Venezuela, Turkey, Iran and Zimbabwe all have something in common: they are all going through an economic crisis. The high levels of inflation in these countries, where paying for even basic products requires a large bag full of notes, has led many citizens to turn to crypto as a store of value and a means of exchange.
It is even possible that “at some point in the future, hyperbitcoiniztion will take place, with Bitcoin (or some other coin) replacing the bolívar, the lira, the rial and other struggling national currencies,” as Simon Chandler at Cointelegraph writes.
However, Chandler also cautions that ‘hyperbitcoinization’ may not happen as quickly as outlined in the noted 2014 “Hyperbitcoinization” article by Daniel Krawisz. As he says: “Even though they’re conspicuously increasing, the BTC volumes traded in the affected countries above are not significant enough relative to global volumes, while the isolated nature of most of these nations means that adoption has little chance of spreading outward.”
The onward rise of BTC is also likely to be hampered by the position of countries using stable currencies, such as the euro, dollar, yen and pound, and even if the countries using these well known fiat currencies experience high inflation, their citizens won’t have the same need to look to crypto as those in Venezuela etc.
During 2016, Venezuelans in the crypto community started to see BTC as a possible solution to their problem and had started speaking in favour of bitcoin and other cryptos as genuine alternatives to the bolívar and even the U.S. dollar. Indeed, the founder of Bitcoin Venezuela, Randy Brito, told Cointelegraph in January 2016 that BTC could be “a genuine savior of the Venezuelan economy.”
All the countries currently experiencing an economic crisis and are turning to cryptocurrencies indicate that the digital assets have huge potential. However, what we can also see is that for as long as the world’s main reserve currencies — such as the U.S. dollar and euro — remain stable, and for as long as people of an unstable nation have access to such reserves, no cryptocurrency is likely to gain widespread adoption and use in that country — at least not as a result of inflation.