‘Imagine all the people living for today,’ that is how the most famous John Lennon’s song goes. Someone in Venezuela took these words too literally and now people of Venezuela can live only for today. Thanks to blackout, they just can’t live for tonight (or any nights in that matter).
You may now wonder, what the Venezuela struggles have in common with cryptocurrencies. As it turns out, a lot. Please, follow my lead, and – hopefully – at the end of this article, you will share my view.
Let’s go back a few years earlier. Hugo Chavez, former president of the South American country, led his nation in a very populist manner. Because of his shenanigans, many citizens of Venezuela fled from the state, seeking asylum somewhere else. In 2010, Chavez declared an “economic war”. There were shortages of everything, so people ate from garbages, etc. At least Chavez still had a good life. Not that long though, because in 2013 he passed away. Nicolas Maduro took over the country, and people believed that something might change. They were right. Something changed. The situation got even worse. Yep, that’s right. You may think what can be worse than eating from the trash? Hold that thought.
By the end of 2018, over 90% of the population was below the poverty line. A pretty large number, right?
So, let’s tackle cryptocurrency involvement now. Bolivar, the traditional currency of Venezuela, was struggling. Year by year, inflation wasn’t below 20%. So, Maduro had a plan. To create a Petro, cryptocurrency for every Venezuelan. It was supposed to be backed by oil and other mineral reserves. However, Petro didn’t make any significant change. If any, it made the situation worse. Maduro somehow forgot to explain how it works, what it is based on, and why it is better than the traditional currency. The Washington Post economic reporter Matt O’Brien even said:
“The Petro might be the most obviously horrible investment ever… The Petro is about creating something useless – that’s why only foreigners can buy them, but only Venezuelans can spend them”.
We have to go back to January 2019. Back then, Juan Guaido, the opposition leader, took the oath of presidential office at a rally. He is backed by the U.S. and many other democratic countries. It seemed like the tyranny of Maduro could not last any longer. But if you are following this case carefully, you already know, that he is not the kind of a man who gives the power back willingly. Of course, he still thinks about himself as the rightful leader of Venezuela.
Last Thursday, almost the whole country was plunged into darkness. Maduro says that it is a sabotage of the United States, the opposition says that it is the result of years of incompetence that has caused the power grid to deteriorate.
Right now, the people of Venezuela don’t have light, water, oil, food, and many other basic needs aren’t met. So, what they have? Cryptocurrencies. The inflation of fiat currency in the South American country reached a new height, and it is going to collapse. According to LocalBitcoins, the Bitcoin volume peaked in February 9th, 2019. People, who still had some bolivars, tried to exchange them to Bitcoins. Maduro still tries to block the capital outflows to private wallets, so there is a theory that blackout came precisely to stop people from trading their assets into Bitcoin.
Despite confirmation or denial of this hypothesis, Venezuela is in the midst of crisis. People, day by day, go out onto the streets and protest. Among all of it, there are cryptocurrencies involved. Whether the crypto industry wanted that kind of publicity or not, digital assets play a crucial role in the Venezuela turmoil. According to many reports, 2019 is supposed to be the year of cryptocurrency. Maybe the revolution started in the least likely place.
For Venezuela, it would be much better if authorities listened to the whole of Lennon’s song:
“Imagine no possessions
I wonder if you can
No need for greed or hunger
A brotherhood of man”
Image by Edgloris Marys / shutterstock.com