you're looking at the situation and seeing that in some countries in Latin America, or perhaps even the majority of countries in Latin America, people are by some extent struggling to get by. How does that inform then your political views and is it common for people?

to come away from that experience and saying, like, this is kind of messed up? Like, I need to do something about this? I think yes and no. So in, on the desk that I was working on, it was the Latin America desk, but the sort of broader category is called emerging markets. And there are certainly a lot of people who work in emerging markets, in finance, who feel very sort of mission driven about the whole thing. And there are all of these charity organizations, There's one called EM Power, for example, that does a lot of work there. So I don't want to say that, like, you know, people, you just kind of sit there and do your job and don't think about, like, the implications for folks on the ground.

Also, again, a lot of the people I worked with are from these places. I sat across from a Venezuelan guy, right? So there's no way that he's looking at the situation, just totally sort of impassively stone-faced. But I mean, that said, there is, I feel like it's almost probably not to the same extent, obviously, but like almost like a doctor who just sees like trauma patient after trauma patient, right, where you do become a bit numb at some point to it. And I'll never forget, there was at one point fighting that broke out in the Ukrainian parliament, like actual violent fighting.

Now, this is the Ukraine. So these were sort of my counterparties in Europe who were trading Ukrainian debt because they were dealing with like the emerging European countries. But like I remember everyone just sort of like watching this and being like, oh, yep, like another day, another dollar. Another day, another outbreak of violence inside of a political institution in one of these countries. And yeah, it can be, it's a very, it's a very odd thing. I mean, the other thing that I want to emphasize, though, here is that, like, all of these countries are not created equal, right? Like, you get these, like, very extreme moments in time, right?

Like Venezuela is experiencing today or clearly, like, the Ukraine was experiencing at that time. But, I mean, that looks completely different from what's going on. in Chile, for instance, right? Even though, you know, these countries get sort of lumped together as like, oh, Latin America. And in my case, oh, Latin American debt, like completely different things. And in fact, you know, within the bond world, you tend to divide debt into two categories. You have high-yield debt, which is much more risky and therefore gives you a higher return. And then you have investment-grade debt, which is much less risky.

and you would put, say, like, Apple bonds in that category. Now, we were one of the few desks at the entire firm that traded both. And, in fact, also traded what's called distressed debt, which, as you can probably figure out, is, like, high yield to the max. It's like going through default, going through restructuring. So, you know, like you said, so a lot of the current situation, you kind of do have to understand, like, the context and the history. of what got it there and which probably why I see of like you know your your history background is probably very useful for the trade I studied the ancient history unfortunately apropos nothing I see I see so yeah could you give us a little bit of uh history lesson uh you know

brief like I'm sure we could write textbooks on this uh but could you give us a brief idea of like what happened in Venezuela in the past like you know maybe 20 years that led to the current situation because like I know 20 years ago you know Sebastian was actually just talking to me about it before the show like you know Venezuela was like under Maduro and stuff people were like oh wow I'm sorry Chavez Chavez people were like oh wow look at this like you know this this like socialist country is like succeeding wildly and like you know this this is the future and whatnot so what exactly changed. Yeah, so, okay, I want to preface with to do this real justice, you'd have to go all the way back to like the Spanish coming in, conquering Latin America and whatnot.

And this is, I think, actually where a lot of the sort of confusion and emotion often comes in is because depending on how far back you go, like Chavez, to many people, was this total hero, right, who came in and sort of. empowered the people who had been, you know, in many ways, kind of like oppressed by like these imperialist forces who'd been in the country for a long time. But to many, it was also a socialist dictator. So again, you have to kind of frame this with a large degree of nuance and balance. But as you said, you know, if you look back, let's go back just 50 years to start. So in the 1950s and 1960s. At that time, Venezuela was one of the wealthiest economies in the world. And I think it's really important to emphasize that because people often miss that. They look at it today and they're like, oh, they're like this, you know, developing country that's like totally backwards and

has all of these messed up policies and people are starving, humanitarian crisis. But not that long ago, Venezuela was one of the wealthiest countries in the world. Even now, they have more. They have more in terms of oil reserves than any other country in the world. And again, people, people do a double take when I say that. Sometimes I even start to doubt myself, because I'm like, can that possibly be true? But it's actually totally true. Venezuela is a very wealthy country in terms of its natural resources. And that's not something that has just been sort of totally squandered. It's actually something that has been used to build up a very modern, country in modern society, where if you look at the rates of online banking, just to take an

example that exists in Venezuela, there are more people who use digital banking services in Venezuela in terms of percentage of population than there are in any developed country. Like, think about that for a second, right? So, like, rates of sort of these common metrics of development or modernization are actually quite high in Venezuela. And a large part of that is due to Chavez, who you mentioned. So Chavez came to power, he came to power promising all of these sort of socialist policies that we're going to start to equalize things. This was in the early 2000s, late 90s. And indeed, he acted upon those policies. Pretty effectively, if you ask him, certainly, in terms of redistributing

wealth in terms of coming up with policies and programs that would benefit some of the poorer populations of the country, et cetera. But of course, all of these programs were funded by these oil reserves that I mentioned that exist in Venezuela. And that was all well and good because at the time through the early to mid-2000s into 2010s, oil was going through a huge boom, right? You know, if you think about the global macro context of what was going on then, the price of oil, if you went to go fill up your car in 2003, 2004, the price was going through the roof, right? So that was working out quite nicely, actually, for Venezuela. Now, that gravy train ran out around 2014 when the price of oil collapsed from around $100 a barrel to around $40 a barrel.

