Across the world, individuals, businesses, banks, and governments have responded to the advent of blockchain technology and cryptocurrency in different ways. Let’s take a look at five unique cases.
From the late 2010’s through to the present day, the Venezuelan Bolívar has experienced hyperinflation, meaning that the buying power of the currency dropped drastically. It is estimated that the inflation rate was over 10,000,000% across 2018 and 2019, and over 1,000,000% in 2020.
The savings of the nation are destroyed during a hyperinflation event. Cash loses its purchasing power and becomes worthless. In Germany during the Weimar Republic for example, children used piles of money to build forts. Others burned cash for heat. While fiat currencies lose value, hard assets rise in value with inflation. Traditionally, real estate and commodities such as gold and silver have provided some protection amid hyperinflation.
During this turbulent time, another option emerged: cryptocurrency. By 2020, Venezuela had the 3rd highest crypto trading volume worldwide, behind only the United States and Russia.
Unlike real estate, cryptocurrency can’t be seized by the government as it resides on the blockchain and unlike gold and silver, it isn’t heavy or difficult to transport safely.
Another benefit to crypto is that it can easily be broken down into very small fractions of a coin. It is difficult to cut real estate or a gold coin in half, but like with fiat currency, fractional division is a simple feature of cryptocurrency. Through crypto, Venezuelans have been able to preserve their purchasing power in a manner which is cryptographically secure.
While cryptocurrencies tend to be quite volatile, going up and down in large swings, they beat currencies which experience hyperinflation and only go down.
Kiklabb is a government owned entity in Dubai which provides licences to foreign businesses setting up shop in their economic free zones.
In 2020, they began accepting payments remotely to curb the spread of Covid-19. In 2021, they made it possible for these payments to be made in cryptocurrency.
The expectation is that other government offices within the United Arab Emirates will follow suit.
The Ontario Securities Commission recently approved two Bitcoin based Exchange Traded Funds (ETFs).
ETFs are traditional investment vehicles which are regulated by the government. The fact that crypto based ETFs now exist is an incredible step towards taking cryptocurrency mainstream.
In the Philippines, the Cagayan Special Economic Zone is a government owned area which was the first to offer hosting to financial technology companies. Now the zone is creating “The Crypto Valley of Asia” with the goal of attracting international blockchain companies.
The CEO of the economic zone, Raul L. Lambino, stated, “Encouraged by Silicon Valley in San Francisco, we are making CEZA a sandbox for the development of these disruptive technologies, serving as a laboratory for interested parties to experiment on these new dimensions of business enterprise.”
Like the ETFs in Canada, this is another case of the government embracing cryptocurrency and finding ways to integrate new technology into institutions which already exist.
Zug, Switzerland has a new nickname: “Crypto Valley”. The canton has attracted many companies due to their blockchain friendly regulations.
In February 2020, the authorities started allowing residents to pay their taxes with cryptocurrency. Their financial director Heinz Tannler stated, “As the home of the Crypto Valley, it is important to us to further promote and simplify the use of cryptocurrencies in everyday life”.
From the above examples, it is clear to see that the adoption of cryptocurrency is taking place all over the world. Individuals are finding ways to preserve their wealth and governments are integrating cryptocurrency into their services.