Is Mass-Cryptocurrency-Adoption Venezuela's Destiny?

A country living under draconian restrictions, which also happens to be facing the biggest currency devaluation of the century. Venezuela should be fertile ground for mass cryptocurrency adoption. Is it? How’s Bitcoin doing in Venezuela, you ask? 

According to Coindance, the country’s activity on LocalBitcoins is immense. Through December Venezuela’s business oscillated between 14.2% and 15.4% of the total volume the site moves. And it sits at #4 in the “Which country trades the most Bitcoin” all-time leaderboard:

However, on the ground, most people are just as unaware of cryptocurrency as the rest of the world. They’ve heard the name “Bitcoin”, and some of them know as few myths and legends about it. They don’t use it, though.

They wouldn’t know where to begin if they wanted to. And most of the altcoins are virtually unknown. Dash is the notable exception. More on that later.

Recent developments you might be unaware of

The Venezuelan Government relaxed its exchange control policy in May this year. It’s been in place since 2003, one of Chávez’s flagship decisions. A way to protect themselves against foreign interference and to control the population at the same time. It may also be one of the causes of the unprecedented crisis the country is living through, but that can’t be proven. Correlation does not imply causation.

Rest assured the control is still in place, just not as severe. You can buy foreign currency from banks and exchange offices, but a limited amount. And you have to declare what you’ll be using it for and cut through red tape to get it.

On the other hand, Venezuelan credit cards still aren’t accepted outside of the country’s borders. And don’t even think about withdrawing cash out of an ATM while abroad.

Worldwide cryptocurrency adoption stats

In the most-recent poll making the rounds on the Internet right now, Statista tried to measure crypto adoption. They asked “Internet users between 18 and 64 years of age” if they use or currently own cryptocurrencies.

There are three South American countries in the top 5: Brazil, Colombia, and Argentina. Venezuela is not even in the chart, which doesn’t seem to make sense. Statista claim’s it’s a “Global Consumer Survey”. We leave it up to each individual to determine if they believe Venezuela was considered.

As for cryptocurrency’s mass adoption, there are other non-country-specific stats that require attention. According to Cryptopolitan, global Interest in Bitcoin shows a dramatic increase over the years in Google Search Trends.

For the terms “Ethereum” and “Cryptocurrency”, the pattern doesn’t show the same growth. Also, the total number of addresses that own more than 1 BTC has been steadily rising year after year. The movement is on its way, but we’re still in early stages.

Our very own poll about cryptocurrency in Venezuela

This article’s author ran a non-scientific, informal poll through Twitter and 411 people responded. They are definitely not a representable sample of the whole of the Venezuelan population, but they might represent a more technologically inclined portion.

The poll was intended for Venezuelans still living in the country, and the question was: 

“Considering Venezuela suffers a perpetual currency-control regime and the most devastating inflation in history, why DON’T you use cryptocurrencies to safeguard your money?” 

Twitter allows a maximum of four choices, so we boiled the possible reasons down. The results were as follows:

• 43% blamed it on a “Lack of Information” 
• 27% claimed it was “Too volatile” 
• 20% complained it’s “Too difficult to use”
• 10% admitted “I don’t trust the technology” 

Let’s break that down, one result at a time:

1. “Lack of Information”

Most of what you need to know about cryptocurrencies is available on the Internet. And we’re in the so-called information age. Still, it’s an overwhelming, chaotic, ever-changing topic. Everything about it seems to be up in the air. It’s understandable that people feel they don’t have enough information about it.

2. “Too volatile”

There’s no way around it, the crypto-space is a volatile environment. And it’s going to remain that way for the foreseeable future. Is that a legitimate concern if you live in a country that suffered an estimated 200.000% inflation this year? It might be if you have more stable ways of securing your money. Do they have it, though? Not according to my experience.

3. “Too difficult to use”

They’re not wrong. The technology behind cryptocurrencies is in its infancy and at the moment everything is clunky. On the other hand, that might be the exact reason to get in right now. On the ground floor. Everybody and their grandmas will be in on the action when it’s easy to use, and then it might be too late.  

4. “I don’t trust the technology”

On this one, we need follow-up questions. It could be argued that the reasons for the lack of trust could be a combination of the three previous options, but who knows really? When it comes to money mistrust might be a healthy attitude. A way to protect yourself. It can also lead to wasted opportunities.

Cryptocurrency in Venezuela poll, other responses:

Besides the options available, the poll reached the Venezuelan cryptocurrency community. They mostly replied with “We do use it. Every day.” or with “Replace cryptocurrency with Bitcoin”. Both valid points, but this article isn’t about them. The poll was intended for people who aren’t as technologically aware as they are. 

The most common reply for the general public, though, was: “We don’t have any money to safeguard”. That one hurt.

Other noteworthy replies: “Fear of change/ the new”, “They’re almost useless for payments”, and “All of the above”. 

Case study: Dash

The only altcoin that has made a significant play to position itself in the troubled region is Dash. Some entrepreneurial Venezuelans learned about the marketing budget embedded in Dash’s protocol and organized a movement around it. Talks, training workshops, huge events followed. 

According to Kryptomoney: “Though we majorly name Bitcoin, the leading cryptocurrency in the country is Dash. As its low transaction fees and fast confirmation time features appeals to merchants in the country.”

We wouldn’t go that far. And the number of commerces that accept any crypto as a form of payment is still too low to take the stat seriously.

Did the play work? Did they achieve their goal? In small circles already interested in cryptocurrency it did. The information spread. Dash’s logo became familiar. In general, not so much. Cryptocurrency is still an arcane subject in Venezuela. It’s early in the game and Dash Venezuela is still at it, though.

Cryptocurrency in Venezuela, a conclusion:

The country faces the biggest incentive for mass adoption to be found on this planet of ours. The harshest economic crisis in times of peace on record. Still, Venezuela’s relationship with cryptocurrency is akin to the world’s relationship to it. Fear, learning curves and lack of access to reliable information about the subject keeps people away. 

The dream of a “crypto-nation” that government officials close to the Petro project and local anarcho-capitalists share is far from becoming a reality. The progress is undeniable, though. And the opportunities that presents for the intrepid entrepreneur are immense and hard to ignore.

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Article originally published by Alternative Asset Allocation, edited by Ben Lakoff.

Amílcar Ortega AKA Eduardo Prospero is a self-published author, a professional rapper and a blogger in English and Spanish from Caracas, Venezuela. Currently located in Buenos Aires.