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.
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!
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).
@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.
very good friend, I am Venezuelan and as a citizen I live daily this horrible chaos of the devaluation of our currency, that is why I have seen in the need to resort to the criptomonedas and I have faith that I will do well with this same that there are many who have been saving and investing in them. Greetings from Venezuela.
Karlin, I feel your pain in Venezuela. I hope your people can find a way to survive the chaos. You need to feed your children. What is the preferred crypto in Venezuela for a daily transaction like lunch or coffee?
thanks for your concern, we are really having a hard time, I have little time in the world of the criptomoneda, I have an account that believes in bittrex I only have a few sbd and 0.01 btc saved. I'm starting in this world and I want to get ahead.
here in venezuela the minimum salary reaches only to eat a week the other days you have to do magic to eat, and without putting school clothes shoes, I want you to know that I am a mother and wish happiness and well-being for my daughters.
You are starting, and I am ending. The good news for you, is that the entire information of the world is at your fingertips. You don't have to go to the library to look up a 20 year-old encyclopedia, as I did when I was young. You can now do any kind of business anywhere. You can learn anything you want from your bedroom. The opportunities may be limited by your country, but there are still plenty of them if you work and study hard and are motivated.
I'm using the translator, I'm sorry the English. Well I want to learn more and if you have much reason right now we are lucky to have the internet is a window to the world. thank you and if you can give me advice of criptomonedas and how to work them this is my email. I am willing to learn and work more in this.
For advice on Cryptocurrency, you can go on Youtube, and watch hundreds of videos. My best advice is as follows:
By the way, I don't recommend publishing your email address in machine readable form. It will be harvested and you will be spammed.
How much does it cost to make a meal at home for your family of four - I mean, what is the total cost of the ingredients for one meal?
thank you for your recommendations. good in dollars will get the account a lunch comes out in about 5 dollars that in bolivares are 100 thousand bf that is our local currency and is very devalued.
Thank you for getting this out. @jrcornel
Bluehorseshoe loves Bitcoin... and steem. :)
Bitcoin to the moon baby! Thanks for sharing..
Getting a nice bump today on geopolitical turmoil. :)
The pace at which this trend is growing is alarming and certainly to be seen taking strength as time passes by. I mean, the value for Bitcoin has increased almost 560% since last year. That kind of progress is not to be taken lightly. And right now its Venezuela, tomorrow it'll be half of the world. This looks like the future in the monetary perspective.
The people in Venezuela need bitcoin for basics such as purchasing food. How will us bitcoin speculators influence the Venezuelan people's ability to keep being able to buy food - will our actions make the bitcoin price so volatile that they'll choose to opt out and look elsewhere.
How can Bitcoin be taking over as a primary means of exchange when there are fewer transactions per day than in mid/late 2016?
Your numbers aren't exactly accurate. I can tell you that from Venezuela. However, the point you make is still accurate. I know people making a living just from steemit, and it has certainly helped me improve my living standards. You have no idea the difference it makes to have an income in currencies other than Bolivares, however small.
As to Bitcoin taking over, it's farfetched yet possible. There are already many businesses operating exclusively with dollars, but I do know a couple people making transactions in Bitcoin. It's untraceable, so the government can't keep up with you, and in Venezuela, that's literally the best thing you can hope for.
This is a clear example of an incompetent government with an economy totally linked to the oil price. After oil price has fallen, the economy has collapsed. But just organically people have started to use bitcoin more and more as the way to be able to do they daily living transaction needs.
It is a clear evidence that Mr. Dimon, JP Morgan CEO is absolutely incorrect on his speech.
Or doing what the do best and that is to discourage bitcoin and any crypto while they buy it up.
Always manipulating the market, and crypto is huge!
This might be an open door for bitcoin to wind up something valuable and not only brief comment swarmed. Yet, with its enormous exchange charges it will be a troublesome offer.
Thanks for yoir information
great even falling state won't fall...
Wow, I knew things were bad in Venezuela but that is worse that I imagined - 200,000 for lunch and a constant eroding of your hard earned money. I can understand why many people would move to bitcoin- easy to do and is actually appreciating instead of holding something that is becoming irrelevant. Thanks for sharing.
I had no idea it was that bad either... Cryptocurrencies are particularly attractive to the unbanked.
"Necessity is the Mother of Invention"...
Venezuela is the FIRST of many more countries to come...
AND it will be out of Necessity...
Thanks Cornel 4 Sharing !!
Cheers !!
Yes I couldn't agree more. Some will adopt it because they have to, which in turn will help spur others to adopt it.
thanks @jrcornel, many informations in your article about bitcoins. i think after next there is Bitcoin in every where, hpe for the best and my support for the peoples of venezuela.
Upvoted.
thank you @jrcornel you have provided information about bitcoin. if you are not too busy, visit my blog to look around :)
That is super interesting and intriguing! Bitcoin is an interesting socio-economiic experiment getting real world results. How many more countries will go the route of bitcoininization.
