Countries in crisis: an opportunity for cryptocurrencies

Countries in crisis: an opportunity for cryptocurrencies

Bitcoin and cryptocurrencies have started to prosper strongly in countries whose economic situation is more fragile, not only as an investment method, but also for the exchange of goods and services.

Although bitcoin and cryptocurrencies have more traffic in non- crisis countries, such as the United States or the United Kingdom, it is a reality that has also prospered strongly in countries whose economic situation is more fragile.

Whereas in the first world cryptocurrencies are an investment method, in crisis countries it is more common for them to be used for what they really are, as currencies to exchange goods and services and to store value.

This happens because the currencies of countries in crisis tend to depreciate over time, which pushes people to protect their money by exchanging it for a more functional currency.

Migrate currency

In the past, it was more common for people to migrate to the dollar or the euro, currencies that, while fiduciary, tend to maintain a stable value. However, this was also due to a lack of options.

On the other hand, not all the inhabitants of a country in crisis have access to these currencies. At least when it comes to digital transactions. Instead, bitcoin and the rest of the cryptocurrencies (eg Dash, Ethereum, Ripple) are available to anyone with an internet connection and a bank account in whatever currency.

This opens the possibility for anyone who wants to shelter the value of their money in cryptocurrencies, to do so.

Countries in crisis: an opportunity for cryptocurrencies

The arrival of cryptocurrencies

This can be attributed to the fact that, despite the volatility, their trend is more upward than downward, while depreciated fiat currencies tend more to fall than to regain value. What makes the value not only protected, but also opens the possibility of making some kind of profit.

Venezuela is one of the countries with the highest bitcoin trading and several times has been in the top 5 of the regions that trade the cryptocurrency the most.

Venezuela: a clear example

The last time that Venezuela shone for its high bitcoin trade was in April, in the middle of the coronavirus quarantine.

Amid the rampant inflation carried by the Venezuelan economy, about 4.16 million bitcoin was traded in Venezuela in the last week of April, equivalent to approximately 595 BTC, according to UsefullTips and CoinDance data.

The bitcoin trade has flourished in Venezuela precisely because of the crisis. In fact, it is not the only crypto that has gained popularity. The Dash digital currency, for example, is also among the most widely used in the Caribbean country and is received as a payment method in more than 2,000 shops.

In Russia, Argentina and Iran, countries whose economic environment is also in crisis, cryptocurrency trading is extremely high.

Some experts support the success of cryptocurrencies in scenarios like this. While in stable countries it flourishes as an investment method, in others as well, but as a payment tool for goods and services and to store value.