Cryptocurrency And The Economics Of The Third World
In America, it is often difficult for small businesses to get funding for their ideas. Simple things like pizzerias, pet groomers and nail salons are not considered by lenders as the big movers and shakers of the business world, but I can guarantee you they are vitally important to their owners and the owner’s families. Just getting their doors open every day is a constant struggle. Thoughts of expansion, hiring new employees or upgrading equipment are often fantasies that will never be realized.
Now imagine if you were a citizen of the third world. The pressures against small businesses are sometimes insurmountable. The governments are often corrupt, as well as the banks that serve them. Their agendas rarely, if ever, align with the plight of the people they govern, especially when it comes to small business. Even though small business is the driving force of the world’s economy, boosting the ability to lift entire classes of people out of poverty, corrupt governments don’t benefit from helping them.
There are dozens of recent examples of corrupt governments running their countries for the benefit of the ruling class and for the large multinational conglomerates that line their pockets. When these governments fail, it is the citizens, and the small businesses they run, who have to pick up the pieces.
Venezuela had a vicious banking collapse in 1994. Fueled by a corrupt banking system, lazy government oversight and an over-dependence on the oil market, Venezuela started an economic death spiral that took an unimaginable toll on its citizens.
From the New York Times, “Eighty to 90 percent of the banking system is compromised in this catastrophe,” said Oscar Garcia Mendoza, president of one of the strongest banks here, Banco Venezolano de Credito. “If you don’t have policemen on street corners, bankers will run red lights.”
The banking collapse was an almost total failure of their economy. Those that created the disaster numbered only a few hundred; bankers, multinational CEOs and high-level government ministers. They were alone in creating this mess. The cabal transmuted Venezuela into a Flag Of Convenience.
Once the dust had settled, one would have thought the leaders of Venezuela, even the corrupt ones, would have learned their lesson, but they didn’t.
In late 2009 Hugo Chávez, then President of Venezuela, took over a number of privately held banks, but all the deficit spending and price controls didn’t help the people of Venezuela. Poverty increased, inflation shot through the roof and shortages of food and fuel were rampant.
After the death of Chávez, Nicolás Maduro was the handpicked successor of the regime and became President of Venezuela. The long slide into economic depression was still continuing as Maduro’s government milked more money out of the people of Venezuela.
What shape is Venezuela in today? Worse if you can believe it. Two weeks ago, CNN reporter, Stefano Pozzebon, tried to get a dollar out of Venezuelan banks. Just one single dollar. He failed.
After 4 hours of standing in line at 4 different banks, all he could withdraw was six cents.
Keep in mind with all of the corruption, the payoffs, the poverty, Venezuela has more oil reserves than any other nation on Earth. More oil than Saudi Arabia and more than America. This type of economic devastation should not happen, especially to a nation of hard-working people like Venezuela.
Going back to the original complaint of trying to get a small-business loan in America, it is not even a reality for a nation like Venezuela, where it takes three days of withdrawing money to pay for one simple cup of coffee.
If you are a shirt-maker in Caracas, even if you are the BEST shirt-maker in the city, no one will make any capital available for you to expand your business. Obtaining an inexpensive, used sewing machine for a newly hired worker is a total fantasy in Venezuela. This person making shirts, at one of the city’s markets, is stuck with no hope, absolutely NO HOPE, of improving their life or the lives of their family.
You don’t count cryptocurrency.
Today in Venezuela, there are two predominate currencies circulating, the American dollar via black market exchanges and Bitcoin. Bitcoin has proven so popular that even the corrupt government of Venezuela has launched its own cryptocurrency named the Petro. The government claims it is backed by oil, but it is not. The government claims it is a cryptocurrency, but it is not. It is simply digital fiat from the same leaders who got Venezuela into the mess it is in today. This is one of the reasons we are building the Nimbus Token Platform, to allow small businesses to grow and thrive despite the ridiculous mechanizations of government. With Nimbus, businesses can fundraise and their customers can buy their products.
Maybe one day Venezuelans will be able to buy a cup of coffee without needing to spend three days withdrawing 18 cents from government-owned banks.