Yesterday the government headed by Venezuelan president Nicolas Maduro devalued the bolívar by 95% (now it’s called Sovereign Bolívar) and pegged it to a national cryptocurrency El Petro. The authorities believe that the denomination of national currency, along with the other reforms, will enable to overcome economic crisis and hyperinflation as well as benefit citizens.
The demand for bitcoin rocketed against the backdrop of these events.
Most likely, it won’t result in anything. The devaluation of national currency is a political step to improve the trade imbalance. But instead of solving the key problem, Venezuelan authorities are trying to shift it to a new tool. In order to deal with a difficulty, it’s necessary to take everything under control and restrict capital outflow. What we actually see is how politicians are doing their best to cope with their own problems but representing it as progressive technologies implementation. They will soon get disappointed.