Could Bitcoin become national reserve asset in Venezuela?

As protests in Venezuela (often met with brutal force by the authorities) continue over the re-election of President Nicolás Maduro and his policies, opposition leader María Corina Machado has envisioned Bitcoin (BTC) as a national reserve asset in a future democratic Venezuela.

Specifically, Machado was discussing what she called the “violations of financial rights” by Maduro and the former president Hugo Chávez, “a tragedy unfolding over the last two decades,” with Alex Gladstein, the Chief Strategy Officer at the Human Rights Foundation (HRF), in an interview streamed on September 5.

Economy in Venezuela under Chávez and Maduro

According to her, the “Venezuelan Bolivar, once stable at three to four units per U.S. dollar, has lost 14 zeros under Chávez and Maduro, turning a functional economy into a catastrophic financial crisis, (…) inflation reached an unimaginable 1.7 million percent, with prices doubling every four days” in 2018.”

As Machado added, “cumulative inflation has exceeded 8 million percent” since 2016, “driving millions of Venezuelans to flee our country,” and the “financial repression, rooted in state-sponsored looting, theft, and non-checked money printed, happened despite our vast natural resources and (…) an oil price boom.”

Bitcoin as lifeline in Venezuela

On top of that, the “regime weaponized financial systems against its people, freezing accounts, seizing assets, and cutting off services.” However, she highlighted the critical role of Bitcoin in bypassing these restrictions, not just for regular Venezuelans but also for her party’s campaign:

“Some Venezuelans found a lifeline in Bitcoin during hyperinflation, using it to protect their wealth and to finance their escape. Today, Bitcoin bypasses government-imposed exchange rates and thus helps many of our people. It has evolved from a humanitarian tool to a vital means of resistance. We are grateful for the lifeline Bitcoin provides and look forward to embracing it in a new democratic Venezuela.”

Bitcoin as future national reserve asset

Furthermore, Machado said that a future democratic Venezuela would include the maiden cryptocurrency as a critical element of its national reserves, which once included vast amounts of gold, later drained by the government under Chávez and Maduro:

“We envision Bitcoin as part of our national reserves, helping rebuild what the dictatorships stole. Before our gold reserves were plundered, Venezuela had wealthy financial reserves worldwide. We will restore those reserves and include Bitcoin as a key component.”

Finally, she concluded that donations in the flagship decentralized finance (DeFi) asset were superior to “bank wires, which the regime usually blocks,” as the government cannot seize it, urging potential donors and others to “use this technology to bring about the change Venezuela desperately needs.”

Ultimately, it is easy to see Bitcoin’s appeal as a national reserve asset, particularly as it has demonstrated its use in various, often extreme circumstances like the war in Ukraine and Julian Assange’s release, as well as becoming a legal tender in El Salvador in 2021 and in Central African Republic (CAR) in 2022.

Meanwhile, former United States President and candidate for the next presidential term, Donald Trump, has also floated the idea of establishing a national Bitcoin stockpile that would serve as a strategic reserve asset, key to addressing the U.S. national debt, which has recently surpassed $35 trillion.

Bitcoin mining in Venezuela

On the other hand, Venezuela’s Ministry of Electric Power earlier this year shut down all crypto mining farms, citing the high energy demand and the need to ensure reliable service for citizens, thus effectively ending (legal) Bitcoin mining in the country, as Finbold reported on May 18.

“The purpose is to disconnect all cryptocurrency mining farms in the country from the SEN [National Electrical System], avoiding the high impact on demand, which allows us to continue offering an efficient and reliable service to all the Venezuelan people.”

Meanwhile, Bitcoin was at press time trading at $55,780, down 1.89% in the last 24 hours, declining 6.29% across the previous seven days, and recording an accumulated decrease of 3.04% on its monthly chart while still holding onto the 33.05% advance since the year’s start, as per data on September 6.

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