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Venezuelan opposition leader María Corina Machado‘s proposal to include Bitcoin (<a data-ct-non-breakable="null" href="https://cointelegraph.com/bitcoin-price" rel="null" target="null" text="null" title="null">BTC</a>) in the country’s national reserves appeals to both Venezuelans and Bitcoin supporters alike.&nbsp;
However, there’s a lingering distrust in the country’s political system and uncertainty over whether this proposal could realistically help the current crisis or if it’s just political posturing.
On Sept. 6, Machado <a data-ct-non-breakable="null" href="https://www.youtube.com/watch?v=5DNrpZVWxEU" rel="null" target="null" text="null" title="null">acknowledged</a> in an interview that many Venezuelans turned to Bitcoin as a “lifeline” during the country’s hyperinflation crisis, using it not only to preserve their wealth but also to fund their escape from the country. 
She said that Bitcoin had “evolved from a humanitarian tool to a vital means of resistance” for Venezuelans. The politician proposed adopting Bitcoin at the national level, including it as part of Venezuela’s reserves to help stabilize the economy.
Javier Bastardo, Bitfinex Bitcoin ambassador, told Cointelegraph that he considered “the statement to be legitimate” but acknowledged that it might have been significantly influenced by <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/crypto-us-election-issue-first-time-history-gemini" rel="null" target="null" text="null" title="null">Bitcoin’s prominence in the 2024 US elections</a>.&nbsp;
The Venezuelan Bitcoin activist added that it could also be a tactic to garner sympathy from the Bitcoin community for Venezuela, as politicians have been accused of abusing<a data-ct-non-breakable="null" href="https://cointelegraph.com/news/crypto-influence-us-elections-politics" rel="null" target="null" text="null" title="null"> Bitcoin as a political tool</a> in the past to gather attention or awareness.
Cristobal García, team lead at Maker Growth and former growth manager at Latin American exchange Buenbit, told Cointelegraph that, at this point, it seems like a political strategy.&nbsp;
He said that Machado may not have a team of Bitcoin or crypto experts to assess the feasibility of implementing her proposal. However, he admitted that “he wouldn’t be surprised if the current Venezuelan government is already using Bitcoin as a reserve.”
The Venezuelan crypto community believes incorporating Bitcoin into the nation’s reserves could provide significant advantages to the struggling country.&nbsp;
They see it as a potential tool for stabilizing the economy and fostering greater financial transparency.
However, they emphasize that addressing the ongoing civil unrest is crucial, as failing to do so could undermine the Bitcoin initiative before it even begins.
<h2 id="bitcoin-is-useful-for-devastated-or-war-torn-economies-such-as-venezuela">Bitcoin is useful for “devastated or war-torn economies such as Venezuela”&nbsp;&nbsp;</h2>
Ernesto Contreras, founder of crypto cross-border payments platform Unalivio and a former board member of Dash, told Cointelegraph that Bitcoin would help diversify and modernize the country’s reserves, “especially since the freedom it provides is not controlled by any government or banking entity, unlike fiat money.”
For Contreras, Machado’s proposal makes a lot of sense, as it amplifies the use case of cryptocurrencies as a “possible solution in a country that has suffered from inflation, isolation from the dollar-based financial system and currency devaluation.”
Anibal Garrido, a Venezuelan Bitcoin miner and crypto assets adviser, told Cointelegraph that adding BTC to any nation’s treasury will always be favorable due to the asset’s “sound money vision and tendency to appreciate over time.”
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 García said it “would be of great interest in the medium term to many governments worldwide,” as the crypto industry is advancing rapidly.&nbsp;
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Daniel Arraez, a Venezuelan economist and financial services consultant, told Cointelegraph that “devastated or war-torn economies such as Venezuela” are the most likely to benefit from placing Bitcoin in their reserves.
Arraez explained that these countries tend to have economies where fiat money does not fulfill the functions that money should offer, resulting in citizens seeking alternatives that provide a store of value. He believes this response could also be applied to a nation. However, “Bitcoin’s advantages would be harder to appreciate in a stable economy.”