And this coincided with like the shale boom and the discovery of fracking and the sort of taking off of fracking, the discovery of all of these oil reserves actually within the United States, et cetera. But this had a really big impact, of course, on a place like Venezuela where not only was a huge source of their wealth and their economic growth based on oil, but also basically all of the policies that had been in place for over a decade. decade now were based on oil and the wealth and the price of oil that could be derived from the reserves they have. So they kind of assumed that there'd be this constant money coming out of the ground that they could redistribute and then when that money stopped flowing, then... Yeah, I mean, to be honest, like, I don't know if it was an assumption that this would last forever or if it was just sort of short-term thinking. I mean, there are all kinds of great papers written about politicians and their economic policies and the decisions that they make

and the short-term thinking that goes on because they basically just need it, you know, as a politician, you basically just need it to last until your reelection, until your next term, or in the case of Hugo Chavez, until you die. And Hugo Chavez died in many ways at exactly the right moment in terms of this crash, right? He died, I believe it was 2013. there was actually a long period where no one was sort of sure if he was still alive or dead and there were potentially going to be succession issues. There was an election called and it looked like the opposition candidate. So the guy who would come in with sort of more conservative policies and try to reform

the socialist system because, you know, there was some knowledge of the fact and discussion of the fact that this gravy train, And like I said, wouldn't last forever. And it looked like the opposition candidate was going to get elected. But then, lo and behold, Chavez's man, so Nicola Maduro, got elected. And that is who is still in power today. And he, of course, has had. In your opinion, was that a fair election or was that, like, from your knowledge? It is very much debated.

It is less debated that the last election, which occurred just this past year of whether or not that was fair, that is by and large, accepted by the international community as a fraudulent election. I'll give the caveat, the United Nations has actually stood behind that election. So again, there's sort of nuance and gray area here that you have to acknowledge. But, I mean, I don't think that it was a free and fair election. Like, if you talk to pretty much any Venezuelan, my understanding anyway is that you'll hear just sort of nothing but complaints. But, you know, there also is you have to be balanced here and you have to acknowledge that there are a lot of people who experience such poverty, even under Chavez, but especially before Chavez, that, even with what's going on today, they might say, like, well, it wouldn't be any better under anyone else. So, you know, there are still people for sure who believe that and will say that.

But that is not most of the people I've talked to. Again, if you talk to Sebastian or most Venezuelans probably who you know, they will either laugh or cry at that idea, that statement. So when we're talking about Chavez, I mean, we were talking about this before the show with Sunny. In fact, in my late teens, early 20s, right when I was a fresh college student, I followed a friend to invest basically all of my savings at the time in a Canadian gold mining company that had a potential contract to mine a whole bunch of gold in Venezuela. and, you know, we were big fans of Chavez and we thought like, oh, this guy's so great. And then he nationalized the gold reserves and we lost all their money. Not that it was a lot of money. But anyways.

Yeah, that'll happen to you when you're investing in stuff in countries like this. Like stuff is just getting nationalized all the time. It's getting seized. It's, yeah. But I had never a dull moment, right? It was eye-opening for me when I, you know, years like, later, having moved to France and everything, met someone who was from Venezuela and actually met a few people from Venezuela who were like, no, this guy's the crook.

Like, you know, Hugh Chavez is a horrible person and a dictator. And from that point on, like, my ideas about this guy, my fresh college student ideas of, you know, socialism and everything were tabled on their heads. This is the thing. And I talk about this with my colleague, my co-founder, guy named Alejandro, who is Venezuelan. He says this all the time, which is that the word socialism might as well be meaningless at this point. Because there's a subset of people to whom you say socialist and it means Denmark. Or it even means like Canada, right?

Which like not actually. And then there's a certain subset of people to whom you say socialist and it means Venezuela, which again, that's like not really, that's not really the intent. Like that is a kleptocracy, right? Like that is a dictatorship. There are tons of other problems. going on there. And it's this very divisive word, and you're seeing this play out now in U.S. politics of like AOC and the Democratic Socialist Movement, of Donald Trump, vilifying

Venezuela, and therefore using that as a means to vilify all of socialism. And of course, like, the truth lies somewhere in this messy gray area in the middle. It's not one or the other. but it is extremely divisive. And the amount of sort of political trolling that you get for even talking about this topic, well, we'll see in the comment section. Yeah, this is definitely one of the most political, I think, topics that we've cut it on the podcast, probably. So before we get to Open Money Initiative, because we're running a bit long here, I think we could talk about this for quite a while.

You know, describe the situation now. I mean, I think most people who are following this to some extent are aware of the humanitarian crisis in Venezuela, obviously have heard about hyperinflation there. So in your view, what is the situation now? Is it degrading? Is it getting better? Yeah. So it's definitely degrading. There have been sort of glimmers of hope over the last year that things might start to change for the better.

