Over the past year, the people of Venezuela have had a tough break. In a relatively small amount of time, the once-popular tourist destination has seen its economy collapse as the local currency hyperinflated to unprecedented levels. According to the International Monetary Fund, the bolivar could depreciate by 10 million percent by the end of this year, an issue that has ballooned Venezuela’s crime rate and caused widespread shortages of basic necessities such as food and medicine.
What many are now calling a “broken economy” is intrinsically tied to Venezuelan president Nicolas Maduro’s oppressive regime, which maintains an iron grip on the country’s banking system, making it extremely difficult for charities and other benefactors to send money to a nation of struggling people. To combat this issue, cryptocurrencies are being used to both protect the wealth of the Venezuelan people and provide aid through entirely new channels.
The first issue is straightforward, as Venezuelan interest in cryptocurrencies soared in mid-2018 when the nation’s currency began tanking. As the nation’s citizens watched the bolivar depreciate, digital assets presented themselves as one of the few methods of wealth storage that would both prevent inflation and shield assets from government seizures.
The second issue, however, comes in the form of a bold initiative by charities who are turning to cryptocurrencies in order to deliver aid by bypassing both the compromised banking system and the country’s ban on foreign aid. One such charity is GiveCrypto, a non-profit organization that was started by Coinbase co-founder Brian Armstrong for the exact purpose of delivering aid to compromised countries. So far, Armstrong and other industry leaders have raised roughly $4 million in digital assets to distribute them to nations in need.
As Joe Waltman, executive director of the U.S.-based GiveCrypto noted, Venezuela immediately presented itself as a primary candidate due to its unique situation. So far, GiveCrypto has distributed around $200,000 in cryptocurrencies by sending tokens to local in-country organizations like Bitcoin Venezuela and Eat BCH, who then distribute food and medicine to the people.
Waltman stressed the importance that cryptocurrencies have played in delivering aid, noting that such action wouldn’t have been possible without the use of digital assets. Furthermore, Waltman stated his desire for Venezuela to become a testing ground for a true crypto economy, where the people enjoy the freedom of making purchases in internationally-accepted digital assets without suffering capital controls or other forms of oppressive government intervention.
While the concept of cryptocurrency charities is still fresh, it shows tremendous promise and is already expanding, as Waltman’s GiveCrypto is also looking into ways of establishing crypto charity networks in West Africa. Compared to traditional charities, crypto non-profits allow for anonymous donations, greatly improve transaction efficiency and attract a wider donor base. With insurance companies growing more accustomed to working with the crypto industry, as well as the prospect of stablecoins, the development of crypto charities is definitely something to keep an eye on.