Bitcoin Forum

https://www.bloomberg.com/news/articles/2019-11-05/venezuela-is-now-more-than-50-dollarized-study-finds


As Venezuela has become dollarized, inflation has come down. Even their idiot president Maduro admits the dollarization (which was done by citizens spontaneously ignoring their govt's ban on dollars) is a good thing.

A year ago, some of us were hoping that Venezuelans would have adopted bitcoin as their currency (or an alt). But the rolling electricity blackouts not only mean you can't use credit cards, but you can't use cryptocurrency. So they've gone with old fashioned US dollars in cash.

This whole real life case study shows that cryptocurrency won't get adopted in poor countries (because of lack of electricty). It will get adopted in rich countries - rich regulated countries.

Yeah, they need a stable currency. What could be better than USD as a medium of exchange? Bitcoin surely was not ready to be used as cash to purchase daily needs. However, it doesn't mean that Bitcoin is useless. We know that Bitcoin is more difficult to confiscate so that it can be used as a store of value. This is important for the people who live in an authoritarian government.

They can store some of their wealth in Bitcoin and cash out when they need to buy stuff.

They need stable currency, that is true. But is it foreign currency solution? This is also the way that one country colonize the other, in a way. Bitcoin can't help the country, it can only be support for individuals but it can't save economy and financial system in Venezuela. They need help but not in a way that will longterm only make them weaker and more vulnerable.

Yes. Maybe the crisis in Venezuela came too soon for bitcoin to benefit instead of the US dollar.

But this case study does mean one of the bitcoin myths bites the dust (that bitcoin will help the unbanked and the poor).

That’s true and those in poor countries may not have access to a computer or smartphone anyway, so even with electricity, they may not be able to transfer Bitcoins or any kind of cryptocurrency or digital currency.

like people said,the new thing need a time for adaptation. crytocurrency can't be adaption so easly,even for poor country like venezuela. the country will have no value after,because they doesn't have a national currency. and now they using dollar,as long the currency have a stable value,i guess its ok.

Well, Bitcoin has the label of only those being on the well offside of life can buy them, so It isn't surprising for other countries to put a hold towards their crypto department/adoptation. But that is only for now though. If the world continues to grow, even if countries at the bottom stay at the bottom, at the bare minimum, they should've gotten access towards old tech right? If the big countries have let's say an analogy of 10x Better tech, then the small countries would at least have the 1x as scraps of the big countries right? Crypto right now is kind of rare and unaccessible by not so rich countries cause the adoption still has a lot of difficulties to tackle. Rich countries encounter this, what more of others right?

I do not think that the reports that talk about the economic situation in Venezuela will be very accurate. Many political events make the possible inflating of statistics.

Also, the reason why Bitcoin is not used does not seem logical. Bitcoin is used for investment, so the power cut will not be a source of concern, especially with the fluctuation of the currency. You also need a little energy (10 Min enough for phone/PC) to send or receive currencies.

Also, you will not need the Internet and other restrictions.

Yeah, that's one of the big drawbacks of trying to use crypto when SHTF--if there's no power, there's no way to send it unless you can at least keep your cell phone charged, and even then it's not reliable. 

But it doesn't surprise me that Venezuelans opted to go with the USD as a replacement currency.  A few other South American countries have been using it as a backup currency for a long time anyway.  I've heard that most of the use those dollar coins see that the US mint keeps making is down in S. America, and I heard that well before the crisis in Venezuela. 

As an aside, I watched a few Youtube videos dealing with Dash and their foundation's attempt to bring Dash to Venezuela.  They made it seem as if they were doing a decent job of getting the citizens to start using it, but I still had no doubt that no cryptocurrency would gain as much popularity as the USD.  You really need physical cash when there's a crisis, and there's no getting around that fact.

Yes.

And that makes me feel that the push for "cashless" societies is really dangerous. Fiat needs to exist, and it needs to exist in cash form just as a backup in case there was an emergency.

Emergencies can occur in wealthy countries too - like if a hostile nation attacked the electricity grid.

Investing in cryptocurrency might require high fund but trading cryptocurrency does not necessarily require high fund. Although bitcoin may look high price to venture into, thats why satoshi can take go round as individual can acquire.Solving Inflation goes beyond the adoption of dollar to settle the economic situation, government do more into production, international exchange, corruption and other economic management policies.

