Author Shares Why Bitcoin Will Not Fix Venezuela and The Reasons Are Obvious
Every so often, a report on how Venezuela is welcoming Bitcoin as a medium of exchange makes the rounds around the cryptosphere. A great many people pat themselves on their backs and say “Look, see how crypto can help a society function when fiat money goes bust?”
The stories all follow the same, old formula. Bitcoin will take over from fiat money in Venezuela since fiat is not trusted any more due to the staggeringly high inflation and on and on. There's usually a measure of smugness in these articles as crypto evangelists. While it is true that there are many people who use crypto as a tool to survive the harsh realities of Venezuela.
A reality where a socialist dictatorship has resulted in people who were educated in cryptocurrency before everything went to hell were able to get help from the international community and whose help has been vital to the process of reformation within the country.
The problem is that people view this as something that extols the virtues of cryptocurrency is not seeing the reality on the ground in Venezuela and are forgetting that not every country in the world has the same infrastructure as the United States of America.
In fact, some of these problems could even be applied to the more rural areas of the United States, as some people in the US have extreme difficulties in access to decent internet.
Infrastructure is king for crypto – and Venezuela is lacking
One of the things usually mentioned when Venezuela and crypto are put in the same sentence is the obscenely low price of electricity. What many do not seem to think about is the supply of electricity.
Sure, when the electricity is on, people can use their Antminers and GPUs to mine extremely cheaply. The key phrase there is “when the electricity is on”, which is not a constant variable unlike in China where it is both cheap and constant.
There is also the problem of internet availability. People in Western countries such as the US and Europe seem to think that every country has the same level connectedness as they do. This is simply not the case.
Look no further than the rural areas in the United States, some of the states have such poor internet that they are still using dial-up in this day and age. Mobile internet is helping to bring more people online but it is a slow process when there is no massive push such as in the European Union.
That's not to mention the entire banking system is in shambles. Lack of ATMs and prepaid cards and the facilities to encourage both are broken. No one in the world knows how many wallets are currently active in Venezuela. The fallacy of Bitcoin saving a country's financial system when the system itself cannot sustain itself is alarming.
There is also a simple lack of education. When your day to day life is spent fighting to put a meal on the table, you rarely have time to devote to reading and education. There is still a majority of the population that is distrusting of cryptocurrency. They have seen everything they have owned fail spectacularly and are not inclined to believe some “computer” money is going to be better than what they had.
Mainstream adoption of Bitcoin, of any cryptocurrency, in fact, needs a stable financial system where people have trust in the issuing institutions. They need to have infrastructure such as constant electricity, easily available wi-fi and internet and of course the little things… prepaid debit cards and ATMs.
Saviour complex hardly helps the man on the street
Many companies have tried to raise funds for the people of Venezuela. These companies, mainly blockchain related, want to use the situation to expand their market share and mindshare in the world. The problem here is that they have failed miserably in looking at the reality of the situation.
Look at the example of GiveCrypto. They had a goal to feed 300 people with $100 in cryptocurrency. This lack of awareness could only be excused in a movie – and even then Eurotrip knew it was poking fun at the “dollar can buy anything in Eastern Europe” fallacy that many Americans have heard. Those same Americans have heard this because they have never traveled to those countries and seen how those people live. How much life actually costs.
The point here is simple. Bitcoin is not going to save Venezuela. It can, however, be used to help those who have the knowledge and the infrastructure around them to take advantage of cryptocurrency. Small steps, just like everything else in crypto, is the way to go.