Kentucky Fried Chicken was rumored to be the latest fast-food restaurant in Venezuela to accept Dash cryptocurrency for payment.
(Actually, KFC denies these claims, but then Church’s Chicken stepped up to the plate and announced it will accept the tokens.)
Why Dash? Because the cost of a chicken now exceeds $14 million bolivars, the Venezuelan currency.
Hyperinflation in the socialist country has caused the currency to lose about 99% of its value since last year… And even then it had already been through years of hyperinflation.
Officially, the exchange rate is $1 USD for 248,000 bolivars. In reality, the exchange rate on the black market is $1 USD for over 6.6 million bolivars.
Venezuela actually introduced its own digital token called the Petro in an attempt to save the collapsing economy.
The currency is allegedly backed by the country’s oil and mineral reserves. But there is so little confidence in the government of Venezuela that many doubt that the currency will ever actually function as anything other than yet another fiat currency–if it functions at all.
Because of this, the Petro has dropped to a value of just 1.8 cents each, from a January high of 8 cents, just after it was launched.
But if you’ll recall, January was when almost all cryptocurrencies reached their peak.
And in fact, Dash has fallen by a larger percentage than the Petro. Dash reached over $1,500 in January and is now valued at just $64.
So Venezuelans have been absolutely screwed by the country’s fiat currency.
But unfortunately, they have also suffered if they accepted Dash, though not nearly as much as the government issued currency. At least with Dash you can still transact. But it certainly isn’t a store of value.
At this point, most cryptocurrencies are still just speculations. People are mostly buying in the hopes that the value will increase.
That said, even with all the up and downs in the crypto-sphere, certain tokens have already proven that they are quite useful under the right circumstances.
For instance, an entire family was able to buy plane tickets out of Venezuela because of donations from Americans, transferred across borders via Bitcoin.
So Bitcoin provided value by easily moving money across borders to help with the humanitarian effort.
And at least with Dash, they are only paying about 23 times more than they one did for a chicken. With the Bolivar, they are paying about 1 million times more than they once would have for that chicken…
But still, Dash is only valuable if people agree it is valuable. And right now Venezuelans agree Dash is valuable as a medium of exchange, because it is better at retaining its value than the Bolivar, and easier to actually transact with than the Petro.
Cryptocurrencies are not yet where they need to be. But the collapsing price doesn’t prove they are worthless, or that they have no use beyond speculation.
A reputable token, actually backed by something tangible–gold or oil–has real value.
Obviously, Venezuela’s Petro is not reputable.
There are however more legit tokens already backed by gold. So why haven’t these been the most popular crypto coins?
Probably because everyone is looking for massive gains, as opposed to a store of value, or a medium of exchange.
We’ve gone through the first wave of crypto, and we have learned a lot. We might have even cleared out many speculators.
Likely the first token truly useful as a currency will be pegged to something tangible so that the only price fluctuations reflect the actual change in the value of the gold or oil backing it.
Check out a list of gold-backed cryptocurrencies here, and an explanation of how a few different ones work.