But just to lay some context. So Chavez implemented these socialist policies. Maduro sort of came into power following him, continued on with the socialist policies and the spending programs and so on. But by all accounts, has mismanaged the economy. And that has led to all kinds of things. So it's led to hyperinflation. So there's 10 million percent inflation projected for this year. Now, like, what is 10 million percent

inflation look like? I talked to a woman through my work with open money, and we'll get to that in a moment, but I talked to a woman who told me that she'd worked her whole life, had her whole life savings. She's working in a decent job. She'd saved up enough money for her kids to go to college, blah, blah, But when she left the country, she left to go to Columbia and she converted her whole life savings. She'd sold her car, sold her house, everything. And it was only worth a couple of thousand dollars in pesos. So that's what it looks like. It looks like your entire life savings has evaporated into, you know, what you're going to need to get by in the next month or two.

It also looks like your salary, right, which is set annually. So your salary gets set annually. But that number is inflating at 10 million percent per year. And so what that means is that by month two or month three of the year, what you're getting paid is like not even a reasonable living wage. Even if you're a lawyer, even if you're a doctor, even if you're sort of a professional class of person, because it's getting set at these intervals that just can't even come close to keeping up with, inflation any reasonable way. So it's inflation, it's shortages. One of the policies that Maduro has in place is around controlling sort of what can come in or out of the country, what gets imported, and so on. And so you end up with these massive, massive shortages of just basic goods. Like you can't find shampoo there. You can't find body soap. People, we talk to a lot of people who use like dishwasher liquid as body soap because you just can't find it. If you're a woman, like, you can't find tampons. You can't find just these basic supplies, and you definitely can't find medicine. So we also talk to a lot of people

who have, like, elderly parents or, you know, children with an illness or whatever, and they just need, like, basic medicine, and you can't find it anywhere. And then the last thing I'll touch on here is the price controls. So price controls and capital controls. So, price controls. So, It's very limited what freedoms you have with your money, with your financial life in Venezuela. You don't get to choose what currency you use. It's mandated by the government that you use bolivars. If you're caught with U.S. dollars or with another currency, you could be fined. You could be thrown in jail.

And then it's also mandated at what price you sell your goods. And so, for example, we spoke to a farmer who sells coffee or sold coffee. He, really interesting guy, he loved being a farmer. He lived in this sort of beautiful rural area of Venezuela. And he would sell his coffee beans, right? But it was mandated by the government that he would sell his coffee beans actually at a loss. And he obviously realized this like immediately, right? Like if I sell it at the government mandated price, I'm not going to be able to continue.

I'm not going to be able to make a living. And so he would sort of sell it like on the black market at a higher price. The authorities catch wind of this. And the authorities would come to his house and beat him and threatened to rape his wife. And like literal physical violence if he wouldn't sell it at the mandated price. And eventually he just walked away from the farm and he said, you know what? Let it all rot. Like I would rather this just rot than me sell it at a loss at this insane government.

government mandated price. So these are just some of the dynamics that play. Overarching all of this is just like kind of a lack of rule of law at this point. It's gotten to a point where people are so desperate. Even the police and the authorities, you have to remember, like they're desperate too. And so it's very patchy enforcement of things. When I first started doing research on this topic, like, I spent a lot of time actually being like, are people misleading me? Like, are people misleading me? people not telling the truth here. But the reality is, is that everyone's reality there looks so different from the next person's because it just kind of depends on the day and it just kind of depends on, you know, the policemen that you're interacting with or like who you happen

to have access to. And so that 10 million percent, you know, I just off the top of my head, that sounds like, you know, like almost 150 percent inflation. So let's say, something close to that. And that means like, you know, you wake up. No, no, sorry. It's 10 million percent inflation. 10 million percent, right. And so that means like on a daily, that's about 150 percent daily because it gets compounded. And then so like, you know, that means I can wake up today with like a dollar. And by the end, by the time I go to sleep, it's like 40 cents. Totally. And so what you have is merchants running around their store on like less than an hourly basis updating prices.

And it's gotten to the point where everyone just kind of understands that whatever price is listed is garbage. Like it doesn't even make sense anymore because it's just constantly changing. People have to have like something that like like a like a app on their phone that tells them like oh, this is how much like you know the price is worth. No. So this is another issue is that you're not even allowed to list in Venezuela. You're not even allowed to list the boulevard to US dollar price.

Which like everyone thinks in US. dollars there. That is that is sort of the default currency and under the table people will quote things in US dollars like, oh, how much is that bag of sugar? How much is it to get my car repaired? Like that'll be kind of quoted in US dollars, but that's risky, right? Because again, even sites that put up what the rate is between boulevars and dollars, like those are not allowed. And so it's these very like underground informal systems. Generally, what people use is WhatsApp and Instagram, and in particular, the stories features. And so you'll be connected digitally on WhatsApp and Instagram with all of these people who are either acting as basically informal money changers.

So they may, they might have access to U.S. dollar bank account. And they're acting, again, as these sort of informal money changers. They might have access to, like, goods and food and medicine, and they'll go in on their stories and list what they have access to, and then the price that they're willing to accept or pay for it. So you have these very, quite literally decentralized digital marketplaces that have emerged around this. Right.

