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Can bitcoin help rebuild Venezuela?
06/25/2019

Nowadays, Venezuela is the most striking example of the negative effect of irresponsible political decisions on economy. Back in the 1980s, the country was an oasis of peace and a role model for the region. Its citizens boasted the highest level of earnings on the continent, and high oil prices gave hope for a bright future. Unfortunately, the extreme left came to power soon after. Hugo Chaves put in motion a spiral of social spending, which combined with the decreasing scope of foreign investment and falling oil prices, led to the financial collapse of the country.

The economy has been devastated by raging hyperinflation, estimated to reach the level of millions of percent. Money has completely lost its value – to the point that it is no longer worth to print it. Ad hoc regulations, such as deleting five zeros from banknotes, have failed. The new sovereign bolivar turned out to be as weak as its previous version. Black market traders selling dollars banned under the Maduro regime have been the only ones who benefited from the introduction of the new currency.

Desperate Venezuelans began to look for help for their shrinking savings. They found it in bitcoin – an on-line currency that has proven immune to the dictator's populist declarations. Venezuelans have bought 16 thousand bitcoins in the first quarter of 2019 alone. At the beginning of 2018, the local market leader, i.e. the Finnish trading platform, LocalBitcoins, sold 170 bitcoins a day to customers paying in bolivars. A year later, the number is 10 times higher.
Payments in bitcoin began to be accepted by Mercado Libre, a popular on-line auction site, and Traki, a chain of department stores. The number of places accepting payments in cryptocurrencies kept growing every day. This did not escape the regime's attention. Maduro began to monitor digital currency trading and even recommended the creation of a national cryptocurrency. "Petro" was supposed to be a stable coin, i.e. a currency supported by a raw material. In the case of Venezuela, the raw material in question would be the one which the country has in abundance – crude oil. Each “petro” was supposed to have a value of one barrel of oil, but the plans have never come into fruition. Today, opposition leaders refer to “petro” as a form of “illegal cheating”, and Trump prohibits Americans from trading this cryptocurrency.

Bitcoin invariably remains of interest to Venezuelans, although the anarchy into which their country has plunged is not conducive to the spread of cryptocurrencies. Coinmap – a map showing places that accept bitcoin – indicates that one could pay with bitcoins in just under 200 stores in Caracas. It is not an impressive number for a capital inhabited by 2 million people. However, it can be assumed that many entities prefer to settle in cryptocurrencies without announcing it officially, so as not to attract the attention of public officials.
Venezuela is often presented in the media as a patient zero for implementation of bitcoins on a national scale, but this is somewhat exaggerated. The country experiences frequent electricity shortages, so local mines sometimes do not operate for days. Crypto-entrepreneurs are one thing, but ordinary people often cannot afford a smartphone for account servicing, and the network itself can fail even in city centres. Venezuelan Internet is one of the slowest in the world with an average speed of 1.61 megabits per second.

What is more, Venezuelans often lack financial education which could highlight the advantages of cryptocurrencies as compared to easy-to-manipulate fiat currency. This is where such platforms as Darb Finance can find their niche by offering not only the exchange platform and portfolio, but also educational materials and tutorials which would be useful for independent exploration of the ins and outs of cryptocurrencies. The platform itself is so simple and intuitive that even people less familiar with new technologies can get their heads around it. The stock exchange can operate in two modes: simplified, for beginners and advanced, as a full trading application. Because of that, users can start their adventure with bitcoin practically from scratch and systematically deepen their knowledge through experience. It will certainly take a lot less time than waiting for Venezuela to come out of the crisis.

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