But Bitcoin saved Venezuela!

Periodically, there will be a rash of news stories claiming that  Bitcoin  has become popular in some country suffering economic  problems,  such  as Venezuela, India or Argentina – because the word “Bitcoin” makes a headline catchy, even  if there’s nothing  to the story.  This transmutes into  claims that Bitcoin will definitely take over the world, any day now. Or  advocates  will respond to scepticism “but Venezuela!”

These claims always fall apart on closer examination. Venezuela is a typical example: all the coverage traces back to a story in Libertarian magazine Reason, fiercely advocating Bitcoin as a way to avert the spectres of socialism and regulation. One of their interviewees had been arrested for stealing electricity to mine bitcoins, which the author describes as a “government crackdown” on “freedom” because “bitcoin mining is arguably the best possible use of electricity in Venezuela”.

A story in The Guardian in the wake of the Reason story appears to be where the rest of the press picked it up. It speaks of some Venezuelans relying on Bitcoin for “basic necessities,” and was based on interviews with a Bitcoin exchange owner, one of his employees and two of his customers.The author had previously written of Argentina and bitcoin.

These two questionably-founded stories were echoed and elaborated upon by the rest of the press, including – among many others – the Washington Post claiming that Bitcoin mining is “big business” in Venezuela,44 the New York Times that Bitcoin has “gained prominence” because of Venezuela45 or BBC News repeating claims from a Bitcoin boosterism blog46 – all of this being factoids repeated in a media game of “telephone.”

The Venezuelan volume on LocalBitcoins (a site for arranging person-to- person Bitcoin trades) at the time was on the order of 200-300 BTC per week, which isn’t nothing, but is negligible in the context of a whole country, and has tracked fairly closely with LocalBitcoins usage in other countries.

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