From October to November, the ground team and our Alpha merchants executed three more phases of our Alpha Project in Colombia not far from the Simon Bolivar Internacional Bridge.
Now four strong our team of Venezuelan merchants include Michael, Julio, Jenny, and Jennifer.
Since 60% of the Venezuelan population do not own a smartphone and thus lack access to mobile cryptocurrency wallets, we are 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 QR code and sends funds to the corresponding public key address.
To make a payment, the merchant sweeps the customer’s paper wallet, meaning that he scans the private key QR code, transfers all funds to his own wallet, the customer discards the used paper wallet.
Earlier in November, the team distributed $250 USD to 50 participants using $ZEN paper wallets loaded with $5 USD worth of crypto.
In order to execute these phases or user tests, our organizers first recruit interested Alpha merchants. For these tests, we collaborated with several merchants to pre-order food to make $5 USD packages that our participants can easily purchase using crypto after a short class. A typical package contains flour, rice, beans, tuna, oatmeal, a plantain, and salt.
“Gracias a las Criptomonedas hemos podido ayudar a muchos de nuestros hermanos que la han pasado mal y hemos podido aumentar nuestras ventas que han estado muy bajas por la situación en la ciudad, cada vez más gente llega preguntando y llaman a apartar turno para el próximo airdrop. Hemos pensado en ahorrar en Bitcoin porque ya estamos entendiendo que se puede almacenar valor”
“Thanks to cryptocurrencies we have been able to help many of our brothers and sisters who are going through a hard time and we have also been able to increase our sales which have been low due to the difficult economic situation of the city. Every day, more people arrive asking for the next airdrop. Now we think about Bitcoin and we understand how it can accumulate value.”
~Don Julio, Alpha Merchant
The organizers give a brief educational presentation on cryptocurrencies, how to use a paper wallet and best practices for storing cryptos safely. After this, participants can fund their paper wallet with crypto by taking a short quiz on our tablets or any web-enabled device and the merchant can scan the wallet QR code with a tablet or Android phone previously provided.
https://www.instagram.com/p/BqgniP3lFbU/?utm_source=ig_web_button_share_sheet
With support from our key partners PAC coin and Horizen, we distributed $500 USD to 100 participants on Thanksgiving Day Nov 22, 2019. Using 50 $PAC paper wallets and 50 $ZEN paper wallets, each funded with $5 USD worth of crypto after participants completed a short crypto-education orientation.
The cost of all of the transactions for this test was less than a single dollar.
Our Alpha merchants are pleased with the process and already asking for additional ways to get involved.
We fed 100 people for at least a few meals while teaching them to use crypto though our Alpha merchants and local staple foods while gathering valuable data:
Merchant Interviews
Transaction Costs / Time
Internet Access
Mobile Device Access
Merchant Pain Points
Liquidity Concerns
System and Process stress tests
Crypto Education Levels
Our totals to date come to 220 new cryptocurrency users and 6 crypto-merchants who have participated in our test so far.
Total crypto commerce created being $1,100 USD over 170+ staple food kits.
https://www.instagram.com/p/BqggEypFS0u/?utm_source=ig_web_button_share_sheet
Our next friction point we are solving is how to return any remaining balance to the customer on a new wallet.
The plan was 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.
Introducing our Newest Key Partner Cointigo.io
Then one day Mr.Who became our Sir Lancelot. He contacted us about helping the team and quickly got to work with our developer, Alejandro from Bitcorp, integrating a new website.
The web app and backend that has made all of the recent scaling tests possible, can automate the verification of submitted quiz responses and public addresses with our internal list of approved ones. It also handles the automatic payment to verified participants and tracts all relevant data.
Cointigo’s involvement means that our team now has a close partnership with theirs and gains all of the capabilities of their amazing SMS wallet platform.
Our first coin to be integrated was Horizen who had just launched on Cointigo. And our first official $ZEN donation came from Scotland via SMS. And now they even display balances in $COP.
We now have a way to scale beyond paper wallets with SMS. Allowing us to solve the need for the new paper wallet if change or balance is needed to be given back and also reducing the need for paper as a resource for tests at scales larger than 1,000 wallets.
Scaling Sanctions
The experience of the tests done so far requires us to begin to consider risks such as federal, local and international regulations. To that end, we consulted with PAC’s team and the following is a synopsis for the $PAC / Cripto Conserje partnership from a compliance perspective:
Trade Compliance Analysis
Decentralized organizations such as $PAC have incredible opportunities to create and effect positive change in local communities worldwide. In an uncertain regulatory environment, it is important to understand local and international laws surrounding cryptocurrency, foreign aid, and commerce. Well-meaning individuals looking to engage in valuable humanitarian work may be unwittingly putting themselves and the project at risk.
