Hi Donovan,
Thank you for taking the time to read my piece and for sharing your views as well. While I may not have had the privilege of visiting Venezuela, there is sufficient reporting from within the country to suggest that there is a statistically significant probability Bitcoin has helped many citizens there stave off potential disaster in the face of uncontrollable inflation and the rapid devaluation of the Bolivar. Here are just a few sources:
Many Venezuelans (allegedly) turned to Bitcoin mining by exploiting the cheap electricity and with those Bitcoins, created their own parallel economy — a Bitcoin market if you will — to cater for the worthlessness of the Bolivar.
The actual reasons for Venezuela’s troubles are well documented, what is of course more significant is Bitcoin’s role in helping millions of ordinary Venezuelans, take control of their own circumstances and try as best they can to dig themselves out of their own quagmire.
It is widely accepted, even by cryptocurrency skeptics, that Bitcoin largely saved Venezuela from descending further into complete chaos and a failed state (although some would argue that it already is). In fact, many commentators also regularly argue that outside of countries such as Zimbabwe and Venezuela, there is little justification for cryptocurrencies such as Bitcoin, in the developed world. Such an argument, whilst easy to make given the current circumstances, fails to consider that even government-backed fiat currencies are not backed by anything other than a promise to pay. While inflation in the developed world is nowhere near to the scale and speed of Venezuela’s, just consider what a dollar can buy today and what it could buy just three decades ago.
It is entirely possible, indeed probable, that Bitcoin may have facilitated capital flight of some of the richest and most powerful in Venezuela, but it is also entirely possible, indeed probable, that it allowed many ordinary Venezuelans to have even a semblance of ordinary economic life. The same way a fistful of dollars can be used to buy an ounce of marijuana, it can also be used to buy many ounces of margarine. Bitcoin, just like any other currency is agnostic to its use, but to paint it as having had no economic benefit, to Venezuelans and their most challenged is perhaps a stroke too far.
Thank you for your views and as always, I appreciate them and for you to take the time to express them.
Yours faithfully,
Patrick Tan
