Localbitcoins.com Replaces DolarToday As Standard Reference

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It’s an open secret: for the past few weeks, DolarToday (DT), the website that publishes the forbidden dollar-to-bolivar market rate, has been giving weird numbers. Everybody could tell, but nobody knew why.

See, on January 26, DT’s rate reached a historic high of 266,631 VEF/USD. It had been at 107,128 VEF/USD a month earlier — an increase of almost 150%. Mind-blowing, but not insane: we were on the fourth month of hyperinflation, the money-printing machine was doing 24/7 shifts and Maduro was creating random bonuses.

A week later, the DT dollar (DTD) was down 15.6%. I thought that’d be the classic agacharse para agarrar impulso (it’d quickly bounce back), but a couple of weeks later, the dollar lost an additional 5.8%. Some said it was the seasonal effect at full force, and the exchange rate was now correcting itself. At the end of March, with hyperinflation still compounding the bolívar’s losses, the DTD was still stuck at Bs. 200,000.

That was it: I decided to prove DolarToday was full of shit. Asdrúbal Oliveros’ mesas de dinero and AirTM’s rate were already contradicting the DTD, but I went for another approach: bitcoin.

People realized that DT was publishing below-market rates, and started shunning it (newsflash: DT doesn’t have a monopoly on information!).

The advantages of using localbitcoins.com, a popular marketplace in Venezuela, are enormous: you don’t have to waste time finding someone who wants to buy or sell bolivars, you just have to log in and choose an offer. DT claims to base their price quote on the open market, but Localbitcoins is a market you can actually analyze.

I coded a little script to interact with Localbitcoins API and download the transaction history of the Venezuelan market. Since the start of the year till the end of March, around 239,000 transactions, totalling around $40 million, were made. On average, $445,000 were moved in a day through Localbitcoins in Venezuela, sometimes reaching peak days of $800,000. This is no small market.

Using a weighted average to get the bitcoin’s price in bolivars, and Coinmarketcap’s historical closing price of bitcoin in US dollars, I created a time series for the “Dólar Bitcoin (DB).” Results show that during the first two months of 2018, the DTD and the DB went hand in hand, with the BTC dollar averaging a 1% premium over DT. This changed dramatically in March — the BTC dollar left DT in the dust. DT froze around Bs. 200,000 for no reason, while the free (bitcoin) market was passing the Bs.350,000 mark.

People realized that DT was publishing below-market rates, and started shunning it. Newsflash: DT doesn’t have a monopoly on information! The website operators must’ve noticed a drop in pageviews and finally reacted, albeit too late — it’s quickly losing its status of leading reference, as even today the DTD remains a lot lower than what people are actually willing to pay for a dollar.

But I was still curious about the behavior of DB, this new indicator I’d found, and expanded my series to include data since 2015.

In 2015Q1, DB had an average 2% premium over DT. They moved together. The DTD would move first and the DB would react a day later. The DTD was relatively stable during the first two months and rose sharply in March 2015.

Now look at 2016. Although DT was clearly the reference, during the same months the DB was priced at an average 5% discount. That year, both rates went up.

2017 was a wild ride. DTD went from 3,100 VEF/USD to 4,300, only to drop to Bs. 2,800 in a few days and climb all the way up to Bs.3,800. DB followed suit until March. When the big crash happened, DB ignored it, keeping above the Bs.3,500. DB had a discount for most of the period, but roles reversed after the crash and DB held a premium of around 28% for 21 days. I believe the market lost confidence in DT after the huge volatility of this quarter.

Data seems to validate that February is “calmer” than other months, but I don’t think it extends to March in the current conditions. The Olivera-Tanzi effect made this tax collection season relatively meaningless, and there should have been pressure on the exchange rate to depreciate more.

Should Localbitcoins displace Dolartoday?

The DB, based in localbitcoins.com, has a key advantage that makes it a better approximation of the exchange rate over DT: it’s more transparent.

I was able to access public data of transactions to do all sorts of analysis (and you can too, if you check out my code!). The daily number of transactions and volume on the site has grown significantly the last couple of years. I’ll admit that the indicator has some flaws: it’s not a very deep market, and sometimes what appears to be fake transactions can skew the graph.

But DT is much more opaque, quoting only average prices of “transactions in Caracas” or “transactions at the Colombia-Venezuela border”. How do we know they never pull numbers out of a hat? We don’t. At best, their data is faulty; at worst, they’ve been bought by market manipulators.

Nobody can keep public information contained forever. As DolarToday is increasingly recognized as fraudulent, other indicators will flourish. I’m sticking with the dólar bitcoin as the one I can trust.

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32 COMMENTS

  1. I can’t speak to the veracity of either website, but in all honesty, DolarToday was (if true) going to the source for what a consumer places value.

    If I have Bolivars and the vendor has apples, my Bolivars are worthless if the vendor won’t accept them. And if the vendor sells the apples at the border for 50 cents, and the same apple goes for 250,000 BsF, then we can acknowledge that the BsF has an actual value of 500,000 BsF to the dollar.

