- Venezuela is often seen as a great example of the power of Bitcoin against an inflation-heavy fiat currency
- The situation is more complicated however, with Bitcoin often seen as just a way to get U.S. dollars
- Bitcoin is also not filtering down to those who need it most
Venezuela is often held up as the perfect ideological reason for Bitcoin’s existence – a form of payment free from government interference that can be used instead of a national currency made unusable by hyperinflation. Stories of Bitcoin helping people in desperate need of basic necessities have abounded in the past, but one journalist, Leigh Cuen, knows more than many about the crypto phenomenon in the country, and she sees a more complicated adoption story.
A Tool to Get Dollars
Cuen detailed her findings on the crypto/Venezuela use case in a recent podcast where she explained how Bitcoin’s use in the country is more multifaceted than a simple currency alternative:
A lot of people are still using Bitcoin as a tool through which to get dollars, through which to get another asset they are more familiar with that they can use in different ways on international markets. A lot of people, especially middle class to upper middle class people, use it for remittances to send money abroad or to receive money from abroad [in order to] pay for any amount of things that they couldn’t buy in a local store, while a lot of the people that are lower income use crypto to purchase food or other necessities from local merchants at accept it and will then go and sell it in a place where those foods are good and services are not available.
Bitcoin Not Filtering Down in Venezuela
Cuen detailed how a “great global network” has developed around cryptocurrency’s introduction into the country, with people buying necessities such as food and medicines with it and trading them cross-border for dollars or necessities that they cannot easily access within their own country. There are few people who can afford to buy and hold Bitcoin “for itself” Cuen says, which is the dominant practice in the West and also among more wealthy Venezuelans who can afford to speculate on it, and that “a lot of other people are using it as a way to purchase things or transfer value.”
This addresses a negative of cryptocurrency’s adoption in the country – those who need it most are the ones with the least access. If cryptocurrency truly wants to bring financial equality and ‘bank the unbanked’ then it must find ways to get into the hands of those in the most need, not those whose first thought is to use it to buy goods on which to make a profit. On the other hand, it is allowing impoverished and financially abused citizens the chance to potentially lift themselves out of poverty, which should surely be considered a positive.
A Wider Impact
All told, the introduction of cryptocurrency into Venezuela has had a much bigger impact than could have been expected, introducing a cross-border trading system and allowing those most widely affected by the government’s financial mismanagement a chance to find some stability and get their hands on essentials like food and medicine. Hopefully access to cryptocurrency will get easier for those who need it most as time progresses, and crypto can claim a greater degree of success in Venezuela.