<h2 id="bitcoin-can-shield-reserves-from-political-disputes">Bitcoin can shield reserves from political disputes</h2>
Ezio Rojas, Polkadot’s head ambassador and co-founder of Caracas Blockchain Week, told Cointelegraph that including Bitcoin in Venezuela’s reserves could both address the internal mistrust among Venezuelans regarding asset management and protect national assets from political interference.
Rojas said that Venezuela can attest to the problems of having assets such as gold in its reserves, “assets that have even been frozen abroad due to internal political diatribes.”&nbsp;
In early 2019, Juan Guaidó declared himself interim president of Venezuela, stating that the 2018 elections were fraudulent and unconstitutional. This declaration led to a diplomatic dilemma over the legitimacy of Venezuela’s government, particularly concerning the country’s gold reserves<a data-ct-non-breakable="null" href="https://www.ft.com/content/b03977ed-4f69-4e55-a3b6-77a8befdd5f3" rel="null" target="null" text="null" title="null"> held</a> in the Bank of England.&nbsp;
Due to ongoing political disputes, the $3 billion in Venezuelan assets<a data-ct-non-breakable="null" href="https://www.declassifieduk.org/why-is-venezuelas-gold-still-frozen-in-the-bank-of-england/" rel="null" target="null" text="null" title="null"> remain</a> frozen. This case has set a significant precedent, raising questions about who ultimately controls a country’s reserve assets amid political turmoil.
It’s unsurprising, then, that an unconfiscatable, transparent asset like Bitcoin is appealing.&nbsp;
Arraez argued that Bitcoin could “help to regain trust in state institutions by allowing audits and controls on the use of public funds.” The additional “transparency and real-time oversight of national funds is fundamental and an important step to regaining confidence in the management of public funds.”
José Rafael Peña, SNS partner at miner pool ViaBTC and a crypto reporter based in Venezuela, told Cointelegraph that he agreed with Arraez, stressing that it’s imperative to “always be aware of both their [the assets’] location and the institutions managing them.”&nbsp;
Rojas believes Venezuela should emulate El Salvador by <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/el-salvadors-bitcoin-wallet-vault-gets-ordinals-sats-donations" rel="null" target="null" text="null" title="null">holding Bitcoin reserves in a public wallet</a> to “bring a new level of transparency to the country.”&nbsp;
<h2 id="political-stability-must-come-before-bitcoin-adoption-in-venezuela">Political stability must come before Bitcoin adoption in Venezuela</h2>
The turmoil in Venezuela surrounding the 2024 elections stems from the country’s ongoing political and economic instability, combined with allegations of election fraud and manipulation, with Western governments <a data-ct-non-breakable="null" href="https://www.reuters.com/world/americas/venezuela-oppositions-gonzalez-speak-with-eu-foreign-ministers-thursday-2024-08-29/" rel="null" target="null" text="null" title="null">refusing</a> to recognize the legitimacy of President Nicolás Maduro’s new administration.
The countries that have publicly welcomed Maduro’s reelection are mostly those sympathetic to the Chavista regime that are traditional economic and ideological partners, such as Russia, China, Iran, North Korea, Syria, Turkey, Bolivia and Cuba, among others.
<figure>
 <img alt="Venezuela opposition’s Bitcoin reserve plan must overcome political turmoil first" name="" src="https://s3.cointelegraph.com/uploads/2024-09/01920583-3b0d-7889-8f90-88e9dfd9544e">
 <figcaption style="text-align: center;">
 International reactions to the results of the 2024 Venezuelan elections. Green is recognized, while red is not recognized. Source: <a data-ct-non-breakable="null" href="https://en.m.wikipedia.org/wiki/File:2024_Venezuelan_presidential_election_recognition_map.svg" rel="null" target="null" text="null" title="null">Wikimedia Commons</a>
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Many Venezuelans claim that the <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/blockchain-elections-zero-knowledge-tech" rel="null" target="null" text="null" title="null">elections were rigged</a>, with widespread belief that Edmundo González, who went into<a data-ct-non-breakable="null" href="https://english.elpais.com/international/2024-09-08/edmundo-gonzalez-leaves-venezuela-and-heads-to-spain-after-receiving-political-asylum.html" rel="null" target="null" text="null" title="null"> exile</a> in Spain on Sept. 8, was the rightful winner. Verifying these claims would require access to the voting records, which are held by institutions controlled by Maduro. The administration’s refusal to grant access to these records has sparked numerous demonstrations across Venezuela, which have, in turn, been met with government crackdowns resulting in numerous fatalities.
