First Bitcoinization of a Sovereign State is Happening Now
How Hyperinflation Produces First Bitcoinization in Venezuela
In recent months, news about Bitcoin being widely purchased and mined in Venezuela has led to a number of rumors regarding the growth and demand of the cryptocurrency there. An interview with Daniel Osorio of Andean Capital Advisors on CNBC indicates that the country may soon ‘Bitcoinize’ completely.
Osorio, who spends about a week per month in the South American country, was interviewed regarding the hyperinflation problems that Venezuelans are facing. During the interview, he explained that a simple lunch costs upward of 200,000 Bolivars, or about $8-$10.
In order to pay for lunch, locals are beginning to accept only Bitcoin or money wires of foreign currencies. The problem, according to Osorio, is that unlike Zimbabwe and other nations where hyperinflation has taken its toll, Venezuela does not have access to enough dollars to manage the economy.
Locals have, therefore, turned completely to Bitcoin in order to function economically. Since Bitcoin is independent of the black market for Bolivars, it represents a fixed exchange platform for business. Near the end of the segment, Osorio says:
“We may well be witnessing the first ‘Bitcoinization’ of a sovereign state.”
Cryptocurrency lovers would argue that this is just the first of many, as liquidity and access increase exponentially.