To address my continued shortcomings, it is time I caught up on practicing the methodology of sanity. Thus far managing Pizarro has been a mix of increasingly routine administration and reactive action as sharp unpleasant edges and rocks are encountered with the mix weighted too heavily to reactive activity. The most recent, unpleasant clash with reality has been the failure of the market in the forum to prove competitive to the market outside the forum when swallowing the datacenter's monthly feeding needs. This is paired with the sad fact that Pizarro's fiat reserve, which helped to weather Bitcoin's winter is now fat, passive, and depreciating against BTC without being put to any productive use.1
Pizarro's monthly fiat needs fall into two distinct categories:
- 2834.06 USD - To the datacenter, invoiced on the 30th of the month, due in 10 days.
- Just under 2000 USD - Keeping presence on the ground, various bills due a various times of the month. From the difference between 2000 and what gets spent the fiat reserve has been growing between 150 to 200 USD each month.
The on hand fiat reserve sits at 5704 as of the June 29th report. If used to back a price floor on monthly auctions for the entirety of the datacenter's fiat needs, it would be reduced by 49.7 percent, and exhausted if called upon twice to cover an entire month. There's also 1537.64 USD on deposit with the datacenter.
The local market buying bitcoin consists of:
- "The Bicycle Guy" - Capacity to reliably provide 1000-1500 USD within 1% of reported spot price within an afternoon. Summoning the fiat to provide the datacenter payment the one time he did thus far required a weeks notice and strained his capacity. Bulk of his business is fiat and Bitcoin into and out of Venezuela. Has provided most of the locally acquired fiat. Have met.
- Less Favorable Rate Guys - One frequently advertises ability to buy up to 5000 USD in Bitcoin within 5% of spot. Due to their choice of bank, transfers take more time. Others offer smaller sums or less frequent offers to buy.
- Border Crossing Argentines - Advertise occasionally in Uruguay.
- Wide Spread Guys - While there are actors as listed above who buy bitcoin within a 5 percent of spot and take heftier premiums from folks buying Bitcoin off of them, there are a few folks who insist on big spreads in both directions. Very small advertised capacity. Still worth another round of conversations.
- Retarded Payment Networks Crowd - Insist on paying for Bitcoin through Mercado Pago, a sort of Latino Paypal or other incredibly niche methods like "recarga telefonica" members of this crowd are frequently not actually in Uruguay, occasionally not even in Latin America.
This reveals an avenue to act in meeting more of the unfamiliar traders even if it means taking the boat to do so.2
Getting Fiat From Outside of Uruguay
There are a few options for reliably bringing USD fiat to Uruguay.
- Western Union - 8 USD fee, well supported in Uruguay, can reliably fulfill transfers up to 1,000 USD. For higher sums it can be a challenge to find a local agent in Uruguay with the full amount in dollars.
- International Wire - Fee dependent on sending bank around 25-50 USD, works reliably.
- Physically Carrying Benjis - Works but requires a person to travel
Two routes are completely unworkable:
- Cash In Mail - Not feasible. A birthday card sent without cash in early February 2018 by my mother arrived in November of 2018.
- Transferwise - Explicitly banned for bad behavior
With this laid out, we can attack the auction problem. From September 1st3 through the end of the year there are 16 weeks. Our fiat needs through the end of the year are:
4834.06 * 4 = 19,336.24 USD All together
Could be met by auctioning 1208.52 USD weekly every week to cover all of Pizarro's fiat needs through the auction process. At this time the sum seems a bit on the heavy side in light of the forum's past auction participation. The fiat reserves and local market are likely to get a workout.
2834.06 * 4 =11,336.24 For just the datacenter, remainder of fiat expenses met with local market and reserves.
This could be met with actions for 708.52 USD weekly every week in the forum. As a smaller number, more folks will likely have the cash to bid for the prize. The local market and fiat reserves can readily support competitive prices, while also being counted on to deliver the other 500 USD in fiat weekly. This is the solution I am inclined towards at present. Of course there's one more way this could be cut.
8000 for other fiat, met with 500 USD weekly auctions. Local liquidity and reserves counted on for paying the datacenter
While this option puts a nice round 500 USD up for bid in the forum every week, I have reservations starting weekly auctions at 500 USD a week could leave the forum stuck through inertia at carrying only 500 USD weekly in bandwidth. Starting instead with the middle option leaves room to adjust up or down. Starting at the bottom leaves only up or stagnation as options.
Based on feedback I will publish an auction plan for the rest of 2019 on Pizarro's blog July 21st, 2019.
- In late 2017 and early 2018 local fiat-Bitcoin liquidity was tighter, anxieties were higher, and having a dedicated "oh shit!" fund seemed to make sense. BTC kept trading down and sitting on fiat made sense for an extended period. Now there's a halving around the corner and 10 kilodollar Bitcoin is here to stay. Having a fiat reserve is still necessary, but it needs to start being leveraged. [↩]
- Exploring the boat situation: one line on a less popular route recently folded (archived). Colonia Express tends to run ~1500 pesos / 50 USD each way to go from the Tres Cruces Bus terminal to Buenos Aires. Buquebus tickets run ~3000 pesos / 100 USD to go from the Port of Montevideo to Buenos Aires each way. [↩]
- Chosen because it neatly marks the last trimester of the year. Also starting weekly auctions creates the opportunity to do one last monthly auction in August for the full datacenter wire using the fellow advertising greater local liquidity as a reserve, or failing using the fiat on hand as a reserve. Having the transaction to offer him means having something to talk about. [↩]