In cases where the outsiders such as pornographers, drug sellers and criminals are first users, nation states soon follow.
Digital black markets such as the Silk Road were the first users of Bitcoin, now desperate countries like Venezuela are investigating Bitcoin as a backdoor to a legitimate payment system.
AKA, not just a “crypto” currency, a Currency.
This is because they simply cannot use their own hyperinflated worthless paper currencies.
Countries that experience/d hyperinflation, such as Venezuela and Argentina keep adding zeroes to their currencies, then in an “end of times” signal they use “redenomination” by arbitrarily cutting off zeroes from their currency, you know, to make them appear more “normal”. Venezuela lopped off 5 zeroes in August of 2018, Iran cut 4 zeroes from the Rial this year, (Zimbabwe cut 12 zeroes back in 2009).
It’s a way hiding the inherent worthlessness of their nation’s currency, and a practical measure so its citizens don’t have to cart their worthless money around in wheelbarrows. It’s a way of stealing savings, and paying down the backbreaking debt of volatile nations.
The backdoor for some nations like Ecuador was to simply replace their own currency, the Sucre, with a more stable currency such as the US Dollar. They link their financial fate to a foreign star, and life continues. Despite the shame of dumping their homegrown solution for a foreign powers’, this has sorta worked for them.
But what about sanctioned countries opposed to the US, such as Venezuela, where sanctions prevent them from using their own currency for trade? This forces Venezuela to look at using the Russian SWIFT alternative, and the Chinese Yuan:
Last month, the [Venezuelan Central Bank] received most of a $700 million payment in Chinese yuan after the parties struggled to find financial institutions that would facilitate a transaction. ~Bloomberg
And now Venezuela is looking at Bitcoin and Ethereum as an alternative to the existing international settlement currencies as a way out of the financial strangulation the US is exerting.
The marginal countries will consider alternatives that the major countries turn their noses up at.
Gold is the original Crisis Coin, Bitcoin is the Second
Economic Hell in a hand basket, and lying in the middle is the savior Bitcoin.
Financial Muscle Flexing
Sanctions are a financial type of arm wrestling to force unwilling countries to do as the sanctioning country says: Do as we say, pay your debts to us in the manner we determine (pay in oil, or cut your retirement benefits, etc), or else we disallow participation in the world economy.
This is also applied to companies labelled “illegal” such as Wikileaks whose founder Julian Assange, after being banned from receiving donations through Paypal, and Visa, and Mastercard, switched to Bitcoin.
The Bitcoin WikiLeaks would receive after would, in Julian’s words, “[see] us through the extralegal US banking blockade…Julian Assange commented that he made close to a 50000% return on Bitcoin as a direct result of the US government imposed financial blockade on WikiLeaks.” ~Forbes
The Perfect Storm for the Rise of Bitcoin
This latest Sturm und Drang between China and the US signals another fall for fiat currencies, with an accompanying…
New One World Currency
Nation states adoption of Bitcoin as a sort of one world currency is in the final stages of Hyperbitcoinization, where Bitcoin outcompetes all other currencies based on its properties of borderlessness, decentralization, and strictly enforced deflationary 21 million supply.
The first users will be the Venezuela’s and Zimbabwe’s of the world. Then the BRIC nations (Brazil, Russia, India and China), then everyone else.
~ Oh wait, China is embracing blockchain I hear.
“If China wins the race to have the world’s largest business blockchains actually transacting real-world financial activity, it will be the first-mover and thereby build in all the default features into the platform,” said Lex Sokolin, global financial-technology co-head at U.S. blockchain developer and investor ConsenSys. ~Reuters
Okay, Xi Jinping said “Blockchain” so not exactly Bitcoin, but does a centralized coin stand a snowballs chance in hell versus the decentralized currency killer of Bitcoin? His talk of supporting blockchain, much like FB’s Libra, is just another unsolicited marketing push for the use of Bitcoin.
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