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BITCOIN TRADING IN A SOUTH AMERICAN NATION SKYROCKETS

Numerous Venezuelans have been purchasing up Bitcoin in ever-expanding numbers to fence against money downgrading.

Venezuela was once perhaps the wealthiest nation in Latin America, with the best quality of living on the whole mainland. It’s gigantic oil holds are the biggest on the planet, surpassing even those of Saudi Arabia. An asset rich nation Venezuela has fallen into an overwhelming monetary emergency that is suggestive of the unbelievable cash breakdown of the Weimar Republic. Indeed, Venezuela’s money emergency might be more awful.

The nation’s issues started when oil costs took a significant decrease. Oil incomes were the fundamental wellspring of subsidizing for the social welfare programs initiated under previous Venezuelan President Hugo Chavez. Chavez started monstrous endowments for nourishment, lodging, and different projects that were intended to dispose of destitution, and made him incredibly well known with the Venezuelan individuals.

When oil prices declined, the social programs and subsidies began to exacerbate the economic problems, and the Government decided to monetize the debt through inflation rather than cut the programs that many of the nation’s poor depend on.

Now that the printing presses have been running nonstop, the inflation has devastated everyday Venezuelans who can’t buy essential goods and services due to the collapse in purchasing power. As a hedge, many Venezuelans have been buying record amounts of Bitcoin to store their wealth in a less-inflationary currency that can be bought and sold despite the government’s capital controls.

BITCOIN AS AN ESCAPE ROUTE

Larry Cermak of the Block tweeted about the rising volumes in Venezuela’s localbitcoins.com peer to peer market. Venezuela has been buying a lot more Bitcoin than other “at-risk” economies, such as Argentina, Colombia, Turkey, and Iran which have also seen Bitcoin volumes increase as a hedge against runaway inflation.

Bitcoin initially made its way to Venezuela through cryptocurrency enthusiasts and miners who were able to secure almost free electricity subsidized by the government. As the currency crisis progressed, mining was actually outlawed for a period, before becoming legalized and sanctioned by Venezuelan authorities who initially opposed cryptocurrencies.

The government changed its tune last year with the announcement of the Petro, the first government-backed and issued cryptocurrency. As capital controls were put into place to try to stave off a massive capital flight, many Venezuelans began to see the benefit of Bitcoin’s censorship-resistant properties to move money around, including across borders. Bitcoin is also now being used (along with the black market in foreign currencies like the Dollar and Euro) to purchase goods and services domestically, as well.

Many Venezuelans have moved out of the country to seek better opportunities elsewhere, so there is also a large diaspora that utilizes Bitcoin as a cheap and direct way to send money back home to family members still affected by the crisis. If hyperbitcoinization does occur as Bitcoin advocates claim, and BTC becomes a global reserve currency, we may see Venezuelans impacted by the crisis, go from being one of the poorest nations to becoming one of the wealthiest nations on earth as Bitcoin’s value goes parabolic.

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