Accurate on whos side? The reporters from the West who are going to talk about it in a negative way (which it should be reported as, because the situation is bad)

The Venezuelans are probably saying that everything is okay and that nothing could be better right about now (which yet again, couldn't be farther from the truth) The situation in Venezuela is bad, and it's bad because of their government. This is what socialism and communism does to a country.

You have a good point, underdeveloped countries will definitely have a hard time adopting bitcoin as their currency. However, this can be solved easily if not only for their president, for the record, solar energy and pther renewable resources are much cheaper compared to the traditional fossil fuel burning, which also disrupts the ecology of the location. These things can be considered and be used as permanent solutions to problems they face electricitiy-wise.

Venezuela had issues with their economy situation, not with trading issues sadly. Usage of dollar helped them alleviate the problem, but without fully adopting it, problems would still probably arise, that is until they are able to manage their own currency, or they fully adopt the usage of dollar in their country.

Poor countries would probably have the ability to adapt to crypto in the long term, just not now. Crypto is considered more right now as an investment, and naturally, only those abled countries could possibly trade them. Especially with the requirement of electricity and Internet access.

Dollarizing their economy as a succor to inflation is just a call to calamity which is about to befall them. If they thinking that is the solution to their problem, they better start to have a rethink because should the United States just slam them with trade embargo or some sanctions for whatever reasons, without any external intervention, the country will explode in a matter of time.

While no country can live as an island, it is expedient for the country to a large extent be self sufficient because of the people in the country themselves. What a reasonable government ought to do is to ensure that the regulations are followed and banks are the ones to drive such policy but it seems the leader of the country is weak to protect his country from the doom that is about to befall them.

If we measure inflation in terms of local currency, it is in free fall, there is no way to stop it, the use of dollars makes the money in local currency move in favor of buying and selling dollars, not to mention the amount of money to the that goes the cash Colombia where they take advantage of the paper money for other types of businesses.

If it is dollarized, people move more dollars, but the government does not have the dollar as a payment currency, it only moves the bolivar and is trying to implement the petro, which caused a great fall in the economy, it is like the printing of currency fiat, the only thing is that this time it was digital.

There is no liquidity, what they do is create more inflation to obtain liquidity for the government, something that very few know is that much more money moves on the border with Colombia than in the capital of Caracas. The businesses that are generated on the border with Colombia are at 1000%. It is clearly a scenario in which Bitcoin turns out to be the best refuge of value for particular economies in Venezuela, gold too, but due to lack of knowledge in most people, Bitcoin is managed by those who know how to do it, since whether in trade or investment. The only thing that has served inflation is for the adoption of Bitcoin to be bigger every day, it is for that same reason the high volumes of trade generated in Venezuela that can be searched on localbitcoins.com.

Can't blame the retailers for accepting a foreign currency when theirs is plummeting on a daily basis. They might end up losing a lot of money due to the unstability of the Bolivar. I still don't know what happened to their very own cryptocurrency which is the petro. It's such a shame that a once great country under Hugo Chavez should sink this low and talking about economical greatness in this scenario.

There will be new Venezuela's in the future. As they were in past. If Bitcoin is not ready now for Venezuela it will be ready then. What is happening n Venezuela now will for sure help for Bitcoin to get ready faster.

They're forced to use it even if they don't want to. Imagine having your own currency shitting the bed and you have a president that wants to push his delusions further into everyone's throats and make use of it in all transactions exclusively. With the blackouts happening more often than ever on the said country, I don't think digital cash or cryptocurrencies would thrive in the situation, especially not in cases where power is unavailable.

There will come a time when President Maduro would order the halt of USD transactions and order people to only use the Petro dollar--or I believe it is happening as of this very moment--in his false hopes that it will salvage their economy. It is beyond repair, and the conditions are only worsening every time. If there's anything that can help it, it would be to cling into an outside economy, though I doubt anyone would every want to help Venezuela at this point in time.

New era for venecuela become bigger country by accepting bitcoin and altcoin as digital currency payment, after seeing how their cash money not have value any more become stronger way why have to accept bitcoin as digital legal payment currency and give opportunity to earn profit with bitcoin and altcoin payment way.