For Arraez, the Maduro regime has taken off its mask. He said that while it initially portrayed itself as a democratic state, it’s now going after any institutions and actors that oppose it.
Peña is not very optimistic, as Maduro and the military branch that supports him have the final say. He believes that Maduro clearly wishes to remain in power no matter the cost.&nbsp;
Bastardo hopes the Chavismo regime will be removed through an election to restore institutional stability, but he says that “Venezuela is at a terrible moment in our history.”&nbsp;
He believes that the government has no incentive to proceed with the true will of the Venezuelan people, as it has realized that the international community will not act in any way, meaning it feels increasingly confident to use violence, coercion and state terrorism.
If the solution to the crisis is for Maduro to leave office, then Venezuela’s options appear slim. A local crypto industry observer, who spoke to Cointelegraph under the condition of anonymity, argued that the regime’s only path forward is a severe military escalation, a major betrayal from within Maduro’s inner circle, or a negotiation offering him a compelling incentive to step down.
Once political stability is restored, Bitcoin initiatives could be adopted more effectively, but citizen oversight will be likely required to rebuild trust in Venezuelan politicians.
<h2 id="bitcoin-can-only-help-venezuela-s-inflation-so-much">Bitcoin can only help Venezuela’s inflation so much</h2>
Many observers noted that Bitcoin’s ability to address Venezuela’s economic woes is limited so long as centralized money printing can run unchecked, whether under a Maduro government or any other government.&nbsp;
According to the Central Bank of Venezuela, hyperinflation <a data-ct-non-breakable="null" href="https://web.archive.org/web/20190529191528/http://www.venezuelaaldia.com/2019/05/28/banco-central-venezuela-hiperinflacion-2016/" rel="null" target="null" text="null" title="null">peaked</a> between 2016 and 2019 when inflation rates surged by 53,798,500%. Since 2020, Venezuela has been able to decrease its dramatic inflation rates, but the problem persists.
<figure>
 <img alt="Venezuela opposition’s Bitcoin reserve plan must overcome political turmoil first" name="" src="https://s3.cointelegraph.com/uploads/2024-09/01920585-c8e8-712a-bf14-452917152c27">
 <figcaption style="text-align: center;">
 Rate of inflation from August 2023 – August 2024. Source: <a data-ct-non-breakable="null" href="https://tradingeconomics.com/venezuela/inflation-cpi#:~:text=Inflation%20Rate%20in%20Venezuela%20decreased,percent%20in%20February%20of%201973." rel="null" target="null" text="null" title="null">Trading Economics</a>
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Bastardo said that if the government is still able to press the button of the fiat printing machine, nothing will change:
<blockquote>
 “If there is still the possibility of creating inorganic money and issuing it without control, it is unlikely that even using Bitcoin will change the inflation scenario.”&nbsp;
</blockquote>
Contreras argued that it all depends on a country’s fiscal discipline, comparing the situation to a household budget: “In a household, red numbers are debts to banks, and in a country, that turns into inflation because politicians love to print more money.” “If you spend more than you earn, it doesn’t matter if you change jobs — you’ll always be in the red,” he said.&nbsp;
Related: <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/decentralization-layer-2-rollup-ethereum" rel="null" target="null" text="null" title="null">Full decentralization will happen in a few years — Layer-2 rollup teams</a>
Garrido said that while Bitcoin offers unique properties that could help combat inflation, it should not be seen as a “miracle maker,” as hyperinflation is a multifaceted issue.
Including Bitcoin in a nation’s reserves might be a step in the right direction, but it must be accompanied by broader measures, particularly political stability.
Contreras said that Venezuela has suffered from decades from structural issues, including misguided monetary policies like price controls, oil dependence, lack of transparency and international isolation.&nbsp;
While “Bitcoin could help add interconnection to the new market ahead of us, the country’s underlying problems must first be addressed, with fiscal discipline applied to the national budget.”

Venezuela opposition’s Bitcoin reserve plan must overcome political turmoil first

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