    Be careful about throwing out the baby with the bathwater. My understanding of this bitcoinage rage is that it is highly speculative.

    • That would be like basing the broader currency exchange markets on airport currency exchange shops. The best indicator should be where the largest sums being exchanged and the most volume are. Increasingly, that is in the virtual currency exchanges.

  2. Promoting bitcoin while accusing DT of being fraudulent sounds like market manipulation to me. It’s odd that my family in Venezuela has not experienced the “valleys” in your chart. Bs are only going up up up.

  3. DT isn’t ignoring the bitcoins, they have an indicator called specifically “dollar bitcoin”, which is now at 480.250 Bs/$, while AirTM has a rate of 487.230 Bs/$.

    More than DT being “full of shit”, it’s more possible than it’s the trade houses at Cúcuta (DT’s main source for the rate calculation) the ones that are ful of shit, mostly because several of those exchange houses belong to chavista enchufados like Vielma Mora.

    Also, the “mesas de dinero” mentioned by Oliveros are as reliable as the article claims that DT is, if not less, because, where’s the source of these “mesas de dinero”? How do they calculate the rate? Aren’t they simply taking DT’s number and multiplying it for a factor? These last days the so called “new reference” is in average “DT x 1,2”, so it’s not exactly as transparent as they claim to be.

    It would be good to track the screw seller that allegedly owns DT and ask him about it.

    • Exactly Umalog…that is what needs to be pointed out. These Chavista scum have made a killing off of DT over the years, but now that we have hit gigainflation they are trying to slow it down a bit because they know their end is near. Always figured something was up with DT and know it is an inside job of controlled inflation to some degree. Great to see their monopoly is broke.

      Hard to say, but once the bolivar hits a million to the dollar (hopefully sooner), ballgame over and we will finally arrive at the zombie apocalypse that will finally overthrow the chabestias (only poor hungry people rioting in the streets will throw out this lot).

  4. Ricardo, isn’t this the same thing that is being done on the VeneBloc website that was being promoted in yesterdays CC post: “Why We’re Innovating in the Venezuelan Blockchain Space,” By Antonio Talledo y Sebastián Delgado? And VeneBloc does the math for you.

    As of an hour ago (1630hrs dst) both sites (localbitcoins.com and venebloc.com) gave identical rates of 589,000 bsf/usd. DolarToday was at 411,000.

    • Many of these new sites are DEALERS, charging a 30% commission per transaction. 589-180 or so commission= approx. 400, approx. DT’s current quote.

        • Speaking about non-bc new sites, like DolarPro/et. al. Bitcoin sites are highly unreliable/speculative/lacking in believable real transaction data.

  5. DT probably more clearly historically has reflected the $/Bs. local Ven exchange rate, as it reflects in-country/border real transactions, albeit perhaps with some short-term manipulation, and recognizing the March historical tax-paying effect. Bitcoin reflects more outright Bitcoin speculation (e.g., this year the Bitcoin Ven. tax effect was somewhat more muted/short-lived, since Bitcoin had fallen from $16-20m highs, to a $7-12m range, and may have been seen as a great speculative buy, since “everyone knows it’s going to $100m”, as many tech “cognoscenti” predicted. As BOA recently stated, “Bitcoin/et. al. are the biggest speculative bubble in history”, which probably already has been pricked, and is just waiting for an overpriced NASDAQ serious decline/rising U.S. interest rates/possible Govt. regulation to sound its death knell.

      • Mostly border–cross the Bridge. Seriously, border non-manipulated exchange houses doing physical/electronic transactions. And, yes, they charge a spread.

      • Lets throw DT out! Then Maduro and crew have less of an “economic war” argument. Lets base this on criptocurrency or whatever. These guys want to dabble in petros, lets point them out the reality of criptocurrencies, which is ultimately related to hard currencies.

        F DT!!!!

        Was a good run with DT, liked some of the articles yet always skeptical of the rate at times (especially when the big fish cashing out), but lets see the monopoly broken and the new kids on the block more accurately reflect what really is GIGAINFLATION (and in a more transparent way, with methodology actually shown).

        GIGAINFLATION and hungry poor people will be the only thing that brings this kleptocracy down.

  6. At this point, does the difference in the two even matter? And historically, DT has been on the money so to speak.

    So one says the B is worth shit, and the other says it’s worth shit with a fly landing on it.

    Not trying to be cynical, but does this matter at all? People on the ground in VZ know how many Bs it is to the dollar on the BM.

  7. Maybe it’s time for a “Weekend at Bernie’s” (aka madoff) to answer investor concerns. Just drag the BsF body around and people will regain confidence

  8. Experience tells us that people overrespond to traumatic events (such as an uncontrollable exploding hyperinflation) by paying more than is warranted to try to protect themselves agaisnt the uncertainty and volatility of the future , this distorts prices and values and retrofeedbacks into people paying even more for things than would be the case absent the traumatic situation they face…….its the equivalent to panic buying . The absolute distrust in the value of the Bs (something which is also reinforced by the traumatic political situation) makes the US$ reach exchange rate ratios that defy plausability ……..!! There is no reference that can be wholly trusted because the reference itself impacts the exchange rate in a direct way so that anything it publishes is like a selfulfilling prophecy…..!! . our is a chaotic life and there appears to be no one in govt willing to recognize the situation and restore things to a situation of stable order !!

