Venezuela is defying assertions by the cryptocurrency advocates towards enforcing a de-facto dollarization economy. Procrypto agencies have previously cited hyperinflation and authoritarianism as positioning Venezuela within the sweet spot for implementing a national cryptocurrency model.
Tech Pundits Consider Venezuela as Suitable for Crypto Utilization
Tech and digital assets pundits constantly portray the South American country as a suitable destination to implement mainstream Bitcoin. The pundits consider that Venezuela is the best-case scenario to embrace digital asset adoption to overcome the collapsing bolívar escape the authoritarian leadership exercised by Nicolás Maduro.
The recent report by Chainalysis disapproves of the projection that Venezuela is gearing toward mainstream digital asset adoption. The report ranked Venezuela fifth in total crypto value receipt across Latin America. Also, the Chainalysis report ranked Venezuela outside the top 20 crypto destinations in the world.
Chainalysis explained that its recent report targeted Latin America in this year’s Global Cryptocurrency Adoption Index. Venezuela was portrayed as offering unique crypto utility, citing its aforesaid political regime and the infamous predatory inflation.
Venezuela Adopts Crypto to Access Dollars
Javier Bastardo, who serves in an organizing role for the leading grassroots Bitcoin group – Satoshi in Venezuela, supported the findings. The pro-crypto enthusiast identified as a Bitcoin ambassador for Bitfinex in Latin America supported the statistics. He indicated that Venezuelans show an affinity for a global reserve currency.
Bastardo admitted that Venezuelans desire access to US dollars, with the country rapidly shifting towards becoming a de-facto dollarized economy. The Bitcoin ambassador disputed the popular narrative that countries battling hyperinflation will ultimately integrate Bitcoin. Instead, he discovered that residents within the countries with hyperinflation would likely embrace stablecoins before resorting to the largest cryptocurrency by market capitalization.
However, Bastardo illustrated that stablecoins usage is limited to the intermediary role as Venezuelans seek real US dollars. Bastoardo’s views resonate with the perspective of Kevin Hernández, popularly identified as Kevin Negocios.
The founder of Critpodemia media outlet confessed that Venezuelans are embracing cryptocurrencies to access the dollars. Hernández indicates that Venezuela’s economic uncertainty only places demand on products with less friction. He explained that such explained demand for Zinli since it grants access to the US dollars.
Crypto Usage Surges as Citizens Avoid Oppressive Regime
Chainlaysis indicates that authoritarian rule is likely to drive the Venezuelan crypto economy. The crypto utilization in Venezuela would facilitate citizens overcoming oppression orchestrated by the Maduro regime.
The blockchain analytic firm captured the perspective shared by Venezuelan opposition chief Leopoldo López, who touted crypto utilization in the country. The politician cited the crypto utilization during the COVID-19 pandemic to remit financial aid to support 65000 doctors. Similarly, digital assets would serve as a tool to resist the regime.
Bastardo echoed Hernández ‘conclusion that cryptocurrency only serves as an alternative to escape the iron fist controlling the economy. Nonetheless, only a minor population leans towards crypto usage. Instead, the residents are pursuing dollars.
Bastardo illustrated the finding in an earlier Chainalysis report that 92.5% of the residents admitted using centralized exchanges to gain access to crypto. He explained that the high number shows that people use it as a more accessible channel to the dollars.
The Chainalysis statistics of 92.5% led to a subsequent finding that the Latin American region portrays the dominance of centralized exchanges. Besides, over 60% of individuals utilize centralized crypto exchange, unlike the global average of 48%.
Crypto Gaining Popularity to Improve Liquidity
Jazmín Jorquera, the chief operations executive at the exchange in Colombia, Peru, Chile, and Argentina, supported the numbers. The executive considered crypto as offering a simple experience and improved liquidity.
Jorquera illustrated that the general criminality across the continent makes it risky to carry cash around. The situation points towards embracing peer-to-peer platforms. The situation points towards Venezuela ditching the currency, given the hyperinflation that forced citizens to carry loads of cash when paying for simple products.
The Chainalysis report indicated that Mexico was an exception to the dominance portrayed by centralized exchanges in the region. The country’s numbers are below the global average.
Lorena Ortiz, who cofounded Bitcoin Embassy Bar in Mexico City, considered the country a boom scene for tech. The Fed’s community master cited the presence of savvy youth and various platforms offering services in the country.
Ortiz acknowledged that their simplicity and crypto’s tax framework drove Latin Americans’ overly utilized centralized exchanges. The executive indicated that the crypto industry remains unregulated, hence a reason for the lower tax than other areas. This understanding explains why Latin Americans portray a solid affinity for centralized platforms.
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