By Colin Louis | VENEZUELA
“Depressions and mass unemployment are not caused by the free market but by government interference in the economy.”
-Ludwig Von Mises
Recently the world has watched as the value of cryptocurrency has skyrocketed. The value of bitcoin recently topped $10,000 per coin. Millions have begun investing and are investing in this new Internet-based economy. Prior to its massive success, cryptocurrency was considered “underground.” This was because there was no backing or regulation by any bank or government, until now.
President Nicolas Maduro of the socialist nation Venezuela announced that the Venezuelan economy will be reinventing itself after the inflation crisis took a sharp turn upward. The nation’s economy crashed after large regulation was placed on the nation by the socialist government. Regulation failed the poor nation and now the US government is threatening to impose sanctions. This puts Venezuela between a rock and a hard place that forces the government to find ways to make the Venezuelan economy more independent.
Maduro announced, “Venezuela will create a cryptocurrency.” The new currency will supposedly be backed by oil, gas, gold and diamond reserves. Those, of course, are the nation’s main exports and goods. Opposition leaders say the plan would have to go through Congress in order to be passed, and Critics of Maduro believe that the plan will fail. The plan would be a major blow to free market cryptocurrency, the purpose of cryptocurrency was to build a market free of regulation or government oversight.
The Venezuelan economy has been failing due to mass market regulations. Venezuela doesn’t need more government interference, it needs less. Bitcoin did not become the most valuable currency on the planet due to regulation by banks or the government, it became valuable because there was none. Cryptocurrency is a new economic frontier that tests how well it can survive without government involvement. By having a socialist state step in, we’re hurting that test. As Bitcoin and other cryptocurrencies take off we will see the world pay more attention to the way it has and will transform the global economy.