Under current conditions, dreaming of a better life in Venezuela boggles the mind. The only economic certainty is that if the government doesn’t seize your belongings, hyperinflation will take care of eating away your livelihood.
As a result, Venezuelans can no longer afford basic needs with the increasingly worthless bolívares they earn each month. Nothing is left to save or invest.
Michael Bennett, an entrepreneur and collaborator with the AIER Bastiat Society program in Venezuela, believes that if bitcoin had existed before the Chavista regime, the country’s history could have been different.
Bennett is an advisor and investor in early-stage technologies and startups. Born in Hawaii, he currently lives between San Francisco and Caracas, Venezuela.
The Bastiat Society is working in Venezuela to provide locals with sound-money and entrepreneurial guidance. Bennett teaches how to set up a business plan and follow through with it. He also evangelizes about technological innovations “that are coming to reality both now and 20 years in the future that the Venezuelan people can capitalize on.”
When Bennett arrived in Venezuela, his biggest surprise was how much control the government had over people’s minds. The Chavista propaganda has been effective at convincing many people that the state is always a benefactor. Many seem like trapped in a sect, looking up to Hugo Chávez and Nicolás Maduro as gods, not realizing that they are the culprits of the nation’s ruin.
Bennett is also an advocate of bitcoin and of coding in general as away to improve society. Before visiting Venezuela, he was interested in the state of cryptocurrencies in the Caribbean country.
However, the truth is that bitcoin and altcoins are far from being widely adopted in Venezuela. Further, Maduro launched his own government-backed cryptocurrency, the petro, which aims to monopolize the nation’s crypto economy and rake in funds to sustain the socialist regime.
Bennett explains that the petro is the antithesis of bitcoin: it is a centralized, tokenized security linked to a barrel of oil. It has the same characteristics of most altcoin scams, he says, so it is good to know that no one is actually using the petro in their daily lives.
One way Venezuelans can use bitcoin to their advantage is by working on blockchain platforms that offer compensation after completing certain tasks, such as earn.com. Even if they make a few dollars, that would be more stable than rapidly depreciating bolívares, suggests Bennett.
I firmly believe bitcoin will prevent another Venezuela from happening, with the exception of a country that is able to successfully filter data packets. In the future, individuals will earn in crypto or at the minimum a currency outside of their national one, and they will be hedged from inflation. If a state fails, they move, exercising their opt-out exit.
Bennett also believes that mining cryptocurrencies can be a boon for Venezuelans, because the cost of electricity is among the lowest on the planet due to subsidies. However, there are important risks. The regime has no respect for property rights and could seize the mining assets, as it has already done. The regulatory environment is anyone’s guess; the Chavista regime has recently gone back and forth on a ban on the import of mining equipment. Widespread poverty and violence may also make mining facilities the target of criminals or gangs, and the frequent energy shortages and unstable internet connections can become a nightmare.
What Venezuelans are going through can only be understood by being on the ground. The overwhelming rates of poverty, malnutrition, and child mortality are the tangible consequences of another socialist failure. Despite all this and a boycotted election, Maduro still clings to power.
Yet, political reforms and transparent elections are not enough to fix a society that has become dependent on the state. As Bennett asserted, it is crucial to change the mindset of Venezuelans to one where autonomy and free enteprise can begin rebuilding the country from the ground up.