The Venezuelan economy has been witnessing its worst recession since the past few years. The country is in absolute turmoil, both, politically and economically.
The South American country is suffering from hyperinflation and humanitarian crisis. The prices of essential commodities have skyrocketed. The only solution to this, as per experts, is the use of cryptocurrencies, which would provide much-needed stability to the economy, rather than its fiat currency.
However, there a lot of hurdles and obstacles in providing the Venezuelans with enough Bitcoins and other altcoins. Coinbase, one of the most famous crypto exchanges, is working hard to overcome each one of them. The biggest challenge seems to be the lack of sufficient infrastructure, which makes cryptocurrencies almost redundant. For instance, the country has been facing regular power cuts or nationwide blackouts, which make crypto transactions undoable.
The lack of electricity has, on the flip side, exposed a major drawback of cryptocurrencies, which is their extreme dependence on power. Coinbase CEO, Brian Armstrong recently started an initiative, GiveCrypto.org, for raising funds to transfer crypto aid to the crisis-ridden country. Armstrong recently stated in a series of tweets,
“A long ways to go still, but starting to gather some data. Thank you to everyone who donated to make it possible.
“Getting a store set up that accepts crypto near recipients seems to help. Also, we had to build a new version of @CoinbaseWallet that runs on Android 4.x since 75%+ of recipients in Venezuela are still running this version of Android from 2012.
“The intermittent power outages we did not anticipate. Crypto still needs internet and electricity to function, although there are some potential relay type solutions in low connectivity environments that we could try in the future.
“We need to find a scalable way to get evidence of impact and try to measure fraud. @joewaltman and team have gotten some good advice from the awesome folks at @GiveWell.
“Would like to be very data-driven and not assume anything about impact until we see the evidence. Still very much an experiment.”
The crypto company has been taking serious efforts to infuse Venezuela with cryptocurrencies, to let the people of the country safeguard their wealth and be able to provide themselves with necessities like food and shelter. Thousands of Venezuelan are migrating to nearby countries on foot, to avoid the civil war and political turmoil.
The United States has placed sanctions on Venezuela, severing all trade and political ties with the country, and secondary sanctions are already in process. Several hundred thousand people in the country are in dire need of humanitarian aid, which has been blocked by the current government, especially those coming from the US. However, the President allowed a 65-ton aid from China on Friday.
Cryptocurrencies have played an important role in keeping the struggle alive. As the country witnessed hyperinflation, a few citizens identified a unique way to keep up with the devaluation of Venezuelan Bolivar, and that was Crypto Mining. People started providing crypto mining services and got paid a few hundred dollars per week. Conversion rates were extremely high, and hence they could sustain themselves and their families.
Alas, the situation kept deteriorating, and currently, it’s horrendous. However, the crypto space has shown strong resistance. In October last year, Bitcoin Cash Association offered financial support to crypto campaigns in Venezuela. Earlier this month, the Dash cryptocurrency continued its operations in the country, in spite of a nationwide blackout.