Today, Venezuela’s national economy is in a crisis. The economy is weakening, and this has led a countless number of its citizens to consider cryptocurrencies as opposed to their depreciated Bolivar.
People from all walks of life are turning towards Bitcoin and other currencies: from wealthy business people to retirees who are living on the brink of poverty. People are using these coins to pay for a range of products and services, such as doctor’s visits, alcohol, bicycles, and the basic necessities of life. The advent of blockchain technology has allowed trades to be conducted quickly and securely, with sites such as Localbitcoins allowing Venezuelans to buy and sell the currency using their fiat bank accounts.
The crypto revolution seen in Venezuela is occurring as the price of crypto assets continue to soar – in spite of many people’s fears that these new currencies are nothing more than speculative investments. Because In Venezuela, these coins are helping families survive.
Crisis Money In Venezuela
The inflation for the Bolivar currency is set to exceed 2000% next year, which is what has happened in other countries struggling with debt and economic slowdown. Countries such as Greece, Ukraine, and Zimbabwe, have also adopted Bitcoin over their fiat currencies, which was also due to excessive inflation and lack of economic progress.
The early adopters in Venezuela to use Bitcoin was originally made up of software development experts and businessmen. But now even the poorest of the country’s populace is turning towards Bitcoin to make ends meet.
Despite Bitcoin’s volatility, the people of Venezuela are converting their spare Bolivars into the crypto asset and other coins, as they believe that these currencies are safer than their rapidly depreciating Bolivar.
The trend of cryptocurrencies has become so popular that even the country’s President, Nicolas Maduro, has announced it’s own virtual currency: the Petro. Although the coin is still in its development stage, it has already drawn a large amount of criticism. Many experts in the cryptocurrency community speculate that Venezuelans won’t end up using a coin backed by their own government.
Opponents of the Petro have also pointed out that it could be used for illicit payments, which is a major problem for Venezuela with it being in a transport zone that’s known for narcotics.
Bitcoin Mining In Venezuela
One miner, who spoke under the condition of anonymity as he fears for his life, said that the government offered a large bribe in exchange for half of his Bitcoin mining machines. He said that government agents would also contact him asking for advice on how to acquire and sell the currency online.
There are other cases of apparent extortion conducted by the Venezuelan government. Some stated that authorities demand that they be paid in Bitcoin, especially in the case of bribes to corrupt policemen.
Although the currency is becoming more commonly seen in the country, there are only a few businesses in Venezuela that advertise they accept Bitcoin. Bitcoin is also hard for companies to exchange into Bolivar, which is needed to buy necessities such as food and other goods.
Venezuelans owning Bitcoin are able to sell their holdings on nationally-run websites looking to buy the coins. Some of these sites also facilitate the trade between Bolivars and the US dollar, which is a competing currency against Bitcoin on the black market.
The Market Trend Towards Cryptocurrencies for Businesses
One economics consultant, Mariana Leon, stated that he has helped many business leaders convert their Bolivars into a portfolio of crypto assets. He stated that many leaders saw cryptocurrencies as the only way their companies could stay afloat amid the depreciation and hyperinflation of the Bolivar.
He has now staked his financial future on an alternate currency called Pepecash, and has 12 people working for him. Each of his employees have elected to be paid partially in Bitcoin, signalling the rise of the currency in the Venezuelan market.