Yes, an interesting situation. The Venezuelan government, represented by President Maduro, has launched an economic war with the United States and its dollars, and now they recognize that dollars are good for the country. Moreover, neither the national cryptocurrency Petro nor the transition to the payment of pensions and other payments in bitcoins saved the Venezuelan economy. Cryptocurrency did not help here, probably due to inept management of the economy.
The problem of introducing high technologies is also raised here. Practice shows that you should not fully rely on them, along with them should be back-up options for conventional technologies. Therefore, do not give up cash.

Using local currency will not help either, considering they would rather use a foreign currency. True, it could mean a way of colonizing. I guess they should fix internal affairs first, as the OP said the Electricity as well as maybe changing their leader, they seem to not know how to run a country. I'm not a person that indulges into politics but at least I know if that politician fits for the role or not.

Am addressing this OP's opinion, I might not quote it

I'd forgotten about the Petro!!!

Doesn't that illustrate that whether a currency gets adopted or not is down to TRUST?

If Venezuela had a competent government and they issued a cryptocurrency backed by oil - which they have vast quantities of - the Petro would have taken off. It failed because people didn't trust Maduro.

But people trust dollars. So that's what they've spontaneously adopted.

policies that are not supported by society, will bring a turning point that is not in accordance with its objectives. Although the government has set the rules, the motion of trust in the government has not yet been maximized, and this is what prevents crypto from developing

Another problem arose amidst the hopes of cryptocurrency "saving" a failing economy. Such real-life examples bring out the issues that needs to be addressed, and what are the possible hindrances to adopting cryptocurrencies in solving such cases.

Paper money still has advantages over digital currencies. They provide anonymity, fast exchanges, and also not relying on any technology aside from it existing on a paper.

Dollar is the safest option for the Venezuelan citizens right now. They cannot be relying on their own fiat. That is for sure. They cannot be relying on their own coin Petro either because that is another failure. Bitcoin could have been much better but with the regular blackouts in electricity, they will have to be back on the more basic. The US dollar is the most convenient since it is the most internationally accepted currency.

Lack of electricity can really hinders the cryptocurrency adoption in Venezuela then they physical alternative is still the best option for their financial situation. Only few can really adopt crypto whos capable of maintaining their electricity needs.

That's the saddest thing about crypto adoption in poor countries.
Anyway percentage of btc usage in Venezuela is still pretty high so it is worth it anyway

The reality is that buying a dollar that is resistant to inflation was the best decision for the citizens of Venezuela. A stable currency is needed for everyday payments. The study only shows the currency in which purchases are made by Venezuelan citizens, but this does not mean that many of them have not invested in Bitcoin. Most likely, people just bought it in the hope that its price will rise later.

For now. I can imagine a future run on mesh networks instead of centralized ISPs and cell data providers. Portable generators, including increasingly efficient hybrid solar powered ones, are becoming cheaper and more common too.

Bitcoin is problematic in conflict zones and downed electrical grids in these early days, but I believe it will be much sturdier within a decade or two.

If the zombie apocalypse ever hits though (or any other situation where the grid permanently fails), then Bitcoin is pretty fucked. But then so is the USD or pretty much any form of money. Bullets and food/water would probably become the dominant currencies in that case. :D

I still have high hopes for the more stable African countries that are already accustomed to mobile payments. These countries usually have enough electricity to run their phones but majority of the population is still unbanked. That's one niche cryptos can still fit in if it cannot completely replace the existing mobile system.

I have this worry about cryptocurrencies from all the time. If there is a situation in a country then the first thing they stop is either Internet or electricity, it will be harder to use a crypto in that moment. Was there any solution for this in crypto.? Has anyone thought of something to solve this issue..?

Just shows that there is a minimum level of stability needed for crypto to be widely-adopted. No doubt the the USD looks far more attractive. I wonder how things would have been if frequent blackouts was not an issue.

IIRC both USD and BTC were banned by the government. Would BTC have been adopted at the same rate as USD? I mean, it would have been harder for the government to confiscate bitcoins if they ever decided to start raiding homes.

