How a digital voucher for the US dollar can help people in developing countries
In this article, we will show you one of the use cases for Nollar, our first stablecoin: Helping people in countries struck by an economic crisis gain access to a stable and trustworthy currency.
The current situation in Venezuela
Venezuela is currently going through one of the worst economic crises of the last decades. The bolívar, the Venezuelan national currency, is in freefall. The International Monetary Fund now forecasts the Venezuelan inflation rate for 2018 to be a mind-boggling 1,370,000%.
The economic crisis has long evolved into a humanitarian one, with disastrous implications for the Venezuelan population:
Last year, the Venezuelan poverty rate reached 87%. Employers have been forced to shut down their businesses, and the resulting decline in production has led to food shortages, power cuts and a lack of running water. Many Venezuelans cannot afford life-saving medication or medical treatments.
According to a report from the UN Refugee Agency and the UN Migration Agency, more than 3,000,000 Venezuelan refugees and migrants have left the country since the beginning of the crisis. Every day, thousands of Venezuelans cross the Simón Bolívar bridge to reach the neighboring country of Colombia:
The decline of the bolívar
Not surprisingly, many Venezuelans have lost faith in their national currency and have tried to exchange it for more stable foreign currencies like the US dollar. But in a desperate attempt to stay in power, the Venezuelan government has introduced capital controls and restricted access to the official foreign exchange rate to only a few individuals with close ties to the government.
Looking at the official and the black market foreign exchange rate shows just how quickly the bolívar has lost its value compared to the US dollar:
How can Nollar help?
Many Venezuelans have long been viewing cryptocurrencies as a decentralized and censorship-resistant alternative to their hyper-inflationary national currency. However, traditional cryptocurrencies like Bitcoin have inherent flaws like transaction fees, long transaction times and high price volatility that make them unusable as a real-life currency.
In contrast, Nollar meets the needs of the Venezuelan population perfectly.
Nollar combines feeless and near-instant transactions with a stable price, making it the perfect tool for payments and a great store of value. Think of Nollar as a digital voucher for US dollars. Every Nollar is transparently backed by one US dollar and can be converted back to fiat money at any time. Our distributed network makes Nollar censorship-resistant and allows people to keep their funds out of reach of authoritarian governments. These features make Nollar the perfect tool to help financially suppressed people gain access to a stable currency. Check out our Nollar article for more info.
Our solution: Crypto adoption
To promote the adoption of Nollar in Latin America, NOS is collaborating with Cripto Conserje to provide local merchants with the training, tools and support needed to accept cryptocurrency payments.
Led by American entrepreneur Jonathan Kohn, Cripto Conserje helps people in developing countries gain financial freedom through the use of cryptocurrency. The team educates merchants and their customers about the benefits of cryptocurrency payments and the management of digital assets and equips the merchants with special point-of-sale terminals that support crypto payments.
Cripto Conserje is currently running an Alpha project with 30 Venezuelan refugees. The participants are taught how to use cryptocurrency in a short video tutorial and then take a test of their knowledge. As compensation for their participation in the project, they each receive $5 worth of crypto to spend on food or medicine at the participating merchants.
The goal is to set up 300,000 wallets in the city of Cúcuta, Colombia, and make it the first city in the world to reach 50% crypto adoption, meaning that half of all local merchants accept crypto payments.
Introducing Nollar paper wallets
Since 60% of the Venezuelan population do not own a smartphone and thus lack access to mobile cryptocurrency wallets, Cripto Conserje is printing physical paper wallets that allow people to use crypto like cash. Each paper wallet contains two QR codes, one for the wallet’s public key and the other for the private key.
To deposit funds to the paper wallet, the customer scans the public key and sends funds to the corresponding Nollar address. To make a payment, the merchant sweeps the customer’s paper wallet, meaning that he scans the private key, transfers all funds to his own wallet, discards the used paper wallet and returns any remaining balance to the customer on a new paper wallet.
Our plan is to use thermal printers similar to those used in cash registers to print receipts, in order to make the payment process as simple as a debit card payment at a supermarket.
Looking ahead
This project shows just one of Nollar’s many use cases. There are so many more and we will talk about some of them in future articles. NOS and Cripto Conserje will scale the project and keep working together to offer the Venezuelan population a stable alternative to their hyper-inflationary local currency and to improve the economic situation in Venezuela.
