What the Venezuelan crisis teaches about cryptocurrency privacy

Amidst hyperinflation, a leadership crisis, and international interference, Venezuela's crisis has come to represent the failings of modern finance and highlights how cryptocurrency could reshape it.

With no indication that the situation is coming to a conclusion, I want to explore the lessons we can take away from this crisis; specifically in terms of the role cryptocurrency can play in an unstable political environment and the importance it can play in protecting citizen's privacy.

With the local currency falling in value whilst inflation spirals out of control, Venezuelans have taken control of their financial security with cryptocurrency.

Free of centralized custodianship, cryptocurrency gives individuals a comparatively stable asset that they have full ownership of and can transact with, without the fear of government oversight.

Whilst Venezuelans have been turning to crypto to avoid the restrictions of their government, the Venezuelan government launched their own cryptocurrency, the Petro, as an effort to stem the bleed of the bolivar.

As a sovereign cryptocurrency or pseudo cryptocurrency, it is entirely centralized, offering users no privacy or security.

Sovereign digital currencies are being explored by several countries with the purported benefits of the elimination of money laundering and tax evasion, but few consider the privacy risks it creates for citizens, the power it bestows to the government, or the security of such private data.

Beyond protection from governments, due to Bitcoin's transparent nature the coins you transact with giving details about your previous transactions or how much you own with any person or entity you transact with.

With large corporations already storing such extensive personal information, a cryptocurrency with poor privacy gives them further insight into your personal life.

Cryptocurrencies serve as an independent global currency, whose existence keeps government and banking overreach in check.