Venezuela Becomes The Testing Ground For Cryptocurrency Amid Political and Economic Crisis
Venezuela's decline from being one of the richest countries in the world to the economically devasted nation that it is today is aided by the several political debacles, hyperinflation and falling crude oil prices. Venezuela was a shining example of socialism, but the situation today is not far from war-torn nations like Syria.
Hyperinflation combined with bad political decisions has made the country's fiat useless. As of today, the national currency is useless and not even worth the paper it is printed on, and people have started to dump it on the streets. In times like these when all doors seemed almost closed, and the country was on the brink of a civil war, Bitcoin and cryptocurrencies have come in to revive the citizens of their distress.
While the central government did try to create a central bank issued national crypto Petro, however, the level of corruption in the government failed that project too. With US trade sanctions in place, the country had no other option than turning towards Bitcoin.
As a result, Venezuela has been recording all-time high Bitcoin trading volumes which have even surpassed the trading volumes of traditional stock exchanges.
Non-Profit Organizations Turn To Crypto To Help Venezuelans Survive
Andreina Cordero, one of the many distressed Venezuelans started the year by skipping meals so that her kids can eat enough to survive. Her husband who used to work as a construction worker has been out of the job for quite some time now, and whatever savings they had is not worth anything as the hyperinflation destroyed Venezuela's economy.
However, things changed for Cordero and her family when a social worker got them enrolled in a program initiated by a Silicon Valley startup, which is donating cryptocurrencies to hundreds of families in the country.
Under the program, she received EOS tokens through a mobile application from February to April. She traded those EOS tokens for the local currency which she then used to buy daily amenities.
Cordero was one delighted woman when she was able to feed her kid fresh food and even chicken after months. She said,
“We finally got to eat chicken. And there were also vegetables for the kids.”
However, the three month trial for crypto donations is over and Cardero is back to skipping meals and mostly depend on a diet of beans and rice. But, Cardero is still thankful for the crypto donations which saved her kids from certain malnutrition. She says,
“I'm very grateful for what they did for us It would be a blessing if something like that was set up again.”
While the original intention behind the invention of Bitcoin was to help people like Cordero from developing nations to become financially independent so that they can manage in hard times like these when their national fiat becomes worthless. However, the hype around the prices of Bitcoin has made it primarily a trading asset for investors to amass huge wealth.
But a handful of non-profit and charity organizations are now using cryptocurrencies to send relief directly to these people, circumventing banks and companies that handle remittances. Venezuela has now become the testing ground for such relief campaigns through the use of digital currencies.
Joe Waltman, executive director of GiveCrypto, the charity that provided direct transfers to Cordero and more than 100 Venezuelan families in Barquisimeto says,
“Crypto has the highest likelihood of being helpful to people in places where the money is broken. And there's probably a no better example of broken money right now than Venezuela.”
GiveCrypto's initiative provided $7 worth of EOS tokens to over 100 families, which is almost equal to the minimum monthly wage. The non-profit organization is also educating the citizens about how to use different mobile applications for crypto so that they can become self-sufficient and transfer their funds to the digital asset and use it to buy their daily needs.
Before the emergence and popularity of digital tokens, the natives used to exchange their earnings for the US dollar in order to protect their savings from hyperinflation. Some even preferred gold nuggets, however, the use of digital assets is much safer as the country has also seen a rise in crime which is quite obvious.
Crypto Use in the Country Might Spike Up
Although storing ones saving in crypto posses a bigger financial risk than storing it in US dollar given the volatility of the digital assets, however, given the national fiat has already lost 2/3rd of its value this year, people are willing to give crypto a try.
Crypto use has not just impacted the lives of poor citizens who do not have a stable job or steady means of income, but it has also helped various local merchants accepting cryptocurrencies. Leticia Luque, an informal merchant who started accepting crypto payments on the request of GiveCrypto organization says that the technology has helped her gain time to negotiate for better prices with suppliers.
Waltman said that the 3-month experiment was just the beginning phase of promoting crypto use in the financially troubled nation. Another similar initiative is being developed by AirTM, a crypto exchange based in Mexico, which plans to donate small amounts of cryptocurrency to 100,000 people in Venezuela this summer. The firm has already garnered over $300,000 in donations, while the goal is to reach $1 million.
AirTM also want to encourage Venezuelans to start using their platform to hold their earnings in the digital asset rather than their local currency.\
Use of Cryptocurrencies Are Helping Troubled People All Around the Globe
The state of Venezuela definitely calls for an alternative form of savings from the regular fiat, however, the use of digital currencies are not just limited to Venezuela. In Europe, a similar initiative is being carried out by Bitnation to donate digital currencies directly to the refugees who do not have a bank account. In Jordan, the World Food Program delivers aid to 100,000 Syrian refugees with the help of digital currencies.
California based non-profit management consultant Paul Lamb says that the emergence of cryptocurrencies have not just helped the vulnerable and the needy, but it has also helped the non-profit organizations in handing out relief faster and more efficiently.
Thus, the vision of Satoshi is being finally fulfilled through these humanitarian efforts. And as the number of people who understands the importance of crypto increases, so will the level of adoption of cryptocurrencies.