Venezuela is currently going through humanitarian crisis; this has resulted to the exodus of a lot of its citizens. According to reports, over a million people have taken flight from the country in the last one year, and there seems to be no hope that this will slow down, as the crisis that are rocking the country does not in any way look like it is ending soon. As a result of this crisis, the citizens have been forced to live with hyperinflation for over four years now. Hyperinflation in simple terms is a phenomenon in which the general population of a country chooses to invest its wealth in stable foreign currencies, or in non-monetary assets.
Its national currency which is called bolivar unbelievably hit a 57.3% inflation rate in early 2014. And by the end of that same year, the inflation had gone up to 100%. This meant that the bolivar (VEF) was losing its value at a rapid rate, and with the neglect by the government, it hit 46,000% in early 2018.
In a bid to find a long term solution to this problem, the international bodies set plans in motion to influence policies that would alleviate the sufferings that Venezuelans were going through, while at the same time keep a standing pressure on the leaders of Venezuela. It was on this note that cryptocurrencies like Bitcoin and Dash came to being in the country, providing a lifeline for Venezuelans in search of investments and medium of exchanges in which they could trust.
Cryptocurrency Market in Venezuela
The cryptocurrency market in Venezuela has continued to be on the rise since its inception. