In recent times, the global political forces have been very unevenly distributed. Leading positions and relations between countries can change very rapidly. Economic wars unleashed by the opposing sides can lead to the significant degradation of the financial system of a state. This problem is especially relevant for countries with developing economies. Therefore, it is not by chance that many countries that are unstable from the financial point of view have expressed interest in cryptocurrencies. Which countries can benefit from digital assets and how can cryptos become a panacea for sanctions?
The Vivid Example of Venezuela
Despite the fact that the largest oil fields are concentrated in Venezuela, its economy has been in a very deplorable condition for several years. Due to the fall in the price of "black gold" in 2014, the economy entered another crisis phase. Because of the depreciation of the national currency, ordinary citizens had to look for an alternative for storing their savings. Cryptocurrency has become one of those alternatives. Crypto payments are already widely used in Venezuela. Many citizens of the country use Bitcoin for this purpose. For example, the LocalBitcoins crypto exchange showed a phenomenal growth in Bitcoin trades made in Latin America.
Interestingly, since electricity is quite cheap in Venezuela, mining remains a rather popular way of earning money in the country. Minting one Bitcoin costs only $531 in Venezuela. The government is also highly interested in cryptocurrencies, and the launch of the petro is vivid proof thereof.
Despite the fact that the cryptocurrency solution of the economic issue is not well structured and debugged, most people in the country support this development path and try to improve their financial position with the help of cryptocurrency tools.
Will Turkey Become a Cryptocurrency Leader?
The Turkish economy is not experiencing the best of times nowadays. Due to the deterioration in relations between Turkey and the United States which led to an increase in tariffs for aluminum imports and subsequent devaluation of the lira, the country is in an extremely tense situation.
It is unlikely to be a surprise to anyone that the current crisis coincided with an increase in the activity of the cryptocurrency market. Turkish crypto exchanges, among which are Btcturk, Koinim, and Paribu, recorded a twofold increase in trading volume. 18 percent of Turkish citizens have cryptocurrencies. A group of unscrupulous people even tried to disguise Turcoin as the national cryptocurrency, which is supported by the state.
In general, the tendency to abandon the classical schemes for the distribution of economic resources is becoming increasingly popular. Right now, one can buy oil not only for dollars but also for yuan, and Iran has completely stopped using dollars. Moreover, the role of the U.S. dollar as a national reserve currency may soon disappear altogether. It is noteworthy that earlier, such global shocks forced large capitalists to diversify their portfolios and buy more gold.
In the modern world, its role can be performed by Bitcoin with ease, giving its owners a lot of advantages. For example, the first cryptocurrency, unlike gold, does not need to be physically stored either at home or in a centralized depository.
Not all experts share the opinion that cryptocurrencies can become a magical savior for degrading economies in the near future. "Blockchain technology will not help sanctioned economies attract investment since the regulation of cryptocurrencies by the state is accompanied by mandatory and sufficiently rigid KYC and AML procedures, which completely deprives any investment of anonymity. And even if we do not take into account KYC and AML, we are talking about large cash flows that are possible with the participation of corporate institutions, which also leads to the deanonymization of investors. Plus, blockchain technology itself allows one to track the entire transaction chain from the recipient to the sender," as said to DeCenter by Dmitry Lazarichev, CEO and co-founder of the Wirex Crypto Bank.
It is worth noting that the current system does not always reflect the real value of certain goods and services. For example, at the moment, the currencies of countries such as Brazil and India have also reached almost the lowest points of their rate in history. Iran and Russia are also discussing the possibility of using cryptocurrencies as a possible replacement for SWIFT. It is obvious that the cryptocurrency market will soon be simply impossible to ignore. As its volumes grow, people's interest in it is also on the rise. Moreover, large economies will not be able to blackmail smaller ones with possible sanctions and other instruments of economic manipulation.