Venezuela is experiencing a very hard crisis. This is one of the reasons why virtual currencies, including Bitcoin (BTC), Ethereum (ETH) and Dash. Expanded on the economy. In a Reddit post, the user WorkingLime updated how the situation is in the country.
At the time of writing, one Bitcoin costs 1,524,000 BsS (the local currency of the country). According to the Reddit user, this represents an increase of 100% in just a month. Compared to the US dollar, Bitcoin remained more or less stable close to $6,500 dollars.
The monthly minimum wage is close to $8 dollars and inflation rates continue to grow. Some reports show that Venezuela could soon have an inflation of 10,000,000% only this year. Bloomberg has also developed the ‘Coffee with Milk Index’ in which they measure how much a cup of coffee and milk costs in this South American country. This index shows that the annual inflation rate in Venezuela is equal to 172,627%.
Each cup of coffee costs 95 Bolivars, less than $0.5 dollars, according to Bloomberg. About it, Bloomberg wrote:
“While the gauge isn’t nearly as sophisticated as conventional consumer price index, it has merits too: it’s tangible; tracked regularly; and, given that it monitors a product consumed by Venezuelans every day, provides a unique up-close look at inflation in the country:”
It is important to mention that in August 2018, Venezuela changed the bolivar by deleting five zeros off it. That means that 95.00 new bolivars are equal to 9,500,000 of the old currency.
The government determines the prices of some goods, something that did not work in the past and it seems that it does not work now. Some products are priced under the production cost. Some products are set at $0.45 dollars and they can be bought in shops for $3 dollars.
Moreover, the local government has pressed banks and financial institutions to star displaying balances in Petro cryptocurrency. The Petro is the virtual currency created by the government of Venezuela and that is backed by gold, oil and other natural reserves of the country. With it, the government tried to avoid international sanctions imposed by the United States and other countries all over the world.
Each Petro is worth 3600 BsS or $15 dollars, banks such as BBVA and Citibank display their balances in Petro.
In the last 24 hours, Venezuelans transacted 153 BTC, according to the local website dolarbeta.com. Coindance informs that the BTC trading volume has reached new highs in Venezuela in LocalBitcoins. 1.075 BTC have been transacted in the country in the last week.
Compared to the beginning of the current year, that represents an increase in trading volume of 584%.
Although the number of Bitcoins transacted in the economy is very high for LocalBitcoins, it is still small. The Bitcoin transacted in Venezuela represent just 0.002% of the whole economy. Dash, for example, is being embraced by several merchants in the country. It allows for fast and cheap transactions and there is a very big community in the country for this virtual currency.
This shows that Bitcoin and virtual currencies are helping the country and the population to avoid an even harder recession. Nevertheless, they will need to keep growing if they want to make a real change in the whole economy.