Zooko Wilcox received his first request for help from someone in Venezuela a few months ago.
The founder and CEO of Zerocoin Electric Coin Company (ZECC) was following closely what he describes as "a humanitarian crisis of the first order" that takes place in Venezuela, when he received that first message, followed by a series of others.
"They said things like ... See what's going on?" Wilcox told CoinDesk. We need Zcash here now.
The problem facing many of these citizens was that, in addition to the alleged humanitarian violations, Venezuela's monetary policy had hyperinflated its national currency, the bolivar, almost worthless, and they were looking for a way to keep their money traditionally stable, but inaccessible, US dollar.
The trick was to convert the bolivars into dollars while protecting the identities of the users.
Although the government did not prohibit the dollar, the official exchange rate discourages its legal acquisition and has led many Venezuelans to buy dollars on the black market and store them under the mattress, so to speak.
And this is where Zcash, the cryptocurrency focused on privacy, that Wilcox helped create, comes on the scene.
In response to the surge in aid requests, Wilcox partnered with AirTM, a Mexico-based peer exchange, last month to promote Zcash as an optional intermediate step in converting bolivars into US dollars.
Although the adoption of Zcash among the 168,000 Venezuelan users of AirTM has been slow, the association has barely begun. According to the founder and CEO of AirTM, Ruben Galindo Steckel:
"We are simply helping Zcash have access to the people who need it the most. Not necessarily to people in the United States who like privacy, but to people in Venezuela who have been oppressed. "
Looking for stability
Founded in 2015, AirTM is specifically designed to allow users in hyperinflated economies, such as Venezuela, to store historically stable US dollar value.
The company offers users a variety of ways to enter and exit the dollar. For example, they can send money from a bank or PayPal account, deposit cash at a Moneygram location or change some Zcash (and nine other cryptocurrencies) to AirTM. The company then stores the money as USD in an account on behalf of the customer.
Customers can withdraw funds, provided that AirTM can find a buyer for the original currency. In exchange for the service, the company usually takes a cut of 20 percent of the cashier's commission. Users can also convert the local currency back to the point of payment when they buy from a participating merchant.
Without underground operations, AirTM, which made transactions worth $ 5 million worldwide last month, is registered as a money services company by the Financial Crimes Enforcement Network (FinCEN) of the US Treasury Department. The startup carries out know-your-customer reviews (KYC) to comply with anti-money laundering (AML) regulations.
What made the association so attractive to Wilcox was that, when it began last month, AirTM had already registered more than 168,000 Venezuelans living in the country and up to 40,000 more living abroad and sending money home.
So significant is the Venezuelan population, that those users now perform around 60,000 transactions per month using AirTM, according to Josh Kliot, head of participation and operations of AirTM, or about 60 percent of his entire business.
In a related effort, AirTM also partnered with four non-governmental organizations based in Venezuela as part of the recently launched AirTM Foundation, with the goal of serving a wide range of humanitarian needs with donations through Zcash and other compatible payment methods. .
To facilitate the connection with pairs from all over the world willing to buy bolivars of fast deflation with Zcash, the association between ZECC and AirTM also includes a marketing investment of both companies, promotion through its various communication channels and the exemption of the 20% of AirTM during the duration of the association. (The AirTM US $ 0.30 transaction fee is still valid).
So far, around 500 Zcash users have made a total of 1,000 transactions in Venezuela on AirTM since the launch on March 8. But Kliot said he expects that to change based on what partners have learned from the process.
He told CoinDesk :
"The first 30 days are for us to evaluate the best way to scale our marketing efforts.We expect a substantial increase in the next 2 months "
The era of Petro
The alliance comes at a time when the Venezuelan government is looking for ways to avoid various sanctions by launching its own cryptocurrency, called Petro, which allegedly raised up to US $ 5 billion through a sale in February.
But according to Wilcox, Venezuelans do not trust Petro more than they trust in the bolivar.
"Zcash is a decentralized system, where the supply and behavior of the network are part of an open global consensus, while the Petro is something that nobody understands and is under the control of the Venezuelan government," said Wilcox.
To be fair, Zcash is not what many people would consider an ideal stock store either.Like almost all cryptocurrencies, it fluctuates enormously against the dollar.
But Zcash's privacy features made it an attractive way to move from bolivars that were rapidly depreciating to the more stable US dollars in AirTM.
"It is legal for Venezuelans to have dollars," Kliot wrote in an email. But "they may want to hide their identification" to avoid being detected by buying dollars "by unofficial means, that is, exchanging bolivars for USD at the free market rate against the official (artificial) government rate".
Underlining the grim situation in Venezuela, a trip to the supermarket can now cost much more than the minimum monthly salary, according to a local AirTM Zcash user who spoke with CoinDesk through an encrypted messaging platform.
According to this source, a 40-year-old economist, who spoke on condition of anonymity, some citizens have resorted to the use of egg boxes as a store of value.
The source sent CoinDesk a copy of a receipt last month in which two kilograms of bananas, cookies, half a kilogram of white cheese, 2 liters of orange juice and 2 liters of corn oil cost 1,981,000 bolivares, or around from US $ 39.00.
Given these high costs of living, Zcash's relatively low transaction fees make it a more attractive cryptocurrency for Venezuelans compared to Bitcoin, the economist said.
"People use bitcoins to save, but not for daily purchases," he said. "That's the opportunity to help in crypto with easy-to-use wallets and low fees."
Evasion of sanctions?
All this happens in a complicated context of regulations and sanctions, and of the attempts by the regime of Venezuelan President, Nicolás Maduro, to evade them.
Earlier this month, President Donald Trump barred anyone in the United States from "buying or dealing with" Petro. "
But while Zcash, or any support to Venezuela, does not interact with Petro, with anyone on the sanctions list of the US Treasury Office of Foreign Assets Control, or with debts from the Maduro government, AirTM customers , or donors of the foundation, are safe.