Cryptocurrency–While the ongoing inflation and forced impoverization of the Venezuelan population is bordering on a crisis, the scenario surrounding government fiscal policy, imposed fiat usage and the role of cryptocurrency is creating an interesting incubation for the industry.
It started with the growth of adoption for Bitcoin in the beleaguered country, with citizens looking for an alternative to escape the six hundred thousand percentage increase for inflation (on pace to hit one million by the end of the year). Bitcoin, which has long been pointed to as an excellent digital store of value analogous to physical gold, allowed Venezuelans the opportunity to use a global currency with far less price volatility than the now-worthless Bolivar. While most of the Western world, particularly older generations polled in investment surveys, complain about the erratic fluctuating price of BTC–a feature that has been heaped upon by Nobel Prize winning economists–Venezuelans flock to the currency in an effort to avoid the crippling inflation of their fiat currency, providing strong support for the validity of the digital asset.
However, that same adoptive population is also realizing the limitations of Bitcoin, a set of difficulties that were exposed in January during the peak of BTC pricing. While mining fees have come down substantially from their average of $55 per transaction earlier in the year, Venezuelans are turning to a currency that offers more utility. DASH has seen an explosion in both price appreciation and adoption throughout this past week, as cryptocurrency moves towards being the go-to choice for the crypto-using portion of Venezuela that desperately needs a transaction-focused tender separate from government fiat.
As previously reported by EWN, DASH is seeing upwards of two hundred new merchant adoptions per month in the country, with the commerce-minded population benefiting from the greatly reduced transaction times of the coin over competitors like Bitcoin and Ethereum. While Bitcoin continues to hold the lion’s share of the market and nearly all of the brand-recognition of cryptocurrency, DASH, NANO and other transaction-focused currencies are quietly making a name for themselves in their ability to offer a fast, cheap (or fee-less) alternative to traditional money.
Given the abuse of government fiscal policy, rampant inflation and bureaucratic control over money that has devastated countries throughout history, it seems unlikely that Venezuela will be the last situation to gain international attention over a crippled monetary system. The average investor in cryptocurrency might be in for the potential of profit, but most developers and industry enthusiasts recognize the underlying power is not just in the technology of blockchain, anonymity and security, but the decentralized framework that is put into practice when large populations shift from government fiat. Venezuela is a real-time incubator playing out for how cryptocurrency can respond to a situation of ineffective fiat or traditional tender as the primary source of money. While the market has responded in a predictable manner, i.e. favoring currencies that offer the fastest and cheapest transactions, it also gives credence to the intrinsic value of the currencies that has regularly been lambasted by economists and other academic circles. Bitcoin may not be backed by a physical property, but it still holds value to the Venezuelan family harboring their earnings in BTC and paying for their groceries as opposed to using the worthless Bolivar.
It remains to be seen how cryptocurrency can use situations like the one currently playing out in Venezuela to ultimately benefit the population and the growing industry. At the very least, it has provided an alternative discussion from the endless conversation surrounding Exchange-Traded Funds and price predictions.
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Source: Ethereum Worldnews
Original Post: Hyper Inflation in Venezuela Makes for Interesting Times in Cryptocurrency