The Venezuelan crisis brings to light the importance of cryptocurrency privacy. How cryptocurrency will be able to reshape the pitfalls in modern finance is seen from the recent crisis.
The economy of Venezuela has been in the downward spiral for several years. There were extreme controls in the capital, which limited the citizens from being able to acquire foreign currency. Venezuelans are suffering from the hyperinflation hitting the 1.7 million percent in the year 2018. This led to several citizens crossing nearly 125 miles to Columbia.
There were no signs for the situation to come to a halt. Under this situation, there is a lesson that we need to learn in terms of how cryptocurrency can protect the privacy of the citizen in terms of the role it can play in society.
Crashing economics encourage the adoption of cryptocurrencies like Bitcoin, TCAT tokens, Stellar Lumens, Litecoin, TRON and the like.
Several Venezuelan citizens have been making their investments in Bitcoin to store their assets in a stable form. Venezuelans are said to trade in Bitcoin a lot than other larger countries like India, Canada, and America in Bitcoin investments. There is a high demand for Bitcoin ATMs in the country.
Several Citizens who flee are taking their valuables in Bitcoin as opposed to taking it in the form of Jewelry due to the portability and easy convertibility of Bitcoin.
The Volatility of cryptocurrencies is far tolerable as a store of value when compared with fiat currencies that have hyper-inflation. It is not possible to seize cryptocurrencies quickly.
Being a sovereign cryptocurrency, the Petro is centralized and does not provide for privacy or security to its citizens. Despite the petro being a real cryptocurrency, the government has complete control over its circulation. It can control the price and the ease and complication involved in the accessibility of the crypto. This is one reason why alternatives like Bitcoin are preferred, and they work well for the citizens.
A better-equipped government might, in the future tie the identities of the citizens with the transactions. The current government does not provide for such a security system in place. Therefore, until such a situation happens, Bitcoin, the pseudonymity of Bitcoin will suffice.
Several countries are currently exploring the option of coming up with Sovereign digital currencies to avoid tax evasion and money laundering. If this happens, it will be a privacy risk for the citizen and overpowering situation from the government.