  9. This is a problem, the difference in quotes for BsF vs $US? At DT vs BC or whatever crypto site?

    I never understood why DT continues with decimal points.. sure I get it when when it was 2.15 vs 11.83.. But when it’s gone from 205,000.00 to 451,239.25 in 10 days.. isn’t it reasonable there be some rounding off of significant digits? The margin of error is so insignificance cant. DT could definitely up their game, if he didn’t have a fulltime job at Home Depot, actually working for a loving while trying to help his “patria”.

    But, DT has done an admirable job for several years of publishing something closer to reality only because the dictatorship publishes nothing, just keeps on printing. Noting the dictatorship “prints” only electronically because they can’t pay a company for the paper. Printing electronically costs only the miserable salary of the accontants posting salaries, paying internal debt,etc. The cause of the hyperinflation. Besides the dictatorship loves the chaos and confusion.. as noted above the dictatorship is in Cucuta gaming and scamming.

    It is logical that there are differences.. is the transfer electronic in BsF to an account in BsF? Or electronic $US to $US to convert to electronic transfer on BsF based on DT (or other)? Or is it in the hard to find paper BsF which commands a significant premium. How does someone find a refenece exchange rate when the dictatorship has no less than 3, and the exchange method has no less than 4? In many cases it depends on how desperate the victim is. And now it is suggested a “new” electronic exchange system is more reliable and will make you wealthy?

    Someone above wrote above that BC is backed by hard currency… wtFuck? When when someone thinks they can survive, make a living and support a family, “mining” BC at a computer.. electronically “printing” BC.. trying to stay ahead of hyperinflation? well that explains why Venezuela is where it is.. you missed your microecon and macroecon classes… which would why sugesst you get a real job.

    Oh, you can’t find a real job because of the dictatorship? Then either leave, go somewhere where there is real work, a job. Or get on the resistance bandwagon.. If you keep scamming under their rules you will keep getting scammed.. and eventually die miserable and poor in cubazuela.

    • “I never understood why DT continues with decimal points.”

      Exceedingly few transactions could have significance below 100,000 VEFs, but I’ll give DT a pass; many university professors don’t understand significant figures these days.

  10. I was told the new standard was DolarPro and that Dolartoday is bust earlier this week. Like if we needed more confusion.

    I believe this is true now, i see dolartoday is simply switching to the airtm/ dolarpro standard anyways. My take is that the people who move large volumes are presuring for a rise and created their own standard, now they are succeding

    I suppose it will keep rising to 1000 bolivar soberanos super sayayin per dolar or one million fuertes during this month.

  11. There is a slight problem with the dollar bitcoin approach: you need to have bitcoins to attain this rate. The average person needs to have fiat, buy bitcoin and then sell them in bolivars. Buying bitcoins with fiat currency at market rates is not quick (Uphold -for example – currently takes 3.99%+1.05% if you want your bitcoins within 30 minutes by paying with your credit card; the normal 5-7 day process is 1.05%). So, now, the average person has to have fiat in a non-Venezuelan bank account, lose 5.04% in bitcoin (or 1.05% and pray the market doesn’t crash in the week or so they have to wait for the platform to process their bank payment) and then sell those bitcoins in bolivars. That is to say that the premium on LBC is not exactly due to a higher dollar to bolivar rate. While I personally benefit from the premium on Localbitcoins, it is not accurate to say that it is a better reflection of the value of the bolivar.

  12. There is a shortage of paper Bolivars, so a seller can demand a significant premium vis-a-vis electronically transferred Bs. But this premium is tiny (in comparison) for paper USD versus electronic USD.

    As the physical exchanges (ie; Cucuta) would be expected to handle more paper than do the cryptocurrency exchanges, would you not expect the physical exchange rates to differ, as a result of the high premium paid for paper Bs?

    I am thinking that both DolorToday and the crypto-sites are valid, the difference simply reflecting the divergence in value of paper Bs vis-a-vis electronic Bs.

  13. There is something I’d like to point out. Prices of goods and services are increasing faster than ever, how could DT index stay around 200.000 bs that much time? Was the Bs having a Real Appreciation? I don’t think so… That’s when I knew DT wasn’t reliable anymore! And the reality is the $-bs is a black market and we can’t be 100% sure of the reliability of the data provided by any website.

  14. Guys, it is simple. The DT guys simply needed to take a 2 week vacay. And when they returned, they realized that they forgot to turn on the auto-update button on their servers.
    Problem solved.
    At this rate of inflation 450,000 will be 36,000,000 in a year.
    Want to buy a new $30,000 Car? That’s 1,000,000,000.000 (One Trillion STRONG Bolivars)

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