Thread by @lawmaster

1/ I am a crypto skeptic and I believe there are a lot of things to be skeptical about. But there are also some things to be excited about. And I think one of the most positive developments is how bitcoin is seeing an increased interest in Venezuela.

theblockcrypto.com/2019/02/12/loc…

2/ Prices double every 19 days in Venezuela. The annual inflation rate is now approximately 1,300,000%, while the International Monetary Fund (IMF) projects it might spike to 10,000,000% in 2019. And this is passed onto the people that are living in poverty struggling to survive.

3/ Arguably, one of Bitcoin’s most important qualities is an inflation hedge useful primarily in countries suffering from irresponsible monetary and fiscal policy. Bitcoin is more portable than gold, divisible and much harder to be confiscated by an authoritarian regime.

4/ The question now becomes whether people in these highly inflationary countries actually use bitcoin. And the evidence seem to overwhelmingly point to that yes, it is actually being used there. The weekly volume on LocalBitcoins in Venezuela reached all-time highs this week.

5/ The government will now attempt to tax sending and receiving cryptocurrencies a minimum What remains to be seen is how Venezuela plans to enforce such taxation. It will likely be nearly impossible for public cryptocurrencies

6/ Argentina is currently suffering from the second highest inflation of 47% and while the traded volume on LocalBitcoins has experienced growth, it’s fairly insignificant compared to Venezuela. The weekly traded volume reached a USD equivalent of $230,000.

7/ Three other countries that have LocalBitcoins data available and are experiencing high levels of inflation are Egypt, Iran and Turkey. But there seems to be very little evidence that the demand for bitcoin has increased in these countries

8/ Venezuela is the only country where there is a meaningful correlation between the increasing inflation rate and increasing traded volume on LocalBitcoins. To be fair, none of the other comparison countries are experiencing inflation of more than 50%.

9/ As Bitcoin’s price fell from $14,000 to below $4,000 in 2018, its annual inflation in terms of USD was approximately 270 percent, meaning that even the inflationary currencies held value better than bitcoin for the year. This was, of course, not the case in 2017 and before

10/ But the value of holding bitcoin in authoritarian regimes is derived at least in part from censorship resistance and its inability to be seized. And as long as bitcoin is helping people that need it, I will always be on board.

Data that I used can be found here: docs.google.com/spreadsheets/d…

One of my fellow skeptical friends had a good point. We don't know who the actors that are buying the bitcoins in Venezuela are. It could technically be people that need it the least. So the data doesn't have to be a good indicator of more freedom, liberty, etc.