Where to make money on the exchange of electronic money, 11 Best Ways to Send Money - NerdWallet
As Venezuela and China start using digital money as a means for economic control and surveillance, can the original promise of cryptocurrency survive?
Once one of the richest countries in South America, the economy is in ruins, livelihoods are shattered, and starvation and violence are rampant. For over a decade, Venezuelan regimes have instituted strict capital, foreign exchange and price controls on its currency, making it virtually impossible for those with savings to safeguard their wealth by exchanging bolivares for U.
Venezuelans are desperate to find alternatives to protect their savings, to earn, and to transact.
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Some have abandoned bolivares in favor of using eggs, milk powder, and flour as bartering tools. Others fill their cars with gas and drive over the border to Colombia where they siphon it off to sell for Colombian pesos. So what does any of this have to do with digital money? As it turns out, quite a bit.
Facing a fiat currency devoid of worth, some Venezuelans are turning to decentralized cryptocurrency, specifically bitcoin, as a stable store of value and means of exchange. An ideological contest is playing out around digital money in Venezuela: On one hand, it is being used as a means of surveillance and autocratic control—on the other, as a tool to shield people from economic oppression and undemocratic abuses.
The tension in Venezuela is emblematic of a larger struggle emerging around the world, as the transition begins from physical cash to completely digital means of transaction.
Will the shift to digital money expand our economic freedom—our ability to transact with whomever we choose with our chosen means?
Or will it do the opposite, becoming a catalyst of control? To understand why, it helps to grasp the original purpose of the technology. Ten where to make money on the exchange of electronic money ago, bitcoin was introduced as the first open source, decentralized, peer-to-peer cryptocurrency, and it has become by far the most adopted in the field. The architects of the tech underpinning bitcoin designed it to solve for challenges created by conventional fiat currencies, focusing on maximizing the agency of the people that use it.
These goals are reflected in a few core properties. First, bitcoin is designed to function as digitally native top options with real earnings. What does this mean?
With cash, you transact without an intermediary. In contrast, with a typical digital transaction, a middleman—say, Visa or Venmo—has visibility into every transaction you make. This data presents a trapdoor to surveillance or even censorship.
A society in which certain ideologies are repressed might use transaction data to track and flag access to blacklisted literature or persecute where to make money on the exchange of electronic money.
Imagine a woman who paid for reproductive health services in a region of the world where this is outlawed. Would we want her financial transactions revealed? This means that if, say, you are a political dissident, a government or corporation could not block a transaction or ban you from using bitcoin. Rather than a central actor controlling the system like a sovereign central bankthe bitcoin system is based on decentralized trust. The integrity of the system builds over time through the interactions of validating computers home bitcoin the bitcoin network, which together must achieve consensus on the bitcoin monetary system for instance, how many bitcoins exist and who owns them.
This decentralized approach to validation makes it extremely hard for an outside actor to, for example, change the money supply.
The petro that was actually deployed for use in Venezuela is not a cryptocurrency—in fact, it represents its polar opposite. The digital currency is centrally controlled, its value opaque, and its circulation arbitrary.
It runs on state-operated servers, using a technology called the Fatherland System, developed by the Chinese telecom giant ZTE, with support from Russia. Fatherland was initially presented as a national ID system, but it has emerged as a tool designed to monitor and track the financial activity of citizens.
In the case of many Venezuelan pensioners, the regime unilaterally swapped their bolivares for petros.
With an autocratic government intent to trace every transaction made with the currency, this has translated into an even deeper erosion of economic agency for citizens.
China is quietly exploring the introduction of its own digital currency. Any transaction made with the currency would require disclosure of what and who is involved, enabling the Chinese government to track every single transaction its citizens make. Chinese citizens with low Social Credit Floor options are already face blocks to travel, use of public services, and access to education, loans, and even dating services.
