Venezuela’s Crypto Adoption: Not as High as Expected
Despite its hyperinflation and authoritarian rule, Venezuela is not leading the way in cryptocurrency adoption as many tech pundits suggest. According to a recent report from Chainalysis, Venezuela ranks fifth in total crypto value received in Latin America and doesn’t even make it into the top 20 worldwide. So, what’s going on?
The report highlights Venezuela’s “unique crypto utility” due to its political situation and rampant inflation. However, Venezuelan Bitcoin enthusiasts like Javier Bastardo and Kevin Hernández argue that Venezuelans are more interested in accessing US dollars than cryptocurrencies. Bastardo explains that the country has been moving towards a de-facto dollarized economy internally and that stablecoins are only used as an intermediary step toward obtaining real US dollars.
Chainalysis also points out that cryptocurrency can enable citizens to resist the oppression of the Maduro regime, but Bastardo and Hernández believe this is only a half-truth. While crypto may be an alternative to an economy controlled by the regime, its usage among the population is minimal compared to the demand for dollars.
Centralized Exchanges Dominate Latin America
Another surprising finding in Chainalysis’ report is that Latin America is dominated by centralized exchanges, with more than 60% of people using them compared to the global average of 48%. Jazmín Jorquera, COO of Buda.com, attributes this to the ease, simplicity, liquidity, and trust factor offered by centralized exchanges. She also mentions that people prefer using these platforms instead of carrying cash due to general criminality in the region.
In Mexico, however, there is a lower reliance on centralized exchanges compared to other Latin American countries. Lorena Ortiz, founder of Bitcoin Embassy Bar in Mexico City, attributes this to the country’s booming tech scene and the availability of different platforms that serve the nation.
Overall, the simplicity of centralized exchanges and the relatively low tax burden in Latin America contribute to their popularity among users in the region.
Hot Take: Venezuelans Favor Dollars Over Cryptocurrencies
Despite Venezuela’s economic and political challenges, cryptocurrency adoption in the country is not as high as expected. Venezuelans are more interested in accessing US dollars rather than cryptocurrencies like Bitcoin. Stablecoins are only used as an intermediary step toward obtaining real US dollars. This preference for dollars over cryptocurrencies can be attributed to the country’s de-facto dollarized economy and its citizens’ demand for a more stable form of currency. While cryptocurrency can offer an alternative to an economy controlled by the Maduro regime, its usage among the population is minimal compared to the demand for dollars.
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