Venezuela holds back bitcoin and ether as a reserve currency. Who is following this course?

Bloomberg wrote last month that Venezuela is playing with the idea of having the central bank of the country hold Bitcoin and Ether as reserves. And actually that is quite a rational step for this struggling country.

Contents hide

1 Dollar is a powerful weapon, looking for an alternative

2 Why bitcoin and ether?

3 Scary country list

4 More can follow

5 Related posts:

Dollar is a powerful weapon, looking for an alternative

Venezuela is (rightly?) In the corner where the blows fall. They are completely cut off from the global financial system. The United States does not do business with the country and they cannot use the US dollar. In addition, the US has threatened to stop trading or to impose fines on anyone who does business with Venezuela.

Because of this situation, the country must look for alternative methods of doing business. For example, they recently concluded a deal worth 637 million euros, which means that oil sales to China can continue. The condition? They are paid in Chinese Yuan instead of US dollars. This reduces their ability to do business with other countries, since not every country in the world uses the Yuan.

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Why bitcoin and ether?

Now it looks like Venezuela will use bitcoin and ether as potential payment methods, they also want to include this cryptocurrency in their national reserves. Investor Anthony Pompliano thinks there is more to it:

The ability of Venezuela to find a currency that cannot be blocked and censored is very important to them. The value that a public blockchain offers in this scenario is undeniable. Bitcoin means something different for different people at different times. Are you worried about your value being taken away? Then bitcoin is attractive. But are you afraid of sanctions by governments or banks? Then bitcoin is also attractive.
Bitcoin cannot be rejected by Venezuelan leaders or another nation state. This inability to manipulate the currency restores confidence between trading partners and citizens. The only way in which Venezuela can undo previous reputation damage is by using a currency that they do not control.
The national oil company of Venezuela is currently asking the central bank to hold Bitcoin and Ether in front of them. The question is where do these digital resources come from? Pompliano expects Venezuela, a country with the cheapest energy in the world, to have many miners.

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According to Pompliano, this last point is important. It is quite something if a country specific invests in the bitcoin and ether infrastructure. He therefore doubts whether Venezuela is the only country. An American lawyer once said that since 2012 his office has started bitcoin itself with minen to use in criminal investigations. In addition, there are rumors that North Korea, Iran, China, Russia and others are also bitcoins.

Scary country list

For many Westerners, that list can sound rather scary. All countries with dubious agendas in our eyes. That is not surprising, countries, but also companies and individuals (such as criminals) in the margin are the first to be open to new technologies. Consider how drug traffickers were the first with a beeper and cell phone. And how bitcoin became popular on Silk Road.

Pompliano says that we don’t have to worry about this and don’t forbid bitcoin ownership. Check out: the same protocol that we use to read this page (internet) is also used by Venezuela, North Korea, Iran, China, Russia and many others. There is no difference between the public protocols of the internet and the public protocol of bitcoin.

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More can follow

The world is changing fast. The macro-economy and geopolitical issues affect our beloved technology. And as a follower of bitcoin (and if you follow bitcoin you will automatically be sucked into the rabbit hole of the sense and nonsense of fiat money) this complexity is very interesting.

Pompliano decides that Venezuela appears to be the first country to include bitcoin in their central bank reserves, more to follow. It is a matter of time before other central banks follow.