I wonder why there was many frequent black outs when bitcoin was being used as the a currency in Venezuela. If electricity was the only issue to use bitcoin, there are many portable generators sold in stores. That's what we've use when our city has been hit by a typhoon.

USD is always the number one choice when it comes to a failing economy but little do they know that USD will hit a recession in coming years and that's where bitcoin will once again be in use, as a safe haven.

   With this part I agree totally! Rich and developed countries will adopt crypto-currencies first. With money you can buy equipment, with
good equipment you will have better infrastructure. In rich countries people are more open minded, they don't live under tough regimes.
   Venezuela is in huge problems for years, thorn apart in fractions. They have problems that crypto-currencies can't solve.

Venezuela after trying to have its own cryptocurrency too unable to recover from the economic collapse. The oil backed Petro initiated by the President gained the attention of the entire world, by the improper execution made it a failure. Later as the citizens have ignored the usage of their own currency and moved to USD small progress in the economy is achieved. Maybe if Venezuela has succeeded out of using cryptocurrency more countries could've got into it.

No. The assumption behind crypto is that electricity will always be there and the internet will always be there.

The internet is pretty robust in that it's designed to work even if some nodes are down. You would have to take down the entire world's internet cables to stop it.

Electricity is more vulnerable. Most electric grids are centralised and can be hacked by hostile countries. And they usually need fuel to power them, so if a country runs out of access to coal or gas, then they're stuffed. Solar panels only work when the sun shines and wind turbines only work when the wind blows, and battery technology is still in it's infancy so power can't be stored.

Years ago, when europeans were afraid the euro would crash and lose all of its value. They bought big screen TV's, electronics. Anything they thought might hold its value better than fiat. Hyperinflation doesn't appear to be a major concern atm. I guess people truly believe militaries of the world will simply invade and steal from foreigners if their government bankrupts.

Investing 101 Protip In The Year 2020: "Worry not if you're government bankrupts on debt. They will simply invade foreigners and steal their capital and goods to compensate."   ::)

Realistically, we should collectively be more concerned over matters relating to deficit and debt. The world it seems has gradually become more "reality optional" and its difficult for people to want to think about anything. Even topics strongly correlated with their own future health or survival.



The closest thing I've heard of is kong cash based cryptocurrency.

https://kong.cash/

But even that is electronic, if to a lesser degree. Based on smart contracts if I'm remembering correctly.

I don't think more than 50%, But if it was true, still lot of of people don’t have USD accounts and getting dollars in cash. Some stores started to accept PayPal, but they got tired of accounts being blocked or limited by the company pretty quickly. Cryptocurrencies are accepted in some places, but they are unstable makes them not practical for everyone. So, I think stores might be forced in the near future to accept online transfers from places like uphold, payeer, perfectmoney, etc. because is easier to get digital dollars from somebody abroad using these services and there are places where people can actually buy dollars this way without an international bank account.

This will be the logical take on this, with bitcoin not being stable enough to be accepted as a currency and a couple more issues, they will slowly but surely dollarize themselves. They wouldn't be able to use bitcoin anyway even if it's not volatile as Venezuela has a power issue. If in any case they are able to solve this one way or another. Bitcoin might thrive in their country.

Venezuela adopted bitcoin/crypto because of TINA (there is no alternative). The case that occurred in the Venezuelan government had to adopt cryptocurrency due to a total economic embargo from the United States. There is no eternal friend and foe that is of eternal importance to Maduro. The policy taken is more political aimed at perpetuating its power amid the shock of the coup from its opposition rather than aiming at improving the country's economic conditions.

One reason why the role of cryptocurrency in Venezuela is displaced by the dollar is inseparable from the reduced economic support of China for Venezuela. As China's growth declines and crude oil becomes abundant after the fall of 2014 oil prices, China has little to gain from relations with Venezuela.

In addition, China is concerned about the Maduro government regime which is not recognized as a legitimate government by many countries in the World. In addition, China is also concerned about the allocation of aid use from China not in accordance with the China strategy (OBOR) as China worries about economic mismanagement and corruption under Maduro's leadership. The intensity of relations between China and Venezuela diminished when the opposition took control of the legislature and America gave full support to the opposition.

