Could Crypto Save Venezuela?

Venezuela’s in crisis. It’s been that way for some time now, and its government hasn’t yet found a solution to preventing hyperinflation from getting worse than it already is.

The situation in Venezuela is incredibly complex. You could argue that its failed economy is as political as it is economical, but that’s a discussion for another day. One thing is certain, however. The citizens suffering most in Venezuela are ordinary people, not the ones creating policies and calling the shots.

What’s the Solution?

Venezuela’s currency, the Bolivar, isn’t worth the money it’s printed on—and it brings us no joy to say that. The Venezuelan government has already experimented with cryptocurrency, the Petro, in hopes to prevent the economy from collapsing. It failed.

The Venezuelan government could’ve used cryptocurrency as a means to add transparency and legitimacy to their financial sectors. They could’ve run Petro on a public blockchain, with a public distributed ledger with all recorded Petro transactions. Instead, they opted to make their cryptocurrency opaque, and investors saw this as a major red flag considering the government has been heavily criticized for corruption. And now, Venezuela has experienced the worst economic collapse outside of a warzone since Zimbabwe under Robert Mugabe. In fact, their economic crash overtook Bob’s Zimbabwe and even the fall of the Soviet Union.

Could cryptocurrency have prevented this from happening? Yes and no. The true spirit of cryptocurrency is democratization. Everyone has equal access to information and to crypto-friendly financial services. If the Petro was built with those values in mind, Venezuela could’ve very well been saved. It would’ve given the country more control over their own finances, allowing them to subvert some of the international pressure against them.

But cryptocurrency is just a tool that could be used to revitalize the Venezuelan economy—it’s not the solution, as you can see by the Petro’s failure. Only Venezuelans can save Venezuela, and that will only happen when there’s a movement to stop corruption, hold politicians accountable, and create a truly transparent economy.
Those values just happen to be what cryptocurrency inherently represents.

Featured image by: Congreso de la Republica del Perú’s and newsonline’s Flickr photostreams

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