The Venezuelan Bitcoin revolution

While the nation struggles, the citizenry has begun to utilize the internet currency in order to make ends meet.

Flickr / The Overtime Illustration

With the recent death of Cuban revolutionary Fidel Castro, many folks worldwide are reexamining the socialist leader’s true influence. While some are content at the death of yet another dictatorial leader, others are quite eager print Castro’s on as many t-shirts as possible. For both groups, however, Cuba is now free to explore, simply for the cost of a plane ticket and a hotel.

As you move further south, the situation can only be described as dire. Present day Venezuela is becoming a case study for economists and an absolute nightmare for the citizenry. Social unrest has erupted, as citizens no longer have access to electricity, clean water, or food supplies. Hospitals are being closed, as they lack proper medical equipment, while delivery trucks are ransacked just so families can make it through the week.

Venezuela is somehow still one of the richest countries in the world in reference to oil, gold, and diamonds. How is it that this nation, the ninth highest exporter of crude oil in 2015, has become the next humanitarian project?

The answer is Hugo Chavez — a self-proclaimed mentee to Fidel Castro.

Chavez was elected the president of Venezuela in 1998, six years after his failed coup. He won the election by substantial margin, largely due to his campaign’s focus on empowering the Venezuelan people. This message was simple, as the price of oil sat at $100 a barrel on the global market. As his presidency continued, however, Chavez used the world’s consistent and collective demand for oil as a weapon for domestic change. Even the United States became a target for the South American leader as he called President Bush “a donkey” and “a devil” during a speech to the U.N.

Venezuela’s policy shifted over time, as the nation ceased exporting and manufacturing any other goods besides oil. The nation instead used the wealth from oil exports to import the needed supplies and goods. Hospital provisions, food, basic goods and services were now all being purchased with money earned from the exportation of oil.

Then, in 2014, the worldwide price of oil plummeted.

In June 2014, a barrel of oil cost approximately $105. By December of the same year, the same barrel cost only $59. The Venezuelan economy unsurprisingly cratered. Venezuelans have become creative, due to their collective lack of employment, along with with strict decrees on food supplies, and an inflation rate that looks to reach 720 percent by the end of the year.

One of these creative measures has been the proliferation of Bitcoin among independent workers.

Despite the volatility of the internet-based currency, Venezuelans are finding themselves relying more and more on the medium to maintain consistency. With political instability and deep economic slumps throughout the continent, the accelerated adoption of Bitcoin is not an exclusively Venezuelan phenomenon.

In fact, throughout South America, there is an exchange rate of nearly 50 BTC a day for nations experiencing capital restrictions by governmental powers. It is precisely for this reason that Bitcoin has been taken up as a form of revolution, as it essentially supersedes centralized banks and government bodies — while effectively providing poor homes with food.

So while the Maduro administration battles conspiracy theories, border deregulation, and firm political measures echoing those of Chavez and Castro, the citizenry is relying on this new currency. It is unclear whether Bitcoin usage will genuinely improve the country, it is obvious that the internet currency is more than just an economic experiment.

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