Venezuela is now undergoing a strategic partnership with Russia and continues to use the dollar as its currency exchange currency. Trump also began to be careful in dealing with Venezuela because Russia's involvement was very thick, with Russia's largest world oil company Rosneft marketing almost half of Russia's oil production. Rosneft is a large company and has a wide reach, too frontal with Russia could risk unwanted damage to the interests of America and its allies.

So when facing economic problems, crypto is only used as a tool or an alternative currency. When the world does not compactly adopt crypto, how can Venezuela minimize the use of dollars? Means the international world more trust in the dollar than crypto. This trust was formed not only because of the superiority of the American economy but also because of world reserves of 58% in dollars. so the use of dollars is considered an effective and fast solution to cure disease.

Lack of electricity is a problem that will be solved in the near future when electricity is free for all in every household. As in everyone will have solar panels, even smaller wind turbines are getting famous nowadays but mainly solar panels of course, specially in places like venezuela that gets so much sun, electricity will not be a problem in the long term (meaning 10+ years of course but still gonna happen).

Crypto will be more common in those places when that happens, this is an extraordinary situation where a country gets so poor that many people die of starvation and food is scarce, so I think crypto can't be help for THAT harsh situations, there was a small period where you couldn't buy food even if you had money because there was no food, crypto can't solve that issue.

That is totally normal. Any country wit high inflation become such. Venezuelan currency is used as cash to pay things and USD is kept as store of value. Not need to be long store of value, but even for few weeks or even days.

Its really a serious problem if you ask me, because there are too many unrests in many countries and this is what they do. If we tell someone that crypto is better than fiat but wont be able to use when it is needed the most..?  ???



Electricity will be the main issue again. It may work with NFC enabled mobiles but that too has too many restrictions.  ::)

I am not sure about the idea of them making use of cryptocurrency, if it’s up to me to decide I would say that them adopting a stable currency is a pretty good idea.

Cryptocurrencies, especially Bitcoin, are highly volatile and imagine they save their money in a cryptocurrency wallet and adding that there is a black out makes everything worse as they are likely to lose their money due to the price fluctuation. So, I don’t see the idea of making use of dollars bad, it is good at least in short term perspective. Anything possible for them to get themselves out from that bad situation they should keep doing that and help themselves.

Agree beside they did adopted bitcoin in a quick manner. As it don't have any measures on what will be the possible effect in the long run. So, may be, the most stable way is to use USD rather than bitcoin but that doesn't mean that it is not necessary at all. Like what you said, mister, store their money in bitcoin or other alts then spend it using fiats.

It is pretty easy to seize fiat on your account. Or get a police/military raid your house looking for gold or banknotes. It had been happening for decades already.

With cryptocurrencies in quite many cases it is almost impossible to get your crypto seized. In the case of hardware wallets, you still have a chance to get access to its content if it is stolen. If you are smart enough, you can keep your cold wallets in plain sight and basically no one will notice it - even on family photos.

The only threat would be for you as an owner of a cryptocurrency to get tortured in order to give all the access to your wallet, including passwords etc.

*Sigh This is the biggest opening for crypto to get massively adopted and yet it still failed. How unfortunate for us and the crypto community as a whole to get beaten by its rival — paper money. Well I guess that's the perks of fiat, it can be used without any further requirements unlike btc which requires constant supply of electricity and internet connection :(. This only manifests that our world is not yet ready to fully acquired this technology. It seems that we're still so far to the futuristic era ;D.
Oops, it still depends to a particular country of course. Even how rich a country is, it will be pointless if they look at crypto as a threat but I'm hoping this kind of mindset will be totally erased on the mind of every nation.

One solution is to lobby governments to decentralise electricity.

Lots of governments are sympathetic to the idea because they know how vulnerable their centralised grids are to hackers. But it costs money to decentralise, so they'll only do it if the voters are agitating for it.

 If a nation can use another nations money that way, what stops all other nations to do it as well? It would be too much centralized in every single nation to be ruled by USA, sure venezuela is a small sample size and USA won't even care but if you for example make %50 of people in Europe to start using dollars instead of Euro, that would be a demise of all european union and all nations withing since USA would basically control them. So it doesn't look all that bothersome to people since its venezuela and they might actually take advantage of this situation yet I still think we should try to stop and eleminate this idea before it spreads to all other nations in trouble, that would make it very difficult to reverse.

