The opposition in Venezuela is looking at bold ways to fix the country’s terrible economic situation. In fact, they want to use Bitcoin as an asset for the national capital. Recognizing Bitcoin as a national reserve asset is a necessary step to fix an economy that has been badly run for years.
Machado thinks that Bitcoin could help keep people’s assets safe from government control and give them financial freedom.
A key person in Venezuela’s opposition, María Corina Machado, proposes Bitcoin as the National Reserve Asset.
María Corina Machado, a leader in the Venezuelan opposition, told Alex Gladstein, Chief Strategy Officer of the Human Rights Foundation, about her plan to use Bitcoin (BTC) as a national reserve asset in an interview. She says that Venezuela needs to look to new ways to fix its economy, and Bitcoin is the key. She said that the cryptocurrency was a “lifeline” and a “vital way of resistance” against the falling economy of the country.
MACHADO says that this choice was necessary because the bolivar, the country’s currency, failed and lost 14 zeros between two presidential terms. She thinks that this devaluation, which was caused by an unchecked inflationary strategy, has caused inflation to reach 1,700,000,000%.
She also brought up the fact that the country has a lot of oil, but that the bad economic policies of Presidents Hugo CHAVEZ and Nicolás MADURO have destroyed all of its financial security.
María Corina Machado said that a lot of people in the country have turned to Bitcoin to protect themselves from the unstable currency and exchange rates that are controlled by the government. She said that people who use cryptocurrency have been able to keep their money safe and in some cases pay for their escape from the country.
To build a “new Venezuelan democracy,” MACHADO thinks that people will use Bitcoin. She says that the crypto asset can protect people’s property rights and make sure that gifts or investments from outside the country are not taken by the current government because it can’t be changed. She thinks that Bitcoin can help people trust the Venezuelan economy again and give the poor back their money.
Bitcoin is being thought about as a national strategy tool by more than one person. To deal with the huge U.S. debt, former President Donald TRUMP has also talked about the thought of creating a Bitcoin national reserve. If MACHADO’s plan works, it could be used as an example by other countries in trouble that want to stop being affected by the financial pressures of other countries.
It is both a bold and a risky idea for Venezuela to use Bitcoin as a national reserve currency. If it works, it could completely change the country’s economic path and provide a new model for other countries that are having trouble. But there are a lot of problems that need to be solved. For example, regulating the crypto market is hard, and Bitcoin is very volatile. The present government might also be against it.
Possible Outcomes of Bitcoin as the National Reserve Asset
Over the past few years, Bitcoin has slowly become a safer asset for many investors. This is because of ongoing macroeconomic uncertainty, geopolitical tensions, and Bitcoin’s better performance than major traditional asset classes. But what is now interesting to see is the slow but steady rise in the number of companies adding Bitcoin to their cash reserves. This could be because they are looking for new business opportunities, diversification strategies, or ways to protect their wealth.
It’s hard to fight with the idea that crypto assets are getting better. They are now used in regulatory systems, US presidential campaigns, and even as money in some places, like El Salvador, where Bitcoin is legal tender. Now that the SEC has approved Bitcoin and Ether spot ETFs, they are more common and accepted in TradFi markets than ever before.
But just a few years ago, not many people would have thought that Bitcoin, a cryptocurrency that has been linked to risk and volatility for a long time, would end up in conservative portfolios and company treasury funds. Things have changed for sure.
Also Read: Airdrops and Retro Drops Explained: A Simple Guide for Beginners 2024
Bitcoin as the National Reserve Asset: A Switch from Traditional Treasury to Innovated Asset
It takes time for any new idea to gain trust and support. Bitcoin is still very new compared to other asset classes, but it has stood strong in the face of political pressure, volatile market cycles, “black swan” events, and ongoing skepticism from many in the TradFi space. So much so that many financial institutions and governments that were skeptical at first are now openly supporting its use and resilience.
It’s clear that a lot of people are now treating Bitcoin like a “proven” safe haven asset, even though it hasn’t been called that yet. This appeal, along with the fact that Bitcoin is becoming more accepted in TradFi, may be the main reason why some business treasurers are now using Bitcoin to protect their cash reserves.
We’re not saying that nations have to use crypto assets like Bitcoin because of pressure from the public or board members. Instead, it is the nation’s treasurer’s or financial ministry’s duty to oversee risks and make sure the treasury stays stable over the long run. With government debt going up, inflation risks, and people losing faith in fiat currencies, adding Bitcoin seems to be more of a business choice than anything else. They might do this for more than one reason. Here are some to think about:
- As a Store of Value and a Hedge Against Inflation: Bitcoin has a level of scarcity that is hard to find in other digital currencies. Bitcoin’s quantity is limited by an algorithm, which prevents inflation. This means that while fiat currencies lose value over time due to inflation, Bitcoin can protect you from this.
- Legitimization of Bitcoin as an Asset Class: With the SEC’s approval of Bitcoin spot ETFs and backing from institutions and regulators around the world, Bitcoin has become a recognized asset class in mainstream finance.
- Loss of Faith in Fiat Currencies: Since Bitcoin is not backed by any government, companies could start putting their cash savings into Bitcoin to protect their wealth if people lose faith in fiat currencies.
- Uncertainty in Geopolitics: In theory, national crises, political upheavals, wars, and even economic penalties shouldn’t have much of an effect on Bitcoin’s unique drivers. Bitcoin has become an asset that many investors and businesses look to for long-term security because of this.
- Bandwagon Effect: The bandwagon effect is likely to have some value as more businesses and organizations start to support cryptocurrencies and/or hold Bitcoin as cash.
Final Thoughts
There are risks that come with using Bitcoin as a treasury reserve asset, but we could also say that there are risks that come with keeping fiat currencies for a long time. Bitcoin is not controlled by constantly rising debt and changing monetary policies, which can and do hurt investor trust, the credibility of central banks, and the value of national currencies around the world.
So, if it’s the choice of nation’s treasurers to carefully protect the nation’s cash reserves, and standard reserve assets are starting to lose value, then many nations will likely start to look into Bitcoin as a way to keep those reserves safe. All of this is still up in the air, of course.