Saturday, March 23, 2019 by Ethan Huff
The massive power outage that occurred throughout most of Venezuela earlier this month once again brought to light the important fact that, during a major “grid-down” event in which electricity is no longer available, cryptocurrencies like Bitcoin instantly become non-existent.
Venezuela’s rolling blackout event reportedly left most of the socialist country in the dark for more than a week, and during this time cryptocurrency trading on the peer-to-peer (P2P) platform “Localbitcoins” was basically brought to a screeching halt.
According to Zero Hedge, the number of transactions on the platform plummeted by as much as 40 percent during the week ending on March 9. By March 13, these transactions began to increase as power was restored throughout the country.
But in the meantime, Bitcoin traders who rely on the digital “coin” as part of their livelihood were basically stuck up a creek without a paddle. Unlike gold and silver, which don’t need electricity to exist, Bitcoin is entirely reliant upon a steady supply of electricity – which is never guaranteed in our increasingly volatile and unpredictable world.
“Since the ‘blackout’ began in #Venezuela, the use of #bitcoin has dropped 40%, heightening the country’s money problems: a lot of inflation, but no money,” tweeted Frances Coppola, a business writer for Forbes, on March 16, two days after power was mostly restored throughout Venezuela.
“#Socialism has returned VNZ (Venezuela) to the days of barter … This is the problem with using Bitcoin. It needs electricity,” he added.
Truth be told, the first monetary systems to go – and the ones that actually bore the brunt of Venezuela’s rolling blackouts – were credit and debit card systems, as well as ATMS, all of which failed as a result of not having electricity to power them.
Interestingly enough, these systems were actually hit harder than Bitcoin was, as ATMs, point-of-sale (POS) devices, and other digital monetary systems that have been around for much longer than Bitcoin weren’t functioning at all, even in areas that still had power.
The Bitcoin network, on the other hand, was still functional for people who had electricity and an internet connection.
“The power in Venezuela was down. People had no access to their $$. The ATMs weren’t working. The banks were down. But Bitcoin was running. It was always running,” one person tweeted in response to Coppola, adding that Bitcoin “is simply superior money.”
The real takeaway here is that virtually all of modern banking, including both money transacting and commerce in general, is 100 percent reliant upon a steady supply of electricity and uninterrupted access to global communications networks – meaning the whole thing is one big house of cards just waiting to collapse.
One electromagnetic pulse (EMP) over America’s heartland, as one example, has the potential to completely bring down the entire infrastructure of global banking and commerce – in an instant – plunging the world back into the dark ages.
This is why many “prepper” types are reverting back to things of tangible value like silver and gold, or even useful resources, all of which will still have value and won’t just vanish into thin are once the plug gets pulled.
Even the U.S. dollar is a risky bet since it’s really just worthless paper, and fiat-based at that. There are no guarantees apart from things that have inherent value, in other words – things like food, or energy, or shelter, or in the case of gold and silver, things for which there’s a limited supply and that will persist for purposes of buying and selling once everything that exists solely in the digital realm ceases to be.
For more related news about Bitcoin, be sure to check out Bitraped.com.
Sources for this article include: