Bitcoinization, what is it and is it happening already?
Bitcoinization refers to Bitcoin taking over as a primary means of exchange.
We have seen it as a legalized method of payment in Japan and we may be starting to see it taking over in another place as well...
Venezuela.
The authorities in Venezuela have not been overly accommodating to Bitcoin and Bitcoin miners as of late. Actually that might be a huge understatement as there have been talks of miners being jailed in the country for mining Bitcoin and other cryptocurrencies.
However, apparently that might not be a problem.
Authorities may not have a choice.
People and businesses have been left scrambling for any way to preserve their wealth with the Venezuelan Bolivar plummeting seeming on a daily basis.
How much has it fallen?
Check out this chart:
The Bolivar has lost roughly 99% of it's value against the greenback since 2012.
And it's not done yet...
Authorities are projecting that prices in Venezuela will rise by roughly another 1,100% over the course of the next year.
Which is where Bitcoin comes in...
In an interview on CNBC with Daniel Osorio of Andean Capital Advisors, Osorio stated that we might be seeing the beginnings of a country (Venezuela) "Bitcoinizing" completely.
Why might Daniel Osorio think this?
For several reasons actually.
Osorio spends roughly a week every month in Venezuela so he has a pretty good understanding of what is actually taking place on the ground.
Osorio said that people are having a hard time dealing with the constant inflation of the local currency and are seeking alternative currencies.
The main one being Bitcoin.
Why Bitcoin, as opposed to say, the dollar?
According to Osorio, a lunch in Venezuela now costs roughly 200,000 Bolivars.
For that reason, locals are beginning to accept Bitcoin (and other foreign currencies) in exchange for goods and services as opposed to the local currency.
In other countries where hyperinflation has taken hold, locals and business have moved to transact primarily in dollars. However, Venezuela is unique in that it doesn't have access to dollars in the amount needed to sustain its local economy, therefore other means are being sought out.
Plus, with Bitcoin making new highs seemingly every month Bitcoin seems very attractive to people who are used to seeing their purchasing power drop every month.
For this reason Osorio states:
"We may be witnessing the first Bitcoinization of a sovereign state."
This isn't the first place where adoption is spiking for Bitcoin, but it might be the first where it completely establishes itself as THE form of payment for its citizens.
Conclusions:
People in Venezuela are tired of watching their purchasing power erode on a daily basis.
Since dollars are not available in the amounts needed to sustain local economies, people are starting to use Bitcoin and other virtual currencies.
Currencies that are insulated from whatever happens with local governments.
This could be the start of a sovereign state becoming Bitcoinized.
Sources:
https://cointelegraph.com/news/first-bitcoinization-of-a-sovereign-state-is-happening-now
Image Sources:
http://www.altcointoday.com/first-bitcoinization-sovereign-state-happening-now/
http://www.zerohedge.com/news/2016-05-25/maximum-amount-cash-you-can-take-out-venezuela-atm
Follow me: @jrcornel
Could be an interesting precedent. Any state on the verge of currency collapse and moving into hyperinflation, has the citizenry decide to abandon fiat ad move to BTC as a better store of value.
I wonder if Greece is far away from this result? or Argentina? South Sudan? Suriname?
Which country could be up next?
New weekly record almost every week. This trend started at the beginning of 2017.
What is the link you used to get this data? This is a huge signal. Would like to look at the raw data if could please assist.
Coindance.com Thanks
It's Coindance.
This may be an opportunity for bitcoin to become something useful and not just something to be horded. But with its massive transaction fees it will be a difficult sell.
Exactly! Fee´s are still too damned high. I hope the adoption of Segwit will change that. There are currently so much better cryptocurrencies out there, but I understand why they picked Bitcoin.
Hi Geronimo, how much fees are you paying to transfer bitcoin? When I transferred some bitcoins before the last fork my fee was several dollars. When I transferred some a two weeks ago, the fee was just $0.04. The second fee is probably low enough for BTC to be used in day to day transactions, like buying coffee - at least in the richer countries.
I am not sure how or why the fee fluctuates like this.
I agree, with segwit wallets I'm paying fees of just $0.06 cents. This can be improved further but I doubt it's a barrier to entry for Venezuela. Here are some cost of living estimates: https://www.numbeo.com/cost-of-living/country_result.jsp?country=Venezuela
Wow, some things are very cheap. Beer $0.72, meal $3.00, gasoline $0.01. It's hard to believe the gasoline price.
they import gasoline?