And so, you know, I think that for the entire, like, kind of to lead into like the OMI stuff. stuff. In the blockchain space, like, there's this, like, meme that I'm pretty sure I've said this sentence at some point before, which is like, oh, Bitcoin isn't for, like, us in the U.S. It's for people in Venezuela whose money inflated away at 10 million percent a year. But how true is that? Like, is that just a talking point? Or is that like, so what is the state of, you know, are people actually using Bitcoin in Venezuela, like we're purporting? what's the state of adoption there?

Yeah. Yeah. So I'll give a little backstory on how I ended up working on this. So about a year ago, I basically, to be honest, had like a bit of an existential crisis around crypto where I was like, I've been working on this stuff for like four and a half years. And I still don't know if it's good for any of this stuff that I hope it is. I still don't know like what is, you know, what it's being used for. Like everyone around me is, you know, as that New York Times headline said, getting hilariously rich. So, you know, I guess I should just be happy about that. But like, this doesn't feel good.

This doesn't feel like what I got into the space to do. And so out of that was born a lot of soul searching, first of all for me, of like, okay, what do I actually still believe is true here? And the thing I kept coming back to was that conversation with my Argentine colleague who used cryptocurrency as basically an escape hatch from his system that was failing him. And I came back to Sonny, exactly what you're saying. Like, how many times have I set up on a panel some blockchain conference and said, oh, you know, Bitcoin, it's not for us. It's for people in Venezuela who hyperinflation and price controls and capital controls and so on. But to be honest, I was kind of sitting there. Like, I actually don't know if.

this is true. And I was lucky enough to link up with a couple of people who were sort of having similar thoughts and coming at it from a similar perspective at the time. So I mentioned Alejandro Machado already. He is Venezuelan. He's done a bunch of interesting work in the crypto space himself. And then another guy named Jamal Montasur, who is a design research, was until recently a design researcher at IDO. And the three of us basically just got together and we're like, let's go, let's go figure this out. Let's go see if there's something here. And more importantly, let's figure out what we as an industry, not necessarily we, the three of us, but like we as an industry could build or do in order to make this be useful. And so we started to sort of design the

research that we wanted to do. We decided. very quickly that this wasn't like an academic sort of quantitative research project. The question to us is not like, oh, well, what percentage of Venezuelans are using Bitcoin or, you know, what percentage of Venezuelans have heard of die? Like, the real question is, how are people using it today? In the cases where they're not using it, how are they surviving? How are people hacking the system? And then how can we take a combination of these insights? to develop some concepts and design principles and so on that could actually lead to real products and services. And so with all of that, the Open Money Initiative was born. So we run ourselves as a

nonprofit. We're very lucky to be sponsored by folks like Cosmos and Tezos, who I did previous work with as well, the Zcash Foundation, Stellar, and then also the Zcash company, Zucco Wilco. has been a huge part of the whole story. So we decided to undertake this research, as I said, to go and figure out sort of what this looks like, what it looks like on the ground. We spent a bunch of time at the beginning of 2019, not on the ground in Venezuela,

but on the ground in Colombia, and spent a bunch of time on the border between Colombia and Venezuela, which is basically as good as you can get if you are a U.S. citizen or if you are in Alejandro's case, Venezuelan, who is not trying to get stuck back in the country. And we spent a lot of hours interviewing people doing sort of these like ethnographic, most anthropological interviews with people, both who use cryptocurrency and many more who don't in their daily lives. We also ran a series of studies. So, for example,

one study that we ran was we distributed Bitcoin to a whole group of people. Again, a handful of whom had used crypto before, most of whom had not, because we wanted to see the hurdles that they would have to go through in order to even receive the cryptocurrency, let alone to then use it, to spend it, so on. So there's a lot of data. There's a lot of nuance to all of this. It's very hard to distill down into just a few key insights. But if I were to try to, to answer your questions, honey, yes, people are using it in Venezuela. People are using specifically Bitcoin in Venezuela. No, the number of people using it is not nearly as high as our industry would like to believe. No, it's not pulling the country out of poverty in any sort of meaningful way. But it is serving as

basically, as I said, an escape hatch, right, for a fairly small, but nonetheless significant subset of people in the country. And so I started to mention it's really just Bitcoin that's being used there now. And it's actually really just local Bitcoins that's being used as the product. So in fact, as we were doing this research, we as Open Money got in touch with local Bitcoins and we were kind of like, hey, do you guys realize that like your tool is totally saving lives here? And we're actually now undertaking a whole sort of study and project with local Bitcoins as well. So it's been an interesting journey. Happy to dive into anything and everything.

Yeah. Do you have an idea of, I mean, I guess maybe local Bitcoins has some of this data, but do you have an idea of the volume that's being traded there? on a daily basis? Yeah, I don't have the latest numbers from local Bitcoins, but my sense is that the local Bitcoin's volume is probably very close to the entire volume. Like people aren't using, at least as far as we saw,

it's not common for people to be using other tools. There are some other tools that allow access. Yeah, there's like BISC and these other kind of decentralized trading platforms. Yeah, and then there's also like RTM. which is in many ways a bit more centralized than local Bitcoins. But in a way that also allows them to provide kind of like better customer support and customer service. And they have a pretty big population in presence in Venezuela. So there are a handful of others.