Nothing apart from the government banning the use of foreign currency.

China bans use of anything other than yuan, and in addition imposes capital controls so people can't easily convert yuan to dollars and take the money out of the country.

Many other countries have capital controls too.

Places like the UK don't have any bans in place nor capital controls, so in theory a retailer is free to accept any currency they want  - but Brits use their own currency as they have a deep attachment to it (as it has served them well for coming up to 1000 years).

However, each and every country has a black market. And the black market plays a very vital role not only in terms of the country's economy but also in terms of the people's access to whatever is declared illegal by the current government. Foreign currencies are always offered in the black market. This would solve any government's ban on specific foreign currencies.

Not all countries have a black market denominated in a foreign currency. I doubt the Americans, Swiss, British or eurozone countries bother with foreign currencies at all. You would only trade in a foreign currency if your own currency was inflationary and retailers were reluctant to accept it as a result.

But, we could not rule out the possibility for the country's innovation, it is still possible for them to cope up and improve their society in the future rendering a solution for the black outs in the country. With the said dollarization, the chance for economic growth is great solving their problem with electricity. Crypto currency in Venezuela would be possible in the future.

I think that what this proves is that the dollar is still the main currency of the world and the one people will use to protect themselves when something goes wrong, but when the dollar  begins to fail then what people are going to use then? And I really think we are going to see a combination of gold and bitcoin saving the day in that instance, however unlike many which have been predicting the demise of the dollar for decades I do not see that day coming anytime soon.

In my opinion, it too difficult to make Bitcoin  a main coin in any country even the poorest despite the king of crypto has a lot of characteristics but there is a problem of stability for all the digital currencies including Bitcoin. So this volatility may negatively affect on  economy of countries, that's is the issue. Also, the governments prefer  controlling of all the people especially in the financial field and due to Bitcoin is so secure, so they can't track any transaction and that is the second problem. Hopefully, everything may change in the near future.

Interesting, i think maybe they will have new currency if new authorities will want to create or will stay with usd until economy recovers.

The lack of electricity and the Internet are two main problems for the development of cryptocurrencies in poor countries, if smartphones and computers can still be found there, then an uninterrupted supply of electricity is a serious problem.

Their government need to resign and allow a new breed to find a solution to the political and economic problem of Valenzuela. Their petrodollar stable coin seems to have failed and using a foreign currency is never the solution to the existing financial instability, it will cost more harm in the long term.

Venezuela's problems are very complex.
1. A total American embargo
2. Government regimes that are not recognized by many countries
3. Domestic political instability
4. State revenues rely on crude oil exports
5. Dependence on meeting the basic needs of imports
6. Culture of corruption

For Venezuela, all decisions taken by the government are due to TINA (there is no alternative). For the issue of the use of dollars in Venezuela because of the fact that 58% of the world's foreign exchange reserves are still in dollars. Let alone Venezuela whose economy is in shambles, the mighty European Union cannot shift the dominance of the dollar. In addition, transaction systems throughout the world are still dominated by swift.

According to the latest news, the Venezuela government privatized the Venezuela oil company which had been controlled by the state. So world oil production is now being handed over and managed by the private sector. The power and legitimacy of the government which so far has relied on its ability to control oil fields as the backbone of the country's economy cannot be maintained. Maduro took this step with the aim of guarding the collapse of the Venezuela oil industry due to the US embargo. With the presence of oil exports, Venezuela can still get income to turn the wheels of the economy and so that Maduro can consolidate the power of his government.

When you go as further as Maduro did and the country is in full rebellion against its ruler and the ruler still declines to move away, there is no way you can recover. Maduro can literally do everything he possibly can to keep the control but once you are done in citizens eyes, you can suddenly become the greatest leader on earth and you still can't hold that position, you will be kicked one day.

You can still be a dictator and rule over a country if you can suppress them enough, look at China or Saudi Arabia, people not only support their dictators but actually find them better leaders than alternative democratic ones that everyone can vote and elect for. However when you are a dictator like Maduro and hated by your people, it will end with death for you, humanity is not kind to hated dictators.