On Paper it Seems Venezuela is in The Perfect Position to Adopt BTC...So Why is Adoption Still Low?
TL;DR
According to Javier Bastardo, Bitfinex’s Bitcoin ambassador to Latin America, the reason why adoption for crypto is low in Venezuela is simple: Venezuelans don't want cryptocurrencies, they want US Dollars.
While magical internet money can be used to purchase some things online, the ability to use crypto to buy everyday things still hasn't really been adopted (especially in countries like Venezuela). Until that happens, USD is likely to be favored over crypto.
While in theory BTC might be a wonderful solution to Venezuela's inflation and authoritarian woes, in practice it's going to take far more time and education.
Full Story
Just as Slack started as a gaming company, and The Facebook started as a college rating platform, until a product is in the hands of users, we never really know the best use cases.
(Keep that in mind, while you read through this).
Chainalysis just released its latest report on crypto adoption in Latin America.
And the findings are surprising - especially for Venezuela.
For the past few years, the Venezuelan bolívar has experienced hyperinflation and a government that prefers to run an authoritarian regime.
You know what's great when it comes to combatting hyperinflation and authoritarianism?
Bitcoin.
(It's a scarce asset with only 21M BTC ever created, and it's decentralized).
So why does Venezuela show such low adoption rates of BTC and other cryptocurrencies?
According to Javier Bastardo, Bitfinex’s Bitcoin ambassador to Latin America, the reason is simple: Venezuelans don't want cryptocurrencies, they want US Dollars.
While crypto has started to be used as an on/off-ramp to USD - in general, it is being used as just that in Venezuela, rather than a store of value or a tradable asset.
For example, Chainalysis' report shows 92.5% of Venezuelans use a centralized exchange (CEX) rather than a decentralized exchange (DEX).
What's this all mean?
First off, while magical internet money can be used to purchase some things online, the ability to use crypto to buy everyday things still hasn't really been adopted (especially in countries like Venezuela).
Until that happens, USD is likely to be favored over crypto.
Secondly, there seem to be some deep-rooted trust issues when it comes to a country like Venezuela. While a DEX works (relatively) well in countries like the US, CEX's are seen as far more trustworthy in LATAM.
So, while in theory BTC might be a wonderful solution to Venezuela's inflation and authoritarian woes, in practice it's going to take far more time and education.
Just as a startup makes assumptions about its users before launching, in the end, it's the users who dictate whether the product will or won't be adopted.
It seems some of the assumptions around BTC being a perfect replacement for the Venezuelan bolívar aren't quite right...at least, not yet.