Economic instability is scary. There is no way around it; when a government lacks economic and financial security, it is the citizens that country who suffer. A prime example of a country facing dire economic issues is Venezuela, where they have been seeing “hyper-inflation” year after year since 2010. There seems to be no end in sight as even a change in leadership has done nothing to alleviate the country's economic problems...in fact, they have only gotten worse. Citizens stuck dealing with a declining national currency value have opted to store their wealth in assets such as gold, diamonds, or other tangible goods. Due to government regulations, this is becoming more and more difficult for the general population to accomplish.
Enter cryptocurrency. With its decentralized nature, cryptocurrency offers residents of nations in economic turmoil a chance to join a global market. Being uncontrolled by one single government means that those who adopt cryptocurrency as their chosen store of value can rest assured that their wealth will not suffer from the poor practices and follies their national currency is subject to. This is becoming a very desirable alternative, with more and more exchanges popping up to service Venezuela and other economically unstable regions. Adoption rate of cryptocurrency is spiking in Venezuela, as more and more people realize its relative stability over their Bolivar.
In what some view as a desperate bid at retaining control, Venezuelan President Nicolas Madura announced that the Bolivar will now be pegged to the value of Petro, a centralized cryptocurrency minted by the government, which is in turn pegged to the value of oil. In this same move, the state devalued the Bolivar by an incredible 95% and assigned new denominations to its bank notes, causing $1 USD to now be worth close to 6 million Bolivar. This is a similar method that this government has used in the past, just updated to include the promise of blockchain/cryptocurrency technology while not actually making use of their inherent benefits.
Given the track record of the Venezuelan government, there is serious doubt and concern regarding how the Petro will retain its value. Petro is said to be a token backed by the value of the nations oil, gas, gold, and diamond reserves, with 1 Petro equal to the price of 1 barrel of oil. This may sound promising in theory, but a glaring issue arises when we look at the fact that PDVSA, the national oil company producing the oil for Petro, has its own debt of $45 billion USD. How can a coin have value when the company producing the asset that backs it cannot even pay their own debts? On top of this, there has been no evidence of blockchain technology even being utilized let alone any sign of a block explorer or way for the public to view transactions.
The Venezuelan public does not seem to be inspired by their country's new cryptocurrency, as everyday usage of the Petro is all but nonexistent. Understandably, they have opted for more proven cryptocurrencies such as Bitcoin and Dash (due to its lower mining requirements and increased speed). Even with their volatility, these cryptocurrencies are a relative “safe haven” from an economy on the brink of collapse due to hyper-inflation.
Venezuela is not the only population embracing cryptocurrency as an alternative to their national currency. Greece, Turkey, and areas all over South Africa have been welcoming cryptocurrency more and more as they realize the benefits a global currency holds. In the past, a nations people were forced to suffer whatever economic repercussions arose from their governments practices. In today's world, however, the average citizen now has options, thanks to cryptocurrency. This is an option that has been needed for a long time, and provides more financial security and sovereignty...something everyone should be allowed equal access to.