If you’re living in Venezuela, chances are, you’ll not be saving your money any time soon. The hyperinflation crisis plaguing the local banknotes has been evaluated to be even worse than that of Zimbabwe, with inflation reaching over 1,000,000% by 2018 – and still ongoing even today, with the central bank of Venezuela estimating that the inflation rate between 2016 and April 2019 was over 50,000,000%.
The currency has already been re-valued multiple times; originally just called the bolivar (Bs.), two reforms have led to issuances of bolivar fuerte (Bs.F) and the newest bolivar soberano (Bs.S.). However, the reforms have not been able to address the hyperinflation crisis, with the inflation rate only getting worse every month.
With hyperinflation at these levels, even holding onto currency and salary for a few hours could mean the difference between having lunch and starving. In comparison, Bitcoin just has an average quarterly fluctuation of around 5%, making it a much more stable asset.
Use of alternative currencies
Currently, the US dollar is the most used “alternative” currency in Venezuela, with over 54% of transactions made in September 2019 in US dollar. However, the rarity of the foreign currency, as well as the lack of denominations suitable for the local economic climate makes it difficult to do business and make payment – businesses often find themselves unable to cough up the right amount of change, sometimes leading to unnecessary debt or premiums paid. This phenomenon, known as the “dollarization”, has also seen parallels in the increase and regular daily use of cryptocurrencies in the country by more digitally-educated users.
Strong support and use of cryptocurrencies for daily activities
Cryptocurrencies such as Bitcoin, unlike paper-denominated counterparts, do not face the issue of change; every transaction made is exact and precise, making it advantageous to transact in crypto. On top of that, every transaction can be made as small as required, or as large as necessary for the same transaction fee. With other cryptocurrencies that support little to no transaction fees, such as Nano, the deal becomes irresistibly sweet for the Venezuelans – having faced decades of inflation and economic crisis, a stable currency suddenly seems like forbidden fruit.
The Venezuelan government has taken steps to try and hijack this wave of support for cryptocurrencies in the country by announcing a state cryptocurrency, Petro; the country has strong reserves of oil, and disputed President Maduro intends to try and resolve the economic crisis by backing the new cryptocurrency with these reserves.
However, the country’s National Assembly, headed by the opposition, has not recognized the currency. This internal turmoil coupled with lack of support both within and outside of the country (US President Donald Trump has even declared the government-issued cryptocurrency illegal) has not led to the cryptocurrency performing well. In fact, there is little to no evidence that the state-issued faux cryptocurrency is even backed by its reserves of oil, or even traded significantly despite the announced issuance of $6 billion in Petro currency.
Petro logo (Source: Wikimedia)
In comparison, Bitcoin and cryptocurrencies see much more usage and freedom – the way decentralized currencies work guarantees that authorities cannot intervene or control it easily, compared to foreign currencies that can be declared illegal at any time and confiscated (as is what happened under the previous administration).
The promise of blockchain-based solutions goes beyond just local payments; over three million Venezuelans are currently refugees in other countries, having left their motherland in search of better living conditions. The cross-border and global nature of cryptocurrencies means that they are able to easily and cheaply send money back home to those who have stayed; the almost commission-free approach is one of the only ways they can do so without paying exorbitant banking fees and risking currency controls.
I’m Venezuelan; how do I buy Bitcoin or cryptocurrencies in Venezuela?
Buying cryptocurrency in Venezuela is mostly a peer-to-peer affair; you find friends, family and contacts who already have cryptocurrency and buy or sell cryptocurrencies through them.
Oobit P2P is an example of a service like this that can be used to find local buyers and sellers; simply sign up, perform the needed verifications and you can be on your way to finding easy-to-use cryptocurrencies for trading, payments and more.
Find out more at oobit.com and start learning about how cryptocurrencies work today!