Exploring Venezuela’s crypto ecosystem since the start of the pandemic

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In the year since the COVID-19 pandemic first disrupted almost every aspect of our lives, many things have happened within the crypto ecosystem around the world. So, what has the past year been like for crypto in Venezuela?

Even before 2020, Venezuela already had a number of businesses that accepted various cryptocurrencies as payment; however, considerably more have moved to adopt this form of payment over the past year. This includes everything from the hotel sector to famous pizza chain Pizza Hut announcing that it will accept Bitcoin (BTC), Litecoin (LTC), Dash and other cryptocurrencies as a form of payment.

Halfway through 2020, crypto exchange Cryptobuyer and payments processor Mega Soft announced that they would form an alliance to allow some 20,000 merchants that use their services to accept payments in crypto through the Cryptobuyer Pay solution developed by the exchange.

Another important landmark was in September 2020 when a Bitcoin node was connected to Blockstream’s satellite network — a first for Venezuela. The result of a joint effort between Cryptobuyer and crypto education provider AnibalCripto, the node was launched despite the logistical limitations imposed by COVID-19-related lockdown measures. Likewise, those responsible for the node announced that this was the first step toward building a mesh network that would be able to process Bitcoin transactions without the need for an internet connection.

New regulations

Despite the ongoing economic crisis in Venezuela, the crypto mining industry has been growing. According to the Cambridge Bitcoin Electricity Consumption Index, Venezuela contributes the most to the Bitcoin hash rate out of any nation in Latin America, which means that there is a substantial amount of computing power being generated in the country.

However, Venezuela introduced a new piece of legislation in September 2020 targeted at the country’s mining industry. In addition to the creation of an obligatory registry and the establishment of new taxes for those who work in mining-related sectors, the new law introduced the controversial “Pool de Minería Digital Nacional” (National Digital Mining Pool). Under this new requirement, it will be obligatory for miners to contribute their hashing power to a new, state-backed mining pool.

Overall, there is still no real clarity regarding the mining pool, which means that the way in which the law will be enforced is not really known, and it has not yet been revealed exactly how Venezuelan miners will have to participate.

Although it may seem paradoxical to see such a level of support for cryptocurrencies from a government that is often seen as being quite restrictive of its citizens and their freedoms, the past year has seen several crypto experiments, including plans to allow Venezuelans to pay for passports with Bitcoin using payments processor BTCPayServer.

However, even though the administration of President Nicolás Maduro did not end up implementing the passport…



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