And this ladies and gentleman, is why we own Bitcoin. Venezuela is a one-two punch for Bitcoin. Firstly, prior to revaluing the new Sovereign Bolivar to 96% of the currently circulating Bolivar, the previous Venezuelan Bolivar had already been massively susceptible to hyperinflation and devaluation under the current Maduro regime. This clever trick is not the fault of a difficult to manage economy, but rather the direct result of the theft of the wealth of Venezuela’s people, through the hidden tax of inflation.
Secondly, and maybe more importantly, Mr. Maduro has paved the way to Bitcoin adoption by attempting to use cryptocurrency as a reset button for his now worthless and hyper-inflated Bolivar. Suddenly, as wealth looks to flee the quickly devaluing, government backed, fiat money to the hardest store of value available…as it always does during such times of economic crisis…People are looking not only to the gold similar to that which Mr. Maduro is stroking in the photo above, but to Bitcoin.
See, what president Maduro doesn’t understand about market economics (or maybe he and his advisors do understand perfectly well), is that as long as Bitcoin exists, and as long as he continues to practice the sneaky trick of stealing his people’s wealth, his nation’s money will flee into the hardest stores of value it can find. But, he has already done his people the favor of introducing them to this newfound invention known as cryptocurrency with the introduction of the Sovereign Bolivar.
Now the Venezuelan people are faced with a choice, do they turn in their worthless paper currency for this arguably, already more worthless digital cryptocurrency…which nobody wants and is even MORE susceptible to manipulation and corruption than ever before, do they turn to the gold which may be prone to confiscation and difficult to transport (and perhaps even more difficult to transact with), or do they turn to something new.
Something perhaps, like an immutable, censorless, global transaction network…built upon a sound money protocol which cannot be inflated or manipulated for the gain of a small minority at the expense of the many. Something which, as I said, Mr. Maduro has already introduced as a new medium for transaction of value to an entire nation of nearly 32 million people.
With 1143 BTC changing hands in a single week, a milestone in and of itself, it will be interesting to see how such trading volume could impact Bitcoin over the next year, or the next decade or the next century…as Bitcoin becomes more and more scarce due to its ironclad monetary protocols. No doubt the price of Bitcoin in Venezuela is currently well above the global average spot price. What happens during the next global economic recession? Or worse? Where will the money flee?
Pay attention to Venezuela.