Colin is an associate editor and staff writer for Bitcoin Magazine. He's proud to call Nashville his home, where he spends his days shouting at peddle taverns and trying to find affordable parking downtown. If it wasn't already obvious, he holds bitcoin.
Venezuela Has Traded $250M BTC in 2019 (And Other Bitcoin Utility Data)
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We Bitcoin folk, dogmatic as we can be, still enjoy a hearty laugh our daily dose of dank memes, so we approach such a serious topic as sound money with joviality. But what if I told you that, all around the world — perhaps even in your own home or among your friends — appreciation for sound money isn’t all roses; it’s actually tulips?
Perhaps you have heard the remonstrations: “It’s a bubble! Surrounding a useless asset, just like the great tulip bubble in the Netherlands!” Content with comparing the world’s first decentralized digital money with a common perennial, these afflicted souls go about their day spouting their anachronistic axioms about bitcoin’s perceived anti-utility without a hint of doubt.
Luckily, there’s now an antidote.
Usefultulips.org: Hard Data on Global Bitcoin Utility
Data scientist Matt Ahlborg created usefultulips.org “to [show] that there is a lot more to Cryptocurrencies than Tulips.”
The website presents data on bitcoin utility by geographic region. Ahlborg pulls this data from LocalBitcoins, and he’s in the process of integrating a feed from Paxful, as well.
“I'm a long-time observer of Bitcoin and am especially interested in researching the veracity of a lot of the promises put forth by the industry,” he told Bitcoin Magazine. “I've followed LocalBitcoins and Paxful for years now because I feel that they, unlike any other data sets available right now, best show whether or not these promises are coming to fruition. In a future article, I will lay out in full detail why P2P OTC markets like LocalBitcoins and Paxful are so important, but I haven't gotten there yet.”
Funded by dlab, a blockchain startup accelerator, Ahlborg’s latest tool builds on his previous work — most notably, an article he wrote in February 2019 that illustrates bitcoin’s use among populations enmeshed in socioeconomic duress. One of his findings, corroborating one of the community’s favored talking points, was “that Bitcoin activity on the platform gravitated towards certain geopolitical and socioeconomic environments, and that utility, not speculation, was likely the driving force” (emphasis his).
“In addition to creating these data sets,” Ahlborg told Bitcoin Magazine, “I also regularly interview top traders on LocalBitcoins and Paxful in various countries to get qualitative context to the larger data trends that I'm identifying.”
Bitcoin Hot Zones
Ahlborg’s new website colorfully visualizes this real-world use in myriad formats. You can toggle between all of the world’s regions (which are broken up by continent or, in the case of Europe, the Middle East and Africa, into inter-continental regions) to view their USD-measured LocalBitcoins trading volumes. These volumes can be adjusted to 7-, 30-, 90-, 180- and 365-day periods, and they include a heat map to illustrate whether LocalBitcoins volume has been rising or falling in each region.
According to Ahlborg’s February 2019 article, the data tells the story that “Bitcoin is working as Satoshi intended.”
If you look at the worldwide data on the website for 2019, for instance, Russia and Venezuela are leading the charge.
Russia is not known as a bastion for social liberties or economic equality (a 2018 European Parliament study claims that it has some of the worst income inequality among the world’s developed countries). Similarly, but on a much more drastic scale, over the past decade, Venezuela has fallen into a state of utter socioeconomic turmoil; its national currency, the bolívar, has hyperinflated over 1,000,000 percent this year alone, and it’s become a hotspot for bitcoin adoption as tech-savvy Venezuelans seek economic refuge amid the turbulence.
Ahlborg’s data confirms that Venezuelans are trading lots of bitcoin. So much so, that on LocalBitcoins they’ve purchased over $250 million worth in 2019. This surpasses both yuan and USD bitcoin trading, previously the top-grossing bitcoin pairs on the trading platform.
In fact, bitcoin trading in Latin America writ large is on the up. Over the course of the year, the Columbian peso has changed hands for bitcoin to the tune of $137 million, and the Peruvian sol is nearing $50 million in volume. Eastern Europe, Pacific Asia and Sub-Saharan Africa are also seeing a steadily increasing trend of LocalBitcoins volume.
Variables to Consider
Of course, this data set has its limitations, as any would. Focusing at the outset on LocalBitcoins, the data is not comprehensive for the entire bitcoin market, obviously. However, in focusing on LocalBitcoins, Ahlborg has sharpened his focus on the trading platform that is used in most of the places that need bitcoin the most.
That said, even this data might not paint a completely accurate portrait of bitcoin utility in these areas. As Ahlborg states in his blog post announcing the website, “the volume shown through LocalBitcoins’ API is only a part of the story and there exists a considerably sized web of trading relationships across social media sites and chat applications of all types, which has formed over the years from activity which originally began on LocalBitcoins itself.” In other words, frequent traders often take their business off of LocalBitcoins once they establish sufficient business relationships, as Ahlborg learned by talking to Bitcoin users in countries with high LocalBitcoins traction.
When we asked if he’s tried filling this hole in his data, Ahlborg said he doesn’t have a clear solution.
“I've thought a bit about using other data sets and pairing them with some kind of mathematical growth function to estimate what it may be, but in the best case scenario all I would have is a controversial guess,” he said.
While this is not a pain point in his data, Ahlborg also clarifies that “currencies ≠ countries.” Indeed, LocalBitcoins users in many countries may use foreign currencies for their primary trading instruments. (This is quite common in Venezuela, with currencies like the dollar and euro being preeminent.)
Proving Bitcoin’s Utility
Ahlborg hopes to expand and enrich his data set to provide the nuance necessary to properly dissect these variables. Such steps could include integrating information from more exchanges and cleaning the data set to display Syria, Myanmar, the Congo, Taiwan, Namibia and South Korea, which aren’t currently showing. Additionally, Ahlborg “would like to eventually open source this project as well bring in volunteers to help with the front-end and content curation,” he told us.
All of this work has the purpose of conveying “that Bitcoin has utility and that its promise is beginning to be realized for the types of people Satoshi said it would,” Ahlborg said.
This reality is best illustrated by Ahlborg’s “final takeaway” from the inauguration of this exciting new data tool:
“... consider that in the 4th quarter of 2018, as Bitcoin price and interest seemed to hit their doldrums, 23 countries on LBC had their best quarters ever. Almost all of these countries are in the developing world. While some of these volumes may seem insignificant now, consider that less than three years ago Venezuela’s volume was less than 1 of what it is now.”