The Limitations of Bitcoin: Comparing Two Nations in Economic Turmoil
Over the past nine months, the people of Turkey have steadily begun to adopt Bitcoin and other cryptocurrencies following economic issues that arose in the country in mid-2018.
Rising foreign currency debt coupled with government overspending led to both fiscal and current account deficits that eventually amounted to 50 percent of the Eurasian nations overall GDP. At the time, President Recep Tayyip Erdogan blamed the United States for a coordinated effort to undermine Turkey’s economy after U.S. President Donald Trump doubled metal tariffs on the Turkish capital of Ankara.
Now, almost a year later, the Turkish lira has dropped again to a new six month low against the U.S. dollar, with inflation remaining at 20 percent. In correlation with the fall, local publication Koinfinans reports that demand for cryptocurrencies is once again surging in the country. Steadily increasing inflation means Turkish citizens are turning to Bitcoin as a safe haven to store their wealth.
Data from crypto statistics site CoinMarketCap reveals that Turkish lira-to-crypto pairs make up six percent of overall crypto-fiat transactions. This equates to it being the fifth most popular country in the world for cryptocurrencies purchases.
How does this level of adoption equate to a country facing far more dire political and economic woes?
Earlier today Coindesk published an article by Venezuelan citizen Diana Aguilar entitled “Bitcoin Can’t Fix Venezuela – I Should Know.” Aguilar, who fled the embattled country a week ago, offers an insight into the hurdles Bitcoin must still overcome if it ever hopes to enjoy adoption within lesser developed countries.
As a result of its failed economy, Venezuela has become something of an icon amongst crypto enthusiasts who believe it can benefit from adopting Bitcoin as a national currency. The reality, though, paints a stark image of the limitations of digital currencies.
Reliable electricity and internet are concepts that are taken for granted by those living in first-world, developed nations. They represent the most basic necessities that a digital currency requires in order to function. However, in Venezuela, even these simple necessities are far from guaranteed. Furthermore, Aguilar notes that a lack of computer and financial literacy means the majority of citizens wouldn’t know how to use Bitcoin even if they could access it.
The comparison reveals a depressing reality: those who need Bitcoin the most are often the ones least able to adopt it.