Bitcoin could yet be the lifeline Venezuela so desperately needs
VENEZUELA is at a critical juncture in its economic and political history.
With the Bolívar, the national currency, losing 14 zeros due to hyperinflation, and inflation soaring to an unprecedented 1.7m% in 2018, the country has faced devastating economic destruction.
Under the regimes of Hugo Chávez and Nicolás Maduro, Venezuelans have suffered under state-sponsored looting, theft, and unchecked money printing that has crippled an economy once buoyed by vast oil wealth.
In light of this financial repression, Venezuela should urgently consider adopting Bitcoin as legal tender, a step that could provide the country with the economic stability, transparency, and the autonomy it desperately needs.
The case for Bitcoin in Venezuela
Bitcoin, the decentralised digital currency, has already proven itself to be a lifeline for many Venezuelans facing hyperinflation and government-imposed exchange rates.
As María Corina Machado, a Venezuelan opposition leader, noted in a recent interview with the Human Rights Foundation’s Chief Strategy Officer, Alex Gladstein, Bitcoin has evolved from a humanitarian tool to a vital means of resistance against authoritarianism.
Venezuelans have increasingly turned to Bitcoin to escape hyperinflation, protect their wealth, and fund their escape from the oppressive Maduro regime.
By making Bitcoin legal tender, Venezuela could bypass the limitations of its crippled fiat currency and create a pathway to economic recovery. Unlike the Bolívar, Bitcoin isn’t subject to government control or manipulation.
Its decentralised nature ensures that no single entity can inflate its value through excessive printing, a problem that has plagued Venezuela for decades. By adopting Bitcoin, this should-be rich Latin American nation could insulate itself from the financial mismanagement that has caused the collapse of its national currency.
Safeguarding wealth and economic freedom
One of the most immediate benefits of adopting Bitcoin as legal tender is its potential to protect the wealth of ordinary Venezuelans.
With hyperinflation eroding the value of the Bolívar, many have seen their life savings evaporate almost overnight.
Bitcoin, by contrast, has shown resilience as a store of value over time, particularly in countries experiencing economic instability.
By integrating the crypto into the national economy, Venezuela could provide its citizens with a stable alternative to the Bolívar, offering them a way to preserve their wealth and regain financial autonomy.
Bitcoin’s use also extends beyond just being a store of value. It offers Venezuelans a means to participate in the global economy without the constraints of government-imposed capital controls.
As Machado pointed out, it allows individuals to bypass government-controlled exchange rates, which have historically been manipulated to benefit those in power. This capability could be a game-changer for businesses and entrepreneurs who have struggled to operate within the confines of Venezuela’s restrictive economic policies.
Rebuilding from dictatorship
The collapse of Venezuela’s economy is not just a result of mismanagement; it is also a consequence of corruption and theft by those in power. The Maduro regime has siphoned off billions of dollars in national wealth, leaving the country in ruins.
As Venezuela looks to rebuild from this dictatorship, transparency will be key to ensuring that such a collapse does not happen again.
Bitcoin’s transparent and immutable ledger - its blockchain - could play a pivotal role in this process.
By integrating the digital currency into the national reserves and using blockchain technology for financial transactions, Venezuela could introduce a level of transparency that’s been sorely lacking in its economic system. This would make it much more difficult for corrupt officials to embezzle funds or manipulate financial data.
Machado’s vision for a free and democratic Venezuela includes Bitcoin as a central component of the country’s recovery plan.
She envisions Bitcoin as part of the national reserves, helping to rebuild what the dictatorship stole. This forward-thinking approach could position Venezuela as a leader in the global adoption of cryptocurrency, attracting investment and innovation in the process.
Adopting Bitcoin as legal tender would not only provide immediate relief to Venezuelans struggling under the weight of hyperinflation but also lay the foundation for long-term economic stability. By embracing it, the country could escape the cycle of financial repression and create a more prosperous future for its citizens.
Nigel Green, deVere Group CEO and founder
