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Contxto – Hyperinflation in Venezuela dampens the value of the remittances many households receive and greatly rely on, since, usually when Venezuelans from abroad wire funds to them and they’re withdrawn, they are converted into bolivars.
So depending on how much time has elapsed between receiving the money and it actually being withdrawn to buy something, its purchasing power is greatly severed.
In light of this problem, fintech Valiu wants to help Venezuelans keep the value of their remittances through crypto-dollars. More specifically, Bitcoin-backed dollars.
To that end, Valiu’s co-Founder/CEO, Simón Chamorro announced on April 22 that it developed an Alpha version of a Bitcoin-backed, synthetic dollar savings account. What’s more, Chamorro recently told Contxto it plans to launch this solution in June of this year.
The executive also stated that while Valiu’s primary focus is remittances to Venezuela, their next likely market is Peru.
How Valiu got here
Like any startup should, this fintech did its homework before setting out to develop its product. Correspondingly, Valiu carried out a study alongside the Open Money Initiative (OMI) to better understand the use of currencies and financial behavior in Venezuela.
The parties concluded that the general population wasn’t too keen on using Bitcoin to sustain the value of their money. Instead, they preferred US dollars, though they are not common in the country (especially right now with the coronavirus pandemic). Meanwhile, they use bolivars (whether as physical money or via e-wallets) for typical purchases.
Related article: Rappi gets some added Valiu for its Venezuelan rappitenderos
Research, done! What came next for the fintech was to develop a product that took into account these factors.
It ultimately came up with a crypto-dollar solution.
Crypto-dollars to kick inflation in the you know where
Through Valiu’s app, remittance senders can connect their bank accounts or deposit the funds via partnering institutions in Colombia and see the money on the app.
From there, they can move that money into a US dollar savings account which acts as a synthetic representation linked to the dollar but backed by Bitcoin. So basically Bitcoin will serve as a bridge between dollars and bolivars. That’s also why they’re referred to as “crypto-dollars.”
Anyway, both remittance senders and those receiving the funds can keep these crypto-dollars in the account. Something that’s incredibly useful for families back in Venezuela, as they can withdraw the amount whenever it’s needed and before inflation renders it worthless.
Related articles: Tech and startups from Venezuela!