“Bitcoin: A good alternative for countries in crisis?”
Why is bitcoin a good alternative for countries that are in crisis?
Throughout history, we have seen how countries have gone in crisis, even those who seem to be most stable nowadays. Maybe your country already went through it or its currently going into one but history has shown it's bound to happen someday. Whether its social discontent, politics, or inflation, the cause, the truth is sooner or later, it can happen.
What does this have to do with Bitcoin or cryptocurrencies in general?
National coins depend on stability, and when a country seems unstable, the devaluation of a currency can be enormous. These crises also lead to lower or no investment in the country, and banks can begin to impose restrictions among its clients.
Bitcoin, one of the most known cryptocurrencies, has been for many an alternative when the national coin is devaluated or when country polices are restrictive. Bitcoin has shown that in places, such as Venezuela, crypto has been that financial alternative. Inflation in Venezuela got so bad that many were opting to get paid under the books in crypto, other digital coins such a DASH became a big hit in the country. It began slowly implementing and helping the public be more familiar with this new digital money system.
When situations get complicated in a country, crypto seems to appeal to many. Crypto provides the freedom that fiat currency (Euro, USD, CLP) does not. Digital currency is censorship-resistant, with no third-party regulator, programmable, and so many things that crypto provides as a currency fit for anyone in any country only needing access to the internet, a computer, or phone. This digital currency, unlike national currencies, it doesn't depend on the stableness of one country in particular because it works on a decentralized network — this allows crypto to exist based on supply and demand.
Countries in crisis have inclined people to turn to this promising future money system. Most Latin American countries have been recently in crisis mode, we have seen in different countries with social uprisings, each country with their problems. A few weeks ago, it was reported by one of the most famous Chilean crypto exchanges Crypto MKT had a 50% rise in volume traded. This increase happens under the context of the social crisis that the country is currently facing since the end of October 2019.
According to diariobitcoin.com, Rafael Meruane, co-founder and CTO of Crypto Market, argues that "after the explosive rise in the dollar price with respect to the Chilean peso on November 12, we had an increase of more than 50% in the volume traded." He emphasizes that the cryptocurrency that led the exchanges for Chilean pesos was Bitcoin, followed by Ethereum. That is, the two best known continue to be preferred "due to its high liquidity and global recognition," he says.
They claim to have 2.500 new clients sign up on the platform coming from Chile and Argentina, both countries under challenging contexts. This was very surprising to read, maybe as surprising as the Chilean protest that have been occurring nonstop.
When things in countries get out of control people, get scared, and many have seen their hard work and earnings decreases significantly, there has to be a way to prepare for the worst or a safe haven for your earnings. It does not necessarily have to be crypto; it can be gold, stocks, or whatever suits you.
You may or may not be a fan of crypto, but it sure is great to have an alternative currency for those who seek it in a time of need.
By: Carolina Pérez