As has been reported by several news outlets, Venezuelan citizens are increasingly turning to digital assets such as Bitcoin as an alternative to the Venezuelan Bolivar. This off course has been precipitated by the rendering of the Bolivar almost valueless amidst one of the worst periods of hyperinflation since world war two.
It’s gotten so crazy in Venezuela right now that a cup of coffee costs 2,800 Bolivars (21p; 28 cents), up from 0.75 Bolivars a year ago, representing an increase of 373,233%, according to Bloomberg data. This sad state of affairs has seen many Venezuelan citizens flee the country as basic necessities such as toilet paper and medicine have become unaffordable which has seen crime soar.
Nicholas Maduro’s government has made attempts to arrest the financial mess by launching the country’s crypto, the petro which is supposedly oil backed to solve the problem; but critics have criticized the move terming it as a sham.
Venezuelan nationals who have managed to leave the country and secure jobs elsewhere use cryptos such as Bitcoin inorder as a way of sending money home. One such Venezuelan native is; Eli Meregote, a 28 year old currently living and working in Colombia.
“I first discovered crypto in 2017 when I lost my job in Venezuela,” the CCTV technician says. “Even if I had my job, it would’ve been useless anyway, because the minimum wage was $4 a month.” He said.
Cryptos offered him total control over his money without banks or third parties. He added that “With Bitcoin and other crypto-currencies, I can send money home faster and without obstacles.”
Bitcoin was designed to be a global digital currency that would be decentralized, i.e governments and banks couldn’t interfere with. Bitcoin like many other cryptos works by recording all transactions on a distributed ledger, known as the blockchain.
A lot of critics argue that cryptos are too volatile, take up too much energy, and are a staple for money launderers; criticisms that do not deter Venezuelans from using and holding them compared to the bolivar.
According to Asdrubal Oliveros, an economist with the Caracas based consultancy Econanalitica, “Many Venezuelans are using Bitcoin to convert their bolivars, which are being permanently devalued by hyperinflation, to keep something of value,”
She also added that most Venezuelans worked as freelancers, receiving their pay in Bitcoin since it does not make any sense to get paid in Bolivars.
Matt Aaron, a manager at the Venezuelan arm of Bitcoin, Bitcoin.com, said that the firm’s team members were being paid in Bitcoin cash were transactions are instant and cost less than a cent to make.
Despite the Bitcoin crash that has seen the crypto lose about 80 percent of its value since the end of 2017, Venezuelans see it as a viable alternative to the native Bolivar. This is explained by the recent spike in interest in cryptos in the country more than ever before. Despite the grim situation that is driving this interest, at least Venezuela is a country where Bitcoin is serving a practical value for citizens rather than just speculators.
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