Venezuelans are currently suffering from tumultuous economic times. Currency controls require permission from the socialist regime for state-issued funds and its markets continually fail to satisfy citizens demands. Often Venezuelans are now resorting to black market goods due to food shortages and hyperinflation caused by the governments failed monetary policies. With these failures, many believe Bitcoin adoption is imminent, and its adoption could really help the country’s people make it through the economic storm.
According to the Bitcoin Market Potential Index (BMPI) written by the London School of Economics, Venezuela out of 178 countries in the world is likely to adopt the cryptocurrency. In fact, the list bolsters quite a bit of Latin American borders with Argentina at the top of the list. Latin America, Sub-Saharan Africa, and Post-Soviet Communist countries are the most likely regions to use Bitcoin in significant numbers due to economic turmoil. And Venezuelans are going through significant hardships as bolivars are becoming more worthless every day. In fact, experts suggest the country’s sovereign currency will suffer from 720% inflation, but that number has since changed covering 1,200% inflation as the region’s economy shudders. According to the LA Times inflation in Venezuela has gotten so bad a dozen eggs costs $150 which has given citizens very little options.
However, as reported by Reuters just before the year beginning of 2015 tech savvy Venezuelans are already looking to Bitcoin to escape the economic crisis. Since this report throughout the whole year of 2015 and Q1 of 2016 Latin American Bitcoin support has surged throughout the region. The exchange SurBitcoin, which came out of a collaboration with BlinkTrade, has aimed to help the Venezuelan people secure Bitcoins. Another particular citizen in the Reuters editorial, Gerardo Mogollon, a business professor who calls himself, “Dr. Bitcoin Venezuela,” promotes the cryptocurrency’s attributes daily. The University of Tachira’s professor states:
“I’m teaching people to use bitcoin to bypass the exchange controls,”
Critics blame the Venezuelan socialist government for its failed social welfare policy including state-controlled grocery stores and the printing of vast amounts of bolivars to curb its issues. Alongside this is the oil war which is heavily subsidized and hurting the Venezuela economy as well as many of the surrounding countries. With Bitcoin, the decentralized technology offers a free market escape from crony politicians manipulating the means of production and exchange. Bitcoin has outperformed the Venezuelan Bolivar by 400% or more with people turning to its economic freedoms in the country regularly. The Reuters report details a chat with a man they met in an air-conditioned Caracas home filled with Bitcoin mining rigs who asked not to be identified. The man told Reuters:
“In Venezuela, we have a gold fever: a bitcoin fever!”
Venezuela and Argentina are the two top countries in the world poised to embrace Bitcoin as the BMPI pointed out above. Alongside the BMPI paper the World Bank explains that a total of 16 Latin American countries will emerge from the economic crisis and become stronger economies. The question is how? Many people point to the open blockchain and decentralized solutions that are tethered to Bitcoin as the answer.
SOURCE: LA Times, Reuters, NY Times, Latin American Post IMAGES: Bloomberg, and the BMPI