Pdvsa imports 70% of the gas consumed by the domestic market
The country's refineries process 420,000, of 1.3 million barrels a day of its installed capacity.
here we are so bad that even gasoline is scarce due to lack of production. they are making long queues to get the fuel.
Segwit WILL eventually help reducing fees, but it's going to take time. Users need to xfer funds to the legacy "1" bitcoin addresses to the segwit "3" format addresses. It would be helpful if the exchanges and payment processors (I'm looking at you Shapeshift) sped up their adoption. Last I checked, segwit txns were now around 5% of the blocks.
Fees are important, but the main positive of Segwit is that it paves the way to 2nd layer protocols like Lightning, etc.
Perhaps they need to be introduced to Steem... ;)
I don`t see STEEM as a currency to buy groceries, do you ? :)
Why not? It's fast, and it's free... at some point it could be.
Because the Steem blockchain can only handle 1000 transaction/second.
(source : https://steem.io/documentation/performance-and-scalability/)
If you compare this to Visa which can scale up to more then 50000 transaction/second.
(source: http://www.altcointoday.com/bitcoin-ethereum-vs-visa-paypal-transactions-per-second/)
Visa is here for quite a while. I'm sure in less than half that time Steem can do wonders.
Exactly :)
How about BitShares add a Hero fund to help Venezuelans. Ultimately this would be a great place to show the cost per transact fee differences and boost awareness of Steem as well.
SegWit address and set fees manually should be able to reduce transaction fees. If you don't need fast confirmation, you can set the fees below 80 satoshi/byte.
That is where the lightning network and atomic swaps come in :)
The way am seeing it, bitcoinization will hit many countries by surprise! Am just worried about my die-hard country because what is happening in China might happen here if government try to stop the trend of cryptos not just bitcoin.
Many folks in China has declared abandoned ship 🚢 to their country and has joined in the great exodus just because of the restrictions on bitcoin.
The world 🌎 should understand that at some point it's good to allow things to revolve in their own natural ways, going cryptos is a way of life and should be giving a chance.
My advice is that instead of government taking back seat ; let them (countries) come together and make or allow the era of cryptos go good for humanity.
Aaaww it's so cute how you still think governments want to do good for humanity. The truth is they only want power, control, and oppression of humanity. Crypto will make them obsolete. People in the crypto community have no interest working with governments. Why would we? This technology will get rid of them to give us a prosperous and peaceful world.
Aaawww it´s so cute that you think it will be that easy for crypto to make them obsolete. If people do not want to work with the government, they will (like you saw it in China) ban it. So I don`t think it is a smart move to disrupt almost everything without the government.
Not every governments are evil, in fact few governments already legalize and accept bitcoin.
Bitcoin is just amazing and the way it is been globally accepted makes it even more fun to acquire it... I've reblogged and upvoted... great
We will see more and more of this in future because the house of cards they call "monetary system" is about to fall apart because of hyperinflation and many other reasons. Imagine if the people in Greece bought BTC when they had their crisis. All would drive lambos now (:
Triangle as been broken, time to buckle up!
The country's situation presents a perfect opportunity for STEEM to enter the scene. Imagine people flocking to buy STEEM and using SBD to transact! I know @ned knows how STEEM can easily be adopted there. It's just a mobile app away from happening. The future looks good for STEEM and Steemit
Would be big for STEEM. How far away is that mobile ap?
Well, the 2017 roadmap says it'll be out sometime in Q4, so I'd say by November or December at most, but I wouldn't be surprised if it comes out sooner. I can't wait!
@jrcornel. As you wrote in a previous post. The genie is out of the bottle. It is only a matter of time. In fact, it is here. I hope that more people will read posts like these and get with the program. It took only 3% of the American public to have a revolution. Bitcoin use is under one percent. Interesting days ahead my friend.
IMO it's about time the world had a genuine international currency that isn't reliant on a specific state or its economics. As far as I'm aware the new regulation in China is about uncontrolled and fraudulent IPO's/ICO's. Given that their economy is driven by bribes (Oops sorry gifts. If you are planning on doing business there you need to give a lot of people gifts) they'll soon find a new way round the new regulations. Just like they'll still be secretly trading with North Korea despite the sanctions (or more accurately because of them).