[edit, and while I'm in here] And why did it drop 50% in a month? Because the worlds 25th largest automaker decided it was a bad medium of exchange for buying electric cars.
Perhaps unsurprisingly in Venezuela, they decided to go the other way, dollarizing. They moved 66% of all transactions to the USD, forcing the Maduro government's hand, and leading to their major banks offering USD deposit accounts. [1]
If anything they need USDC not BTC. This is just gambling in a regulatory and legal void. The Mad Max of finance.
[1] https://www.bloomberg.com/news/articles/2021-01-13/venezuela...
You don't need to transact on-chain (i.e. settlement layer). There's a lightning network, where transactions are instantaneous, and fees are a few satoshis.
It's amusing how most Bitcoin critics focus on on-chain fees and pretend that lightning doesn't exist.
> And why did it drop 50% in a month? Because the worlds 25th largest automaker decided it was a bad medium of exchange for buying electric cars.
That wasn't the main reason. It was the China FUD and the lack of Grayscale's neutral arbitrage, which took out the biggest buyer off of the market.
Sure, however LN is not sufficient because it requires an on-chain transaction to open a channel. To open a channel for everyone on earth would cost up to a third of a trillion dollars and take over 75 years, plus or minus deaths and births. Like getting a phone line in the Soviet Union. Further, complexity of routing is quadratic and will quickly exceed our patience.
> It's amusing how most Bitcoin critics focus on on-chain fees and pretend that lightning doesn't exist.
Well, that's because the underlying that LN is strapped to is so incredibly inefficient LN is a rounding error at the limit.
It's not just FUD. It's been known for long that a lot of the Chinese interest in crypto is nothing more than evasions of China's capital export controls (see e.g. https://www.scmp.com/economy/china-economy/article/3098981/c...).
https://www.dw.com/en/venezuelans-try-to-beat-hyperinflation...
Why would a country embargoed by the USA use USD?
Likely only the wealthy laundering money, probably connected to the Maduro government are playing BTC. Only certain entities and individuals connected to the Maduro government are under sanctions, not everyone in Venezuela - which is why USD remittances are possible in the first place. Folks are using USD because Bitcoin is wildly inappropriate for use as a currency.
[edit] Consider that at the time that article was written the average BTC transaction fee with multiple months minimum wage for the average Venezeulan.
During a hyperinflation crisis everything that isn't money appreciates rapidly by definition. This means the often touted usefulness of bitcoin as "inflation hedge" is rather meaningless, because literally any asset that isn't money is an "inflation hedge". The shoes that I'm wearing right now are an "inflation hedge" just as good as bitcoin. In fact they're a better inflation hedge than bitcoin because their price is more predictable.
As for Maduro, he's just trying to stop capital flight.
Though so far US government authorities have been supportive of USD-based stablecoin use by people living under repressive anti-US governments, even going as far as facilitating transfers of USDC, via Ethereum, to medical and humanitarian groups in Venezuela: https://www.coindesk.com/circle-usdc-venezuela-airtm
