Bitcoin entered the world without any funding mechanism when Satoshi Nakamoto released it in early 2009. Modern cryptocurrency projects take a different path. Many fund themselves through initial coin
Bitcoin entered the world without any funding mechanism when Satoshi Nakamoto released it in early 2009. Modern cryptocurrency projects take a different path. Many fund themselves through initial coin offerings before their networks go live. Others direct portions of block rewards toward development and marketing budgets. Supporters argue these resources give altcoins a fighting chance against bitcoin's network advantages. The argument has a critical weakness, though.
Dash and Bitcoin Cash have built meaningful presences in Venezuela. On a recent episode of The Coin Pod, Venezuelan product designer Alejandro Machado spoke with host Zack Voell about cryptocurrency adoption in his home country. Bitcoin evangelism barely exists there, Machado said. Dash and Bitcoin Cash communities, by contrast, maintain active operations.
"Apparently, I've heard, there are some people in the Dash team that have salaries in Dash and basically their mission is to go around and convince merchants to set up shop and start accepting Dash," Machado told Voell.
Altcoins have pursued similar strategies for years. Worldcoin funded water well construction across Africa in 2014. Dogecoin covered the Jamaican bobsled team's expenses at the Sochi Winter Olympics. A documentary about Dash's Zimbabwe initiatives arrived while this article was being written. These campaigns serve obvious marketing purposes. From a humanitarian angle, any cryptocurrency beats the Venezuelan bolivar at this stage. The bolivar has lost 98% of its value against the dollar over the past twelve months, according to Reuters.
Machado and Voell focused their discussion on two initiatives: Dash Caracas and EatBCH. Voell noted that EatBCH has drawn complaints for functioning mainly as Bitcoin Cash marketing. Both acknowledged the tension between praising charity work that produces real outcomes and recognizing the promotional mechanics underneath.
"If you're just doing this for a very short-term gain and strengthening your community, [then] you're not providing lasting value to these people," Machado said.
But Machado saw a larger pattern. The Dash and Bitcoin Cash work in Venezuela may aim to boost those specific projects, but they create broader effects. "It seems like, obviously, they're trying to make their coin stronger and gain adoption for their coin, but in reality, what they're also doing is they're making cryptocurrencies as an asset class [or] as a whole a more legitimate thing in the eyes of Venezuelans," he said.
History suggests his observation has weight. When Dogecoin captured mainstream attention in 2014, some participants gravitated toward bitcoin afterward. The ICO explosion of 2017 introduced millions to cryptocurrencies; many went on to learn about bitcoin. Even Maduro's petro token campaign had the unintended consequence of introducing more Venezuelans to bitcoin.
Every altcoin struggles with the same fundamental problem: liquidity. Contacts told Machado that Bitcoin Cash lacks liquidity in Venezuela. Miners mining altcoins demonstrate this pattern themselves. They immediately convert their altcoin rewards into bitcoin after mining.
"Bitcoin would actually be much more useful there because there's a lot of exchanges that accept it, LocalBitcoins trades over a million dollars in value some days in Venezuela, and the USD and bitcoin and the bolivar and bitcoin are very liquid pairs," Machado said.
Bitcoin's superior liquidity positions it to capture the most value from Venezuela's emerging cryptocurrency economy. Marketing for any altcoin reaches the entire cryptocurrency sector, but the most liquid currency reaps the benefits.
