- Venezuelans running to cryptocurrencies to beat inflation as stock market dwindles
- Bitcoin and other altcoins have come in handy amidst hyperinflation
- The government’s effort to create national cryptocurrency has hit a brick wall
Venezuela is seeing a meteoric rise in cryptocurrency adoption and use because of their desire to escape the effects of the damaging effects of the ongoing hyperinflation. The Venezuelan Stock Market (IBVC) decreased 51 points to 5972 compared to the previous trading session as locals are turning to Local Bitcoin.
Crypto the Saving Grace for Venezuela
That Venezuelans have been living with hyperinflation since way back as 2014 is an is an open secret when its national currency the Venezuelan Bolivar hit an inflation rate of 57.3 percent in February of that year. By September of 2014 analysts believe the inflation rate had surpassed 100 percent, meaning that as the bolivar was depreciating, the ordinary people had to have something to fill the void that was left by their only known means of exchange.
A recent Tweet posted by Eduardo, head of support at PurseIO is a testimony to the dismal state of the local stock market:
The Venezuelan stock market moved less than $300K today. LocalBitcoin Venezuela has nearly the double in trading volume, about 650K. https://t.co/eo53sBvU0v
— ⚡🇦🇷Eduardo🇻🇪⚡ (@Codiox) January 16, 2019
Bitcoin and other altcoins have come in handy during this economic quagmire to provide Venezuelans with a medium of exchange or a store of value instead of their official local currency which was nose diving. Cryptocurrency trading and ownership have seen an impressive rise since 2014 with more progress seen during the last few months when inflation hit the unbelievable 46,000 towards the end of 2018 with the IMF predicting it was likely to hit 1,000,000 percent.
As citizens of other nations became devotees of cryptocurrency for a change, Venezuelans have turned to the blockchain and cryptocurrencies tyrannical governments can debase that. The strict currency controls that existed for years cut off the supply of hard currencies like the dollar that has kept its purchasing power.
Several cryptocurrencies such as the Dash have proactively established themselves within the country which has been strengthened by the people’s desire to resist and circumvent their authoritarian government which has for a long time used capital controls to starve any suspected opponents of funding.
In trying to mitigate the state of affairs, President Nicolas Maduro’s government created Venezuela’s state-backed cryptocurrency, the Petro but the citizens can’t seem to find it anywhere.
The president went even further to declare the Petro a second national currency and even asked local banks to adopt it, forced locals to use it to pay for government services but this hasn’t borne fruit, thanks to lack of liquidity and U.S. sanctions against it. Last month Nicolas Maduro more than doubled the price of the Petro from 3,600 sovereign Bolivars to 9,000; economists explain that the Petro can’t be a cryptocurrency since its price is determined by Maduro rather than by the market. One wrote:
“When the president decrees that a petro is worth 9,000 Bs.s, what he is saying is that the petro is not a cryptocurrency but a debt title that is predetermined which cannot be mined.”