But today, my sense is it's primarily that local Bitcoin's volume, which is pretty substantial. It's consistently one of the highest volumes by currency. that gets traded on local Bitcoins period. So that tells you anything. Who wants the Bolivars? Is it that merchants are not allowed to accept Bitcoin? Like they're required to accept bolivars? Like who's trading, who's selling the Bitcoin there?

Yeah. So this is one of the weirdest things. Or to me, it was one of the most surprising things that I learned, which is that it's totally true that nobody wants the Bolivar. Like nobody wants to. hold on to that thing. But you still need it just to survive your day-to-day life. And so a lot of it,

as you just said, Sonny has to do with this government mandate that you can only use the boulevard. And that makes it so that many merchants, the incentive is just not there to accept other forms of payment. But now all of those merchants on their back end, they're figuring out how to get rid of those boulevars that they've just accepted from their customers. as quickly as possible, whether that's to buy more goods, whether that's to get it somehow into US dollars. So it's basically this gigantic game of hot potato that everyone is playing with the local currency, where nobody wants to hold onto it for too long.

But just to stay in the game, you've got to hold it at some point. The question I have here is, is Bitcoin really the right solution to this? Like, do people really want this like these? centralized cryptocurrency that's like, you know, or do the, or is what they want really just access to dollars, which we're kind of seeing now through these like stable coins that are being released. Like, you know, the Bolivar may have lost like 10,000 percent, 10 million percent in the last year, but, you know, Bitcoin still lost 80 percent, which is, you know, not, not quite on even. I'll take Bitcoin any day. Yeah. Of course, I'd take Bitcoin any day over

the Bolivar, but like, you know, I'd still prefer in that case, I'd prefer, I'd prefer, or USDC over Bitcoin. And so really, is Bitcoin the solution that we should be looking for here? Or should we be figuring out how to get more access to global financial system to people there? I think the answer to that whole question is yes. Like, both. Okay. And, you know, this question of what is it that people actually want?

You're spot on. Like, people don't want Bitcoin. They don't want local Bitcoin's wallet. they don't want like decentralization to the max. What they want is a U.S. dollar bank account. To a person, when we ask people this question, that's what they said. And one of the exercises that we did with the folks we sat down with actually was this card sort exercise where we would give them note cards with all of these different assets on it and we would have them rank them in terms of, you know, what would you most prefer to have your savings in? What would you most prefer to be

able to use in your day-to-day life, so on. And pretty much to a person, there was one young woman who ranked Bitcoin first. But other than her, to a person almost, it was US dollars first. And so what does that tell us? To me, that tells me that there probably is a place for a US dollar pegged staple coin. But then you ask the question, why aren't people using that today? And the biggest point that it comes down to is liquidity, right? Because we're not yet living in a situation where people are going and spending their digital currencies directly. Like, of those who have Bitcoin there, they're not going to their merchant and using Bitcoin to buy bread directly. They're cashing it out into their local currency. And so the existence of local Bitcoins

and the fact that local Bitcoins has a high degree of liquidity on it, I think is what keeps Bitcoin as the sort of shelling point there and the thing that people are using over other assets that may have attributes that Bitcoin doesn't that they want. And for me, it's really reframed actually completely how I think about money and how I think about what is and is not money. Because the question is never is this money. It's how good is this at being money for my purpose? right now. And there are all of these different aspects to it, whether that's stability,

redeemability, convertibility, how easily can I spend this thing, what does the uptime versus downtime of the actual system look like? And you see this very explicitly, for example, in the US dollar presence in Venezuela. And what I mean by this is the following, which is that $520 bills in Venezuela, they're actually worth more than one $100. bill because it's divisible, right? And you're more likely to be able to spend an entire $20 bill and not have to worry about getting change back in boulevars than if you have a $100 bill. And so there are all of these different knobs that you're suddenly turning, whether we're talking about Bitcoin and Die, whether we're talking about different denominations of USD cash or whatever it is, that really matter when you go to a scenario that's as extreme as this. You know, there's another project, you know, I think Coinbase kind of like heavily funds them called Give Crypto. And I think it was actually founded by Brian Armstrong as well. And so, you know, they tried to do this thing.

I remember last December where they were kind of like, I don't know, I'd call it air dropping Zcash to some families in Venezuela. I think it was like $1 a day or something like that. And so do you, one, do you think that's the right approach or and two, you know, why Zcash in that case? Like, you know, Coinbase, USDC is their product or partially their product. And so, or, you know, like you said, Bitcoin has more liquidity. So what, what do you think was the motive between behind like they're dropping Zcash? So I.

Is privacy important? Is there privacy concerns that like, you know, or is the vendors, you know, or is the Venezuelan government sophisticated enough to, like, know how to trace the Bitcoin and that's why the cash is useful there? Privacy is definitely a concern. We're not yet at a point where the government is employing sort of chain alysis style techniques to track Bitcoin transactions. But certainly, you know, that company that I mentioned, RTM, they had, they have agents, basically, cash in cash out agents on the ground in Venezuela. And at one point, a whole bunch of them, came under threat from the Venezuelan government had to get evacuated by the RTM team from the country.

