How cryptocurrency is changing the world
Money may make the world go around – but cryptocurrency is turning it on its head.
In this lesson, we take a look at how digital currencies are quite literally changing the world.
As you read this, ordinary people across the planet are using them to tackle real-life financial and economic challenges. Some countries are even proposing replacing their traditional national currencies with cryptocurrencies.
The case studies below demonstrate the transformative power of cryptocurrencies – both today and in the future.
Cryptocurrency case study #1: Venezuela
Venezuela is suffering from hyperinflation. The economic meltdown has resulted in insane prices for ordinary goods; a wheelbarrow of cash can barely buy a loaf of bread and supermarket shelves are so empty that they’re practically licked clean.
Basic household necessities are not only unaffordable - they’re increasingly unavailable. To keep their families alive, people have started mining Bitcoin. This allows them to make up to around $500 a month, which means they can afford to order things like nappies and medicine online.
The hardware used to mine cryptocurrency draws a lot of power but, while food in Venezuela is scarce and cash is useless, electricity is plentiful and heavily subsidised.
Unfortunately for Venezuelans, mining is considered an illicit activity - Venezuela has no cryptocurrency laws in place to regulate the market. As a result, miners are being arrested and this has forced others to take their operations even deeper underground. More miners are also turning to Ether mining as a more profitable alternative to Bitcoin.
Who are these miners you ask? No, not some cloaked cult of tech experts. They are people from all walks of everyday life – academics, shopkeepers, a former Miss Venezuela and even politicians.
Mining in Venezuela may not be a legally permissible practice, but it is giving its people a means to survive the current economic crisis. A more open approach that weighs up the real benefits of cryptocurrency could potentially help the country stabilise sooner rather than later.
Cryptocurrency case study #2: Catalonia
It’s anyone’s guess what Catalonia’s independence will look like. The region has declared its devolution from Spain, but Spain refuses to let it go. As the political battle rages on, Catalonia is already giving thought as to what sort of independent financial system it would like to implement.
Catalonia may be small, but it has a thriving fintech sector and technology advocates are calling for a national cryptocurrency. It’s not the first region – or country – to do so, however.
Estonia proposed a plan for a ‘digital residency’, which would include a national virtual currency called ‘Estcoin’.
Estcoin would exist on a blockchain-based system, but it would be issued by the country’s central bank via an official initial coin offering (ICO). More about ICOs in a later lesson – they’re important.
Catalonian leaders are seriously considering going this route. In fact, it seems they have already met with fintech experts in Estonia, as well as with Ethereum founder Vitalik Buterin, to discuss its viability.
It’s still too early to say how these plans will all pan out. However, even if Catalonia does secure its independence, it will still need to navigate several geopolitical and economic hurdles before realising its national cryptocurrency dreams.
The European Central Bank, for example, shot down Estonia’s plans for a national cryptocurrency. As Estonia remains tightly linked with the EU, this roadblock seems to have dampened their enthusiasm…for now.