Bitcoin will become a reserve currency
Venezuela's dream of becoming a cryptocurrency is clearly not limited to petro.
Venezuela's central bank may soon hold a certain amount of bitcoin and ether as part of its international reserves, Bloomberg reported today.
Petroeos de Venezuela, Venezuela's main source of revenue, is exploring ways to send bitcoin and Ethereum to the central bank so that the state-owned company can pay monetary debt to international suppliers, according to unnamed sources.
This idea is crazy. Does it work?
In fact, unlike the "cryptocurrency" (i.e. petroleum currency) created by President Nicolas Maduro of Venezuela, bitcoin has a certain degree of popularity in the world, and Ethereum is the most important competitive currency in the global market. It is relatively easy for anyone to pay in these two cryptocurrencies and convert them into French currency immediately.
More importantly, Venezuela has the cheapest electricity in the world and one of the most powerful hydro generators in Latin America. Therefore, it is reasonable to believe that despite the shortcomings of Venezuela's energy network, the Maduro government could have secretly opened bitcoin and Ethereum mines in the country.
However, on the other hand, using bitcoin and Ethereum for international trade is not easy. In order to convert these tokens into legal currency, anyone willing to do business with Venezuela must comply with the KYC policy established by the exchange or OTC trading. In most cases, KYC policies will be governed by the laws of the United States or other countries affected by U.S. policies.
This will be a problem for the Maduro government, given the further expansion of the sanctions currently facing Venezuela.
If Venezuela has bitcoin, Ethereum or other cryptocurrencies, the government is obliged to disclose such information to the national assembly (or the national constituent assembly), so the public will not see the official response until January 2020 at the earliest. Until then, the Maduro government is likely to keep the matter secret in order to avoid any possible opposition measures.
Is bitcoin a Venezuelan reserve currency legally viable?
In addition to using encryption as a means of payment, Bloomberg reported, "staff are still studying proposals to include cryptocurrencies in international reserves, which are currently $7.9 billion, close to the lowest level in 30 years." This means that bitcoin is also being used as a means of value storage in the country.
This is also technically and legally feasible due to recent regulatory reforms. Venezuelan legal experts said that the country has been committed to laying the corresponding legal basis for this situation.
Ernesto Portillo, a Venezuelan lawyer and co-founder of scriptojaris Venezuela, said:
"This is entirely possible and has been protected by the law of the constitutional act of 9 April 2018. Article 9 of the decree stipulates that the Venezuelan government shall promote and accept cryptocurrency as a means of payment. "
Portillo said that additional measures were needed to list the corresponding agreements in the mutually agreed contracts. Cryptocurrencies currently have the same functions as money: value storage, unit of account, and method of payment, he said.
However, bitcoin is a deflationary cryptocurrency, so the Venezuelan central bank can not manipulate the supply of bitcoin, nor can it arbitrarily set the value of bitcoin by law, which is why the Venezuelan government still needs legal currency.
Necessary innovation of cryptocurrency
In the past few months, the Maduro government has accelerated a plan aimed at promoting the popularization of encryption technology nationwide. The main Venezuelan banks can choose the transfer mode from petroleum currency to French currency. In the future, users may connect to other cryptocurrencies.
The inclusion of bitcoin and Ethereum in national reserves may also be a way to promote the spread of cryptocurrencies in Venezuela. Users can pay for a wallet connected to a bank, where recipients can easily convert it into Bolivar, or put these bitcoins in the wallet, just like a savings account.
Without an official statement from the government, we can only speculate. We are still not sure whether the Venezuelan government holds bitcoin and Ethereum. However, according to the current economic situation of the country and the rapidly depreciating Bolivar, increasing the cryptocurrency reserve will be an upgrade._DJMINER
Venezuela's central bank may soon hold a certain amount of bitcoin and ether as part of its international reserves, Bloomberg reported today.
Petroeos de Venezuela, Venezuela's main source of revenue, is exploring ways to send bitcoin and Ethereum to the central bank so that the state-owned company can pay monetary debt to international suppliers, according to unnamed sources.
This idea is crazy. Does it work?
In fact, unlike the "cryptocurrency" (i.e. petroleum currency) created by President Nicolas Maduro of Venezuela, bitcoin has a certain degree of popularity in the world, and Ethereum is the most important competitive currency in the global market. It is relatively easy for anyone to pay in these two cryptocurrencies and convert them into French currency immediately.
More importantly, Venezuela has the cheapest electricity in the world and one of the most powerful hydro generators in Latin America. Therefore, it is reasonable to believe that despite the shortcomings of Venezuela's energy network, the Maduro government could have secretly opened bitcoin and Ethereum mines in the country.
However, on the other hand, using bitcoin and Ethereum for international trade is not easy. In order to convert these tokens into legal currency, anyone willing to do business with Venezuela must comply with the KYC policy established by the exchange or OTC trading. In most cases, KYC policies will be governed by the laws of the United States or other countries affected by U.S. policies.
This will be a problem for the Maduro government, given the further expansion of the sanctions currently facing Venezuela.
If Venezuela has bitcoin, Ethereum or other cryptocurrencies, the government is obliged to disclose such information to the national assembly (or the national constituent assembly), so the public will not see the official response until January 2020 at the earliest. Until then, the Maduro government is likely to keep the matter secret in order to avoid any possible opposition measures.
Is bitcoin a Venezuelan reserve currency legally viable?
In addition to using encryption as a means of payment, Bloomberg reported, "staff are still studying proposals to include cryptocurrencies in international reserves, which are currently $7.9 billion, close to the lowest level in 30 years." This means that bitcoin is also being used as a means of value storage in the country.
This is also technically and legally feasible due to recent regulatory reforms. Venezuelan legal experts said that the country has been committed to laying the corresponding legal basis for this situation.
Ernesto Portillo, a Venezuelan lawyer and co-founder of scriptojaris Venezuela, said:
"This is entirely possible and has been protected by the law of the constitutional act of 9 April 2018. Article 9 of the decree stipulates that the Venezuelan government shall promote and accept cryptocurrency as a means of payment. "
Portillo said that additional measures were needed to list the corresponding agreements in the mutually agreed contracts. Cryptocurrencies currently have the same functions as money: value storage, unit of account, and method of payment, he said.
However, bitcoin is a deflationary cryptocurrency, so the Venezuelan central bank can not manipulate the supply of bitcoin, nor can it arbitrarily set the value of bitcoin by law, which is why the Venezuelan government still needs legal currency.
Necessary innovation of cryptocurrency
In the past few months, the Maduro government has accelerated a plan aimed at promoting the popularization of encryption technology nationwide. The main Venezuelan banks can choose the transfer mode from petroleum currency to French currency. In the future, users may connect to other cryptocurrencies.
The inclusion of bitcoin and Ethereum in national reserves may also be a way to promote the spread of cryptocurrencies in Venezuela. Users can pay for a wallet connected to a bank, where recipients can easily convert it into Bolivar, or put these bitcoins in the wallet, just like a savings account.
Without an official statement from the government, we can only speculate. We are still not sure whether the Venezuelan government holds bitcoin and Ethereum. However, according to the current economic situation of the country and the rapidly depreciating Bolivar, increasing the cryptocurrency reserve will be an upgrade._DJMINER
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