So there's definitely an issue of privacy, but again, we're not yet at a point where it's relevant to think about sort of on-chain privacy. In most cases, more likely you're going to be leaking through other methods and forms and forms of communication. particular. So, you know, I can't, I can't speak to sort of the, the value of using Zcash in, in that scenario. I'm familiar with GiveCrypto. I'm, I'm friends with Joe, who runs it. Like, I think that a lot of what they're doing is great. I think that there's a lot of value in just sort of the more studies that we can run in these circumstances, the more knowledge will have as to, like, what works and what doesn't. And I appreciate that Give Crypto, I think, has been very humble in their approach to all of this of saying, like, we're doing a bunch of

experiments and we're trying to learn right now so that when we roll something out in size and at scale, like, it can have the intended impact, which of course is this like very positive mission-driven impact. My sort of philosophy on it is is a bit different, which is that I think that, you know, if you give some, if you just airdrop someone, some Z-CAP, or some Bitcoin or whatever it is, like all you've really succeeded in doing is giving that person some crypto, right? And like, you don't know what the end result is going to be, what the end impact is going to be. You don't know yet how that fits in to their life and their needs. You don't yet understand the why of the decisions that they're making on a day-to-day basis.

And that's really where I wanted to start was what do people's lives look like today? What are the problems that they're facing? And then how can we think really critically about where the technology that we have, be it cryptocurrency or not, might fit into the solutions that can be provided as, you know, potential tools in what people are trying to do on a day-to-day. basis. So it's just two sort of very different approaches. But yeah, you know, there's actually a decent amount of activity going on around cryptocurrency and Venezuela, whether it's give crypto. Dash has done a ton of sort of marketing and education there. There's a lot of these types of projects.

Randy Brito, if you follow BTC, then Bitcoin Venezuela. Very, very, very. active on Twitter, but also another great example of someone having a real impact on the ground. And with him, he accepts Bitcoin and cryptocurrency donations and then caches them out, I believe, via local bitcoins, although I'm not sure, caches them out locally and then uses that money to buy food to give away to people. So yeah, lots of activity, lots of experiments. And another crypto project that's kind of tangentially related to this whole discussion is the Petro. And we don't have to bring this up earlier. But, you know, as we've got a couple minutes here left for the end of the show, maybe talk about how the Petro fits in all this context.

You know, so for those who don't remember, the Petro was an ICO, which was effectively done by the Venezuelan government, I believe in 2017, a sort of, you know, pushback on the U.S. and on the U.S. dollars specifically is sort of like the exchange currency for petrol. So, yeah, what's the story there and how is it related to all this? Yeah, the petro is one of the more sort of insane dystopian stories to come out of cryptocurrency in my view. So as you mentioned, the petro was sought up, dreamed up, and created if you will, back in 2017, shortly after Venezuela defaulted on their debt and also pretty long, actually, after sanctions had been put in place on the Venezuelan government, those sanctions actually date back to Barack Obama put them in place. And so the sanctions state that, okay,

Venezuela, the government of Venezuela can't go out into the world and raise money, basically until they clean up their act. Now, when the government of Venezuela defaulted on their debt, this created a huge issue because normally when a country defaults on their debt, what they do is they negotiate with their bondholders and they say, okay, you know, we'll pay you back the same amount, but over a longer period of time and so on and so forth. If you look at like the Greek debt restructuring that happened in like 2010-ish, that's exactly what happened. That's a great example of this. But in the case of Venice, because of the sanctions, right, they couldn't have those negotiations. And so they suddenly

found themselves totally locked out, like country non grata with all of these investors. And so they have no mechanism of financing themselves with outside capital anymore. And of course, this was 2017. This was the year of the ICO, which to most means initial coin offering. But as my friend Casey coined to Venezuela, meant initial country offering. And so they decided to attempt to issue their own token, basically, I think, in order to evade the sanctions that the United States had put in place. And so the Petro was born. They went, I mean, they took the whole thing pretty far, right? Like, they wrote up a white paper on it. There are all of these very dystopian images of this dictator, you know, the guy in charge of Venezuela is sitting in front of like

this big sort of coin with a pee on it, stands for Petro. They claimed initially that the petro was backed by oil reserves that are still in their ground. Then at another point they said, actually, no, it's backed by that. And are gold reserves. Like, they've, they've sort of changed tactics a bunch of times on it. At one point, it was being built on Ethereum. And then they switched to NEM. And there's also been a lot of confusion around what it's for and how much they've raised. So the Venezuelan government at one point put out the number, I believe it was like 700 million that they'd raised. At another point, they put out the number five billion dollars that they'd raised. As far as any of us can tell, they probably didn't raise anything, actually. Donald Trump actually

came out with an executive order and said that the Petro is also sanctioned. So then suddenly, like, no one is going to touch it. You know, I don't think there would have it. You can't even have it on a crypto exchange effectively because as a sanctioned asset, it is subject, well, if you're running a crypto exchange, you're subject to KYC or you're subjecting your, you're using to the KYC. And so those users can't trade a sanctioned asset. And you do not match with OFAC, the office of foreign assets.

