How Venezuela Fueled Bitcoin Adoption
The economic woes of Venezuela is arguably the worst case that has been recorded by any nation since the Second World War. The setback caused by falling oil prices prior to the Hugo Chavez’ administration, and the inability of the same government and those after it to resolve the issue has left a huge mark on the South American nation’s economy that could outlive several generations.
The crumbling economy has led to different periods of hyperinflation that have gone beyond whatever was experienced ever before. Several measures at different times have failed to boost the economy into recovery, including the currency devaluation of 2018.
The Hopeless Situation in Venezuela
The meltdown which started during the government of Chavez got even worse after he was succeeded by Nicolas Maduro. Indeed, the citizens hoped that a change in government could have engineered a turnaround in their economic plight, but that wasn’t the case. Instead, the situation got even worse as the country’s national currency, Bolivar became almost valueless.
The Venezuelan economic woes degenerated, giving rise to socio-economic problems. In 2015, inflation rose by 275% with more woes still predicted, which of course eventually came to pass. The significance of hopelessness at the time gave rise to shortages of basic supplies, high criminality and eventual unfriendly government response, such as media censorship.
Envisaging a bleak economic future, citizens of Venezuela began to seek alternative means of economic survival. Those who could avoid it adjusted to capital flight, putting their money into the US dollar or any other superior currencies that they could get hold of and use. This period coincided with the time that Bitcoin awareness began to find significant traction.
Why Did Venezuelans Turn to Bitcoin?
During this period, certain awareness programs sprung up in Venezuela. Prominent among them was the group BitcoinVenezuela which was formed by one of the popular cryptocurrency enthusiasts in the country, Randy Brito. The purpose of the group was said to be to encourage Bitcoin education and awareness, and to offer the public a possible alternative from the failing Bolivar.
Like most other nations at that time, there wasn’t any solid approval or disapproval around cryptocurrency activities. Rather, the body language of those in power suggested that there was no resistance whatsoever for those who may want to adopt Bitcoin as a means of escape. One incidence that further encouraged the public was the involvement of the son of a member of parliament, Guido Ochoa (jnr). He bought over a Bitcoin mining company, Hashfat after it declared bankruptcy in the United States.
Another factor that was suspected to have encouraged the non-resistance from government quarters was the involvement of many government officials, who used Bitcoin to conceal their wealth.
Time passed, and things grew worse for the Venezuelan economy. The inflation rate skyrocketed to levels that were unbelievable. The Bolivar became almost worthless and even the government itself began to search for alternatives.
The Venezuela Cash Burning Protest
In December 2016, the government of Nicola Maduro released new 100-Bolivar banknotes in an attempt to check the failing situation. In line with that, the government issued a 72-hour ultimatum for all old 100-Bolivar bills to be returned to the banks. Considering the short period and the inaccessibility of banks by many citizens, this caused a social unrest. Citizens were seen burning Bolivar notes in the streets in protest against the government.
This development intensified the search for alternatives by citizens. Some opted for precious metals like gold. Yet, the inflow and outflow of gold and USD were heavily restricted by the government in an attempt to discourage capital flight out of the country. The repercussions of this, especially with the younger generation, was turning to Bitcoin. This enabled them to be unreachable from government restrictions and regulations.
How Venezuelean Government Made Bitcoin Popular
Several other measures have been employed by the government, including the creation of its own cryptocurrency, Petro which is backed by its oil resources. This project hasn’t been very successful, but it has helped in creating more awareness about cryptocurrencies. And of course, you can’t talk about cryptocurrencies without talking about Bitcoin.
In considering how Venezuela fueled Bitcoin adoption, it can easily be assumed that it has served as an economic refuge for the citizens of the country. In the early days, accessing Bitcoin was not that easy either, due to the lack of liquidity providers. Today, platforms like Vertex.Market have made it possible for anyone to participate in this innovative marketplace.
The Vertex platform allows customers to buy Bitcoin and other cryptocurrencies using bank transfer systems, as well as trade cryptocurrencies on a peer-to-peer level. It is a secure and convenient platform that delivers purchased tokens directly to the buyer’s wallets in real time.
Venezuela is not yet free from its economic turmoil. As a matter of fact, the situation seems to have worsened with the political unrest between Maduro’s government and the parallel government of Juan Guaido. The uncertainty that this situation creates, amidst several international sanctions, has further fueled the intention of citizens to seek alternative means of survival.
With Bitcoin, a lot of people within the borders of the oil rich South American nation are managing to escape the severe hit by the dwindling economy. This in turn explains how Venezuela has fueled the adoption of Bitcoin.