Every day we read about different countries moving forward in the process of integrating the digital currencies into their financial system. While many still see cryptocurrencies as another scheme for the rich to get richer, one of the poorest countries in the world turned to different digital currencies as a way to get through the economic crisis.
Venezuela, a South American country with striking natural beauty, was one of the continent’s richest countries in the past. Now, it’s falling apart. Marketwatch takes a look into why the falling economy has turned to cryptocurrencies.
The poverty rate in the country has increased from 48% to 87%, and the average Venezuelan living in poverty has lost 11.2 kilograms (24.7 pounds) of body weight in 2017. Their economy is on the way to contract by more than 10% this year, bringing the total decline to a shocking 45% in the past four years.
“Crisis led us to this situation,” the story quotes Jose Rodriguez, a local business owner.
“This situation” refers to the widespread adoption of cryptocurrencies. By using digital currencies, local business owners can transact and store something of value that is not under the direct control of the Socialist Government. For instance, the latest figures show that the annual inflation is around 48,000%.
Two days ago, Newconomy covered the launch of “Dash Text” service in Venezuela. The service is based on the SMS system with an aim to eliminate the need for smartphones and internet access in order to process a crypto transaction. As the poverty rate in the country has increased significantly in the last couple of years, many cannot afford to own the smartphone or have internet access anymore.
Prior to the launch of the “Dash Text” service, Dash has been actively pursuing users in Venezuela. The cryptocurrency enables both merchants and individuals to use the DASH digital currency to buy goods and services. They simply need to download a wallet, link it to the bank account and start paying it.
“Cryptocurrencies, especially Dash, have helped me to have an alternative means of income that, unlike the bolivar, is stable and much safer. In addition, it has opened the doors of my business to many more clients and the general public,” said Victoria Merchán, owner of the Caracas-based homemade food restaurant.
The country’s Supreme Court of Justice (TSJ) has recently ordered a national institute to pay indemnities to one of its employees in its oil-backed cryptocurrency petro. According to the ruling, “the National Institute of Agricultural Research (Inia), will have to pay Venezuelan citizen Maria Elena Matos “the equivalent of 266 petros” following a workplace injury. The value of 266 petros is estimated to be of $15,960”.
On the other continent, the interest in cryptocurrencies is growing steadily as well. Similarly to Venezuela, citizens of Zimbabwe have turned to Bitcoin to mitigate the effects of hyperinflation.
“Zimbabweans and citizens of other African countries transact in Bitcoin “as opposed to their local currencies, which are plagued with hyperinflation,” says Emmanuel Tokunbo Darko, the vice president of marketing for ICOWatchlist.com.
At the forefront, crypto payment services are popping up everywhere in Africa. According to Africa Renewal, these services include Abra, which operates in Malawi and Morocco, GeoPay in South Africa, BitMari in Zimbabwe and London-based Kobocoin.
In Kenya, BitPesa is a platform for blockchain payments and digital exchanges. Their services are available in numerous countries as the system helps lower the costs of payments, now available in more than ten different currencies. The startup project was also praised for its promotion of intra-African trade as it facilitates cross-border payments.
In Tunisia, the Government has already created digital currency called “eDinar”, which runs through the Tunisian post. The government, in cooperation with Monetas, has combined blockchain technology and the national digital currency, thus creating eDinar. The digital currency can be used for making mobile money transfers, paying bills, purchasing of goods and services, etc. The circulation of the currency is fully controlled by the La Poste Tunisienne, a state-owned post enterprise.
According to a report, fees involving eDinar never exceed 0.9% of transaction or $0.30, whichever is less. Tunisian example was followed by Senegal, where the Government has recently become only the second country in the world to introduce a digital currency based on the blockchain technology.
Whether it is country-driven or privately owned cryptocurrency startup business, the above-mentioned examples show that cryptocurrency projects can make a real difference, even though we are at the very beginning of the mass adoption of cryptocurrency ecosystem.
As no country would want to find itself in the position of Venezuela, the specific example of Dash services offered to Venezuelan citizens show that cryptocurrency has entered the “real” world.Leave a comment