Venezuela’s relationship with Bitcoin has become a truly fascinating tale. In recent months, the level of Bitcoin adoption has skyrocketed, as more and more people see it as the answer to the country’s growing economic issues. In a previous blog, we took an in-depth look at why Bitcoin is proving to be a saving grace for the country’s struggling citizens. Latest reports show that Venezuela is experiencing a Bitcoin trading boom as the government’s battle to get the bolivar back under control falters.
The Fear is Real
Within Venezuela, there is a legitimate fear that the bolivar is now beyond repair, as it’s currently hovering around 14,000% inflation. Inflation of this level has seldom been seen throughout history, so it’s fair to describe it as extreme. The government recently made the drastic move to cut three zeros for the bolivar’s value. Whether this actually proves to be effective remains to be seen, but those residing in Venezuela seem to be taking a different approach to solving the problem. As inflation skyrockets, Bitcoin transactions in the nation’s currency are becoming increasingly common – this is at least according to recent data released by Localbitcoins.
Too Little, Too Late
The government is still of the belief that the bolivar is savable, but the new overhauls have now been pushed back. Reason being that the banking industry requires more time to prepare transaction systems and new bank notes. However, the feeling amidst the public is that President Nicolas Maduro’s response to the hyperinflation crisis has come far too late, as the economy is effectively devastated. As mentioned earlier, inflation is set to hit 14,000% during 2018 according to the International Monetary Fund. Calling it how it is, this represents a full-blown currency collapse, which could leave millions of people struggling to pay for basic day-to-day necessities such as food and medicine.
Searching for Solace
If you were to cast a wide net, you would probably find that Bitcoin only plays a small role in the daily operations of most countries. However, in places like Venezuela, where the economy is effectively crumbling, Bitcoin is taking on a more important meaning as an alternative store of value. What’s truly crazy is that while its people are struggling and turning to Bitcoin for solace, Venezuela’s government is actually discussing the idea of launching its own cryptocurrency. Having decimated the bolivar, how this can be conceived as a good idea is beyond most, while investors aren’t exactly going to put faith is this new currency given the state of the current one.
Bitcoin Beats the Bolivar!
Venezuela is dropping deeper into an economic crisis, with the bolivar being almost worthless at this point. Government officials might be devising new plans in an attempt to save the currency, but all that this doing is creating further distrust. For Venezuela’s population, Bitcoin appears to be presenting the answer, as trading numbers have exploded in recent months, with cryptocurrency interest only set to grow in the country as the bolivar continues to sink.