Hopefully a lot. It is an interesting experiment. Better than that one out in California where people are being gifted free money to see what they do with it...
Hey @jrcornel that is right on the money. I am disabled on workers compensation from California. I am pretty bad off and my family relies on California dollars. It is scary to think that I will not get my money that I bled for because a person who entered the State and Country illegally, will now get an expensive free education. It's scary as hell. I try to learn as much about investments as I can and put away everything I can into various ventures trying to get ahead so I won't loose more sleep over this serious problem. Furthermore, I live in a small town in Florida. I put a lot of money from my pension and workers compensation into my local economy. There are people who make good retirements distributed throughout the US that rely on those California dollars. The economic cycling in the rest of the US is significant. It is a big mess. When it tanks the shock waves may be deafening.
I'd buy bitcoin with it hehe
Great interview @jrcornel.
Apparently that might not be a problem XD
thanks for share
government is shooting itself in the foot...again.
that's crazy.
Interesting. Venezuela is banning Bitcoin for similar reasons to China but it's not working for them because they have lost control of their currency. When gold was rising Venezuela called back all its foreign gold reserves to bolster their own currency. Now that oil and gold have plummeted and the socialist government has mismanaged their finances, Venezuela is broke and selling off it's gold reserves for dollars. If they had converted all their gold to Bitcoin they would be doing mighty fine right now but then again that would have been a very risky move for any nation. China's central bank has also been accumulating lots of gold and some speculate to make a challenge to the supremacy of the petro dollar. So with their ban on Bitcoin and crypto exchanges it looks like China just like Venezuela is banking on their massive gold reserves to keep the government and the Yuan going strong. Unless they are working behind the scenes on their own version of a controlled crypto as I suspect many governments are doing right now. In fact, every government in the world with a department for National security should be running models on Bitcoin and other crypto currencies to assess the adoption rate and the very real threat to their sovereign currencies.
Otage. The evidence is that many countries are buying gold. Russia, for example, bought 201 tons last year. So far, I have not heard of any country buying bitcoin for their reserves. Maybe that's because the $12 billion Russia spent on gold exceeded the entire market cap of bitcoin last year. The trouble with gold is that the more you buy, the higher the price. The higher the price, the more it encourages miners, which then increases the supply.
On the other hand, bitcoin's supply is capped at 21 million coins, whatever happens.
I guess central banks will start buying bitcoin when the price reaches a billion dollars.
Thanks for your reply. Yes, although there is a finite supply of gold in the earth's crust we probably have only just scratched the surface. Its like "peak oil." A few years ago when prices shot up people declared that we had reached "peak oil" and we were on a worldwide downward trend of discovery and production. The world would be thrown into chaos without enough oil to meet demands. New finds and new extraction methods have proved that that is not the case and oil prices have declined again. As you point out the Bitcoin market cap is still in it's infancy so it will be interesting to see where it goes and which central bank is going to be the first one to jump in and reap the rewards.
I like that: "which central bank is going to be the first to reap the rewards.". I wonder what it would do to the bitcoin price if a government or central bank announced that they would even consider it. Imagine it is little Switzerland, which has the fifth largest foreign currency reserves on the planet.
Yes I read from @jrcornel that some jurisdictions in Switzerland are accepting limited amounts of BTC towards tax payments. So it appears they are dabbling although most likely the BTC from tax payments is immediately converted to Swiss Francs.
In Switzerland, there are 10'000 train ticket machines that also sell bitcoins.
cool
Steem is a much better fit... 3 second no-fee transactions will be a way easier way to buy lunch than sitting around and hoping that the BTC clears within the first 10 minutes.
I'm new in steemit. afraid of long comments. the post you share is very good thank you for sharing. success always ya friend!
It is certainly going to happen in the countries that are having the most issues with their fiat currencies.
I really like this article. Bitcoin is taking hold if you don't see it you are blind like Jamie Dimon.
yip Im BITCOINISED !!!
very interesting post ! great job
bitcoin are amazing cryptocurrency . bitcoin as like a future aset.
This is good news to all Bitcoin holders. Thanks for sharing...This will encourage other nations to look into Bitcoin as an alternative to their currencies.
People all over the world are tired of watching their purchasing power erode on a daily basis, all the while banks making all the money and charging you to access it, they have been pushing us into a digital system for years now, such as places that won't take cash, business all using direct deposit now, but with crypto you become your own bank, Along with silver and gold, bitcoin isn't going away.
Thanks for sharing this; it's great to learn more about crypto in terms that are easy to understand!
Bitcoinization!!! sounds good
Bitcoin for life!!
How to make bitcoin ??
"V" is for...Venezuela? Okay, got to start somewhere.
plsss like my blog too
Hello
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Fell Free To Drop Bye Anytime
Hi @jrcornel, When it comes to Bitcoin, your posts are the ones I like the most. Your analysis is to the point and very practical. Keep posting and serving man.