Humanitarian work requires a deep understanding of the nuance and complexities particular to each crisis and community. For example, international entities like the UN and NATO enforce strict sanctions on governments that violate human rights in order to pressure offending governments to change course. In providing aid to communities under international sanctions, individuals must understand the very real risk of unintentionally violating international sanctions by working with local government officials, militias or even resistance groups. The consequences of violating sanctions range from diverting time and energy filling out paperwork, to having their entire project shut down.
The purpose of this analysis was to determine the scope of Cripto Conserje’s efforts, what awareness the organization has of their responsibilities regarding international sanctions and what efforts are being made to prevent violations from occurring. The focus of this analysis is to identify the risks and liabilities to the parties as it relates to the partnership.
Beginning in 2015 and continuing through 2018, the US government passed a series of laws sanctioning the government of Venezuela for human rights abuses and creating a series of economic controls that were destabilizing the country. These sanctions are codified in 31 CFR part 591 by the Department of The Treasury and outlined the specific people, entities and organizations that United States persons are prohibited from engaging with. In general, these sanctions target the government of Venezuela, state-owned subsidiaries such as Petróleos de Venezuela, S.A and the proposed Petro criptomoneda (also known as the Petro) cryptocurrency.
This is relevant to us due to the definition of a United States person:
“… including all U.S. citizens and permanent resident aliens regardless of where they are located, all persons and entities within the United States, all U.S incorporated entities and their foreign branches.”
After consulting with experts, we have concluded that this definition should be considered applicable to the project. While PAC coin and Cripto Conserje are decentralized projects with leadership teams but no official business entity, the fact that a significant number of the core team, developers and moderators are considered US persons gives the US Treasury Department, the Bureau of Industry and Security (BIS) and the Office of Foreign Asset Controls (OFAC) cause to claim jurisdiction over potential violations made by $PAC, Cripto Conserje or closely affiliated projects.
Primary Risk
Based on an initial review of the sanctions regarding Venezuela, the primary concerns about this partnership with Cripto Conserje revolved around the use and transfer of cryptocurrency, the potential for the project to directly or indirectly work with members of Venezuela’s government, and what preventative measures (if any) are being taken to ensure that US sanctions are not being violated.
In September, Mr. Ridgley Esq. met with Mr. Kohn, Co-Founder of Cripto Conserje, and Mr. Matthes Director of Charity for $PAC, to discuss how Cripto Conserje operates as it relates to this analysis. The discussion included information on the grassroots work being done to assist the refugees being displaced by the Venezuelan economic crisis. As a result of the discussion, Ridgley, Kohn, and Matthes confirmed the following:
Cripto Conserje has no ground operations within Venezuela. Their work focuses on the border city of Cúcuta, Colombia as it is currently experiencing a massive influx of refugees, many of whom have little money and are frequently battling illness and hunger.
The organization only works with viable digital asset partners like $PAC, Kohn confirmed that at no time now or in the future will Cripto Conserje utilize or trade $PAC or any other cryptocurrency for the Petro. Additional information from Jonathan along with research from Sean indicates that the Petro is largely smoke and mirrors and has no partners, value or presence outside of the Venezuelan government’s own publications.
While $PAC, as the primary funding source for Cripto Conserje and this analysis, has little to no liability regarding Know Your Customer (KYC) regulations, Jonathan and Sean spoke about precautionary KYC efforts being done now and in the future.
Lastly, as the Venezuelan government is seen as the cause of the current crisis, Cripto Conserje is strongly against working with Venezuelan officials or state-owned companies and will refuse to do so.
Conclusion
Based on this analysis, to include the conversations with outside professionals in trade compliance, and the current regulatory environment, we have concluded that funding and involvement with Cripto Conserje to provide essential goods and medicine to Venezuelan refugees does not pose a real threat to its partners or any violation of current sanctions.
Our next tests will focus on refining our process and making sure we properly interface with the local authorities as we grow and attract more refugees and word gets out that Cripto Conserje is here with #crypto4help.
We can not thank the people and projects that have supported us enough. You are the reason this is working. You can find out more about them on our website under key partners and all over our social media.
Here is a song performed by our talented merchant and singer Mr. Michael Piña during the Thanksgiving test:
Find more about us on:
Twitter: 
Instagram:@criptoconserje.esp
Youtube: https://www.youtube.com/channel/UCgVr5qHtrHLj0gzuWoGOepw
find out how to give #crypto4help on our website criptoconserje.com or email us at Criptoconserje@protonmail.com