Ongoing protests in Kazakhstan this week have dealt a blow to Bitcoin as the cryptocurrency took a hit. The central Asian nation in recent days has been rocked by violent clashes between protesters, police and the army, sparked by a fuel crisis. Kazakhstan is a power player in the Bitcoin world. Last year, the nation became the world’s second-largest centre for Bitcoin mining after the United States, according to the Cambridge Centre for Alternative Finance. This isn’t the first time international politics and Bitcoin have collided.
In September, history was made when El Salvador became the first country to accept Bitcoin as legal tender, making it an official currency for the country.
This week, the country’s president – Nayib Bukele – backed Bitcoin’s value to reach $100,000 (£74,000) at some point over the next 12 months.
Mr Bukele also tweeted a series of predictions about Bitcoin, including “two more countries will adopt it as legal tender”.
Expert Carol Alexander told Express.co.uk that Venezuela is another country that could follow in El Salvador’s path.
She said: “I wouldn’t be surprised if Venezuela took a similar path. The Bahamas also have a digital currency called the sand dollar.
“But Venezuela, and many other unstable countries, could go for it. It’s most likely to come from places from South America where they have had inflation and terrible governments for years and years.”
Professor Alexander also explained how El Salvador made Bitcoin an official currency.
She added: “They started off by giving people Bitcoin to get it into circulation. Then they set up cash machines for trading in Bitcoin.
“They can switch them for dollars, but at the moment people seem to be keeping their Bitcoin.
“It’s quite possible that Venezuela could do this. There will be central bank digital currencies, they have to come.”
Venezuela has already experimented with crypto in the past.
This came as the country’s Bolivar currency was rendered useless due to hyperinflation.
In 2018, Venezuelan President Nicolas Maduro launched the “Petro”.
A year earlier, he claimed this would combat a US-led financial “blockade” – the US has hit Venezuela with sanctions in response to corruption in the Caracas regime, although this measure has contributed to the economic downturn in the country.
Nigel Green of deVere Group, has said three more countries could adopt crypto.
He said: “I’m confident that the young, maverick president, Nayib Bukele, is correct about other countries adopting Bitcoin as legal tender in 2022.
“But I would go further still than he did. I believe that it’s likely that three more nations will follow El Salvador’s pioneering, future-focused lead into the digital age.
“Low-income countries have long suffered because their currencies are weak and extremely vulnerable to market changes and that triggers rampant inflation.
“This is why most developing countries become reliant upon major ‘first-world’ currencies, such as the US dollar, to complete transactions.
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“However, reliance on another country’s currency also comes with its own set of, often very costly, problems. A stronger US dollar, for example, will weigh on emerging-market economic prospects, since developing countries have taken on so much dollar-denominated debt in the past decades.
“By adopting cryptocurrency as legal tender these countries then immediately have a currency that isn’t influenced by market conditions within their own economy, nor directly from just one other country’s economy.
“Bitcoin operates on a global scale and therefore is impacted by wider, global economic changes.”
Express.co.uk does not give financial advice.