If such a centrally controlled digital currency system were to succeed at scale in China, it would obviate these challenges to control. It may also comprise the largest and highest-resolution surveillance apparatus in human history. This makes sense. Cryptocurrency by design subverts centralized control, and it poses nothing but trouble for a repressive regime. At the same time, people living in countries with low economic freedom are using cryptocurrency at an increasing rate. A recent study by the data scientist Matt Ahlborg showed that the countries seeing fastest growth in localized bitcoin transactions are marked by economic oppression, unstable fiat currencies, or both.
And most of these transactions are small, indicating that users are everyday citizens, not the ruling elite using the currency to aid in capital flight.
Further, as the crisis in Venezuela has deepened, local bitcoin transactions in Venezuela and bordering countries have spiked faster than anywhere in the world. The good news: In each case, technologists, designers, and activists are racing to tackle the challenges. A first issue is privacy. Cryptocurrencies, while often assumed to be completely anonymous, are not.
Bitcoin, for example, is pseudonymous. Every bitcoin transaction is recorded and viewable by anyone on the network.
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What this means: If the owner of a bitcoin address is uncovered, the full thread of all their transactions can be unraveled.
Cryptocurrency advocates are acutely aware of this problem and are advancing a range of strategies to address it.
One startup, Samurai Wallet, has created a bitcoin wallet that mixes coins with others to block the traceability of user transactions. Others have expanded beyond bitcoin to start new cryptocurrencies with novel, privacy-preserving tech. Zcashfor example, uses a complex cryptographic process, called a zero-knowledge proof, that enables people to prove something is true without revealing what that thing is yes, you heard that right.
When sending a private Zcash transaction, the transaction sender, receiver, and amount is completely and mathematically provable, like bitcoin, while remaining private to outside eyes.
Another, Moneromixes various transactions to obfuscate who is sending how much to whom. A second challenge: Using cryptocurrency requires an internet connection, and access to an open web is not guaranteed. If a government wanted to block web use to keep people from using cryptocurrency, they could conceivably do so. Blockstreaman American startup, is working to overcome this by broadcasting the bitcoin network directly onto populated regions of the world.
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The company recently launched its fifth operational satellite into space, beaming the network directly to users. For people who depend on the tightly controlled telecoms and internet service providers under the Great Firewall of China, this could mark a turning point for access to a free and open financial system.
Another startup, GoTennauses Bluetooth antennas that connect to smartphones to allow people without internet access to broadcast wirelessly across large distances until they reach someone with a connection to the World Wide Web.
The aim is to allow those confined to net-restricted areas to connect via neighbors with open and free internet. Finally, cryptocurrency, even bitcoin, remains hard to use, especially for people with little exposure to technology. New organizations are emerging with the aim of making cryptocurrency more intuitive, user-friendly, and safe for people facing monetary crisis or fiscal oppression.
The Open Money Initiative cofounded by co-author Jamaal Montasser is working with open source software partners and the Human Rights Foundation to create tools for people in regions in need of censorship-resistant money.
OMI is currently conducting research and pilot experiments in support of Venezuelans.
Electronic money refers to money that exists in banking computer systems that may be used to facilitate electronic transactions.
The age of digital money is here. Within decades, physical cash may cease to exist in industrialized societies.
Many of us take for granted that we can use our money privately, without fear of reprisal or compromising our prospects. Evidence suggests that for many this may not long be the case. Those intent on social control see the shift to digital money as an opportunity to tighten their grip on civic life and close off financial systems.
Put simply, without cryptocurrency, a cashless society is a surveillance society—it enables central control over all aspects of our financial lives. It creates the anti-surveillance benefits of cash without sacrificing the parts of the modern economy that exist solely on the web. And while the technology remains imperfect, activists, engineers, and designers are sprinting to make this promise into a reality.
- Digital Cash by Brad Puffer In the last few years scores of companies have been formed, sporting appropriately cyber-sounding names, all aiming to be a part of the future of money.
- Digital Money - Future Agenda
- E-money can be used for payment transactions, with or without bank accounts.
With the economic might of autocratic regimes reaching new heights and exploitation of personal data accelerating, the stakes are higher than ever. Ideas Newsletter.