control, which is the office within the United States that deals with sanctions enforcement. Like, you do not mess with them. So exactly. They're not listed on the amount. So if they did an ICO or some sort of a fundraise, couldn't we just, you know, how do they raise this money presumably? And can't we just audit that blockchain somehow? I mean, if they had raised in Bitcoin or ETH, say, then you could do like the, blockchain audit of like what was going into the Venezuelan accounts, et cetera. But that's not how they did it. They had, they put up like a web form that you could like fill out and like click buy on things. As far as I remember, they did have like some some form where you could go in and

pay, although that came up later and like the website was down for a long time. So there was like a lot of confusion around this. But if they did raise anything, those transactions were off-chain, right? And so there isn't really a good way. But it also, though, it gets really sketchy if you look at the petro blockchain. I say that because, like, I don't know. It's not actually decentralized. But if you look at sort of the movements of these petro tokens, like it looks like there's just like a lot of like laundering going on within the government's own wallets and that it's primarily just the government's wallets that actually hold these things. But then you also hear this very confusing conflicting information like I've spoken to people who told me that they

logged into their pension accounts, their Venezuelan pension accounts that are obviously like related to government accounts. And that suddenly what was formerly denominated in Bolivars and there is denominated in petro. But like no one has a really good sense of what a petro is worth, where you can spend it. The Venezuelan government has said at various times that if you want to renew a passport, you have to use petro to be able to pay the fee to renew your passport. But like, again, no one really knows like how to get a petro or like what it's worth. So it's just this very like Kafkaesque nightmare of like monetary. experimentation gone bad, I would say. So this all backfired the day that Donald Trump issued an

executive order effectively making this an illegal asset. And so therefore, this whole plan to use the petro to circumvent U.S. financial sanctions also backfired. That's my take on it. That's my sort of understanding of what likely went on here. But as with all things, having to do with the Venezuelan regime. Like, it's so hard to say what's actually going on. It's so hard to say what the actual intent was that, yeah. Back when the, uh, Petro, uh, came out, you know, I was having some discussions with some friends and, you know, we were, we were like, wait, this is like very mind blowing in a way,

because, you know, the current instantiation was just like, you know, Venezuela and shitpoint that they're ICOing in order to fundraise. But it got us thinking about like, you know, what, the, a concept of a petro seemed interesting, something that's backed by gold and or sorry, backed by oil or. And so, you know, we were thinking like, you know, what if blockchains give the ability for all of the like different OPEC countries to like coordinate and launch? a coin that's like a cryptocurrency that's like you know the you know it's it's designed to be the primary way to buy oil whether it's like you know discounted or you know it's the only thing you can

use to buy oil and you know would like such a thing have the ability to like you know there's this term called the petro dollar which is like you know the US dollar gets its value by being the lot of its value by being the primary thing you need to buy oil with and so do you think that is like have you even heard any rumors of like such a thing and do you think that's actually a feasible concept? So I haven't heard any rumors of such a thing. I think it's really interesting though because you know for the first time we have the ability to just mint assets right like in this new sort of way where you can and all these different sovereign nations in OPEC and coordinate to do that. Yeah, exactly, exactly. And you certainly do have this dynamic of a lot of

countries disagreeing with the dollars, the U.S. dollars reserve status. So, you know, for example, you have China and Chinese entities issuing debt, not in dollars or in another sort of reserve-ish currency, but denominated in special drawing rights or SDRs, which is like the IMF neutral basket of currencies. So could I imagine a world in which you have OPEC sort of doing something similar and trying to find or trying to create rather their own neutral asset to be able to receive payments for for oil. Yeah, totally, totally. I think it's super interesting.

As you said, very dystopian the way that it's been sort of playing out in Venezuela and also just very inept, to be honest. Like the execution has been very poor. But I think that I do think that there is something there. And I've long been kind of like beating this drum of, no, the Petro is actually really important to look at because you can start to view it as a precursor to a lot of these other sorts of like sovereign-esque use cases of crypto. Again, whether that's like good, bad, ugly, totally up for debate. And this is to zoom out a little bit further, actually, this is something I. I wanted to bring up that I always like to highlight is like, you know, with the work that I'm doing

with the open money initiative, et cetera, it's very easy for me to sort of like wax poetic about, you know, Bitcoin, local bitcoins. It's like it's helping this subset of people in Venezuela. But like, you know, who else is using it is the government is like the corrupt government administration for sure are also mining Bitcoin using cryptocurrency to get their money out of the country, et cetera. And so it's this real issue of like, you know, we can dream up all of these ideas and come up with all of these ways that these tools can be used. But at the end of the day, we don't get to choose who's using them or how they're getting used. And yeah, whether it's like OPEC or Venezuela or whether it's, you know, people or the government or whatever it is, like that is definitely something that keeps me up at night. I wanted to ask you one last question about open money initiative before we wrap up here.

