The Reserve Dollar—a U.S. dollar-backed stablecoin—will be available in Venezuela via the Reserve app. The goal is to provide a cryptocurrency-based, less volatile alternative to the rampant hyperinflation persistent in each country.
The stablecoin and corresponding Reserve app will enable citizens and businesses to store their money, make in-store purchases and send money internationally. So far, many cryptocurrencies have been used in Venezuela to hedge against high levels of inflation, but they are still subject to fairly volatile prices.
In particular, a strong community has built up around the cryptocurrency Dash, begging the question: Can Reserve can catch up?
In an interview, Nevin Freeman, co-founder of Reserve, admitted that Dash is an interesting example of a cryptocurrency achieving adoption. However, he claimed that “Dash is still too volatile to really catch on and become the main form of money.”
Indeed, during 2018, the price of Dash dropped 92 percent.
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Freeman said the real competition is the U.S. dollar, both in fiat and electronic versions, such as PayPal. While the government doesn’t stop cash transactions made with U.S. dollars, there are restrictions on electronic forms, including debit-card transactions. As such, there are restrictions on who can use services like PayPal.
Worse, he argued, transactions can be recalled by the sender, which can leave the merchant with no payment.
The Reserve app allows Venezuelans to store their wages as Reserve Dollars and, initially, transfer their funds back to Bolivars to spend in stores. The long-term goal is to have the transactions made just using Reserve Dollars. But it will need to get past Dash first.