And that is with regards to your political views and how they inform, say, ethics about, you know, the activities of that organization. So in a country like Venezuela, I think, you know, we can all agree that there's a humanitarian crisis there and people are in need. and I think it's easy to defend, you know, educating people about Bitcoin and allowing them to do something as simple as, like, feeding their kids, right? Like putting food on the table. But I believe your mission on your website is something to the effect that, you know, you believe that open financial systems are a human right. You know, for Venezuela, it might be clear cut. But in the future, there might be other cases where, you know, helping people circumvent their country's capital controls is a bit more of a gray area.

Capital controls, some might argue, are useful in some cases to help stabilize an economy, for instance. Like, I'm not an economist, but I could definitely see how that would be the case. You know, how do you look at that and how do you make decisions about, you know, what is ethically okay and what is not if you know people if you're encouraging people to perhaps like break the law and circumvent their country's capital yeah yeah no there are a lot of considerations there um there are the considerations that you just outlined but also there's the issue of like look using bitcoin in venezuela is a huge gray area right like it's it's very patchily enforced

but like we've heard of instances where people have been punished either with fines or jail time or sometimes physically with using any of this stuff and or rather excuse me for using any of these types of products and tools and so there's also then the issue of like okay if we are if we are trying to build tools that make it easier for people to use this then is that potentially putting them in harm's way. And so that's yet another aspect of this that is really hard and problematic. Now, I'll say for the Open Money Initiative itself, our aim is to just present the world as we find it. We're doing research, right? Our aim with that research is to be as neutral as possible. yes, there is this underlying fundamental mission of trying to build a more free and more open and more fair financial system for people who don't have access to that today.

But we are not like an activism organization. We are not even a product organization. We're a research organization. So that's kind of my first answer to that. Yeah, well, I mean, I don't know if I fully agree with that. I mean, if you have an organization like this Give Crypto organization that you partner with, you know, perhaps you're not being active in activism, but you're partnering with organizations that kind of are on the line there. Yeah, we're providing research to other organizations, the Human Rights Foundation, which is very controversial, give crypto. You name it. Local Bitcoins, as I mentioned earlier. And so absolutely, I mean, we consider who we're working with and we consider whether or not the potential directions that they go align with what we believe. And so here I'll get into sort of what I personally believe, which is that evasion of capital controls has been around since capital controls have existed. This was actually what I ended up writing my master's thesis on was not just Bitcoin, but evasion of capital controls in general. Now, historically, those who've been able to evade capital controls in their given

countries, it's been big multinational organizations, it's been the executives of those types of companies, it's been the government officials themselves, it's been the sort of upper echelon elite classes of those countries who have the ability to get an offshore account in the Caymans or even in the United States, whatever it is. And that has left behind huge swaths of the population who not always, capital controls are not just blanket bad, but very frequently get left behind. And so, you know, it's one of these things where you have to, to look not just at sort of in theory, how does this play out, but the reality of it, and the reality of it is that there are huge groups of the populations who are finding ways with or without

cryptocurrency to evade policies that they deem as not beneficial to them personally or to their company or even to their country as a whole. So that's one big aspect of it. And then, you know, the other aspect that I would point to is just there is a reason why we're starting in Venezuela here. And of course, you know, our vision for the research that we're doing in the project is not solely just about Venezuela. But if I were to look at sort of the different places where these sorts of policies are playing out, Venezuela is among the most extreme, certainly. And also, to me, among the most sort of clearly, clearly there is a need here, right? And that comes back to the humanitarian crisis that's playing out the refugee crisis that's now playing out. More people,

as a percentage of population, more people have left Venezuela in the last few years since the crisis began than even the population of Syria. So the refugee crisis in Venezuela is actually bigger than that of Syria. And to me, like, there is just this very clear, dire, desperate need there. And so that is one of the more clear situations, as you, as you yourself just mentioned. And that is a huge part of why, why that's where we're beginning. So noble, noble cost to be working. So, yeah, where can people find you? Yeah, please plug your podcast as well. Yeah. Oh, God. So for more information on the Open Money Initiative, it's just OpenMoneyinitiative.org or on Twitter at Make OpenMoney. We'll be coming out

with a whole series of blog posts and papers and so on, sharing the research that we've done, sharing our findings. If you want to find me, I am very much on Twitter at underscore Jill Ruth is my handle. And then I also, yeah, I also help run my own podcast with Meltem to Mirrors. It's called What Grinds My Gears. So by all means, check that out as well. I'm not sure we keep it quite as professional as you guys do on this show, but we have a lot of fun. Awesome. Well, thanks for joining us today. And it was great to learn about everything you're doing with the Open Money Initiative. and also to dive into this very complex topic, which is Venezuela, and I think is worth looking at, you know,

regardless of where you sit on the political spectrum, we're not a political show at all, you know, but I think it does, you know, merit some attention, at least from the perspective of, you know, the humanitarian crisis, at least, if anything. Yeah, absolutely. Well, thanks so much for having me on. This is great.

Thanks, Joe. Thank you for joining us on this week's episode. We release new episodes every week. You can find and subscribe to the show on iTunes, Spotify, YouTube, SoundCloud, or wherever you listen to podcasts. And if you have a Google Home or Alexa device, you can tell it to listen to the latest episode of the Epicenter podcast. Go to epicenter.tv slash subscribe for a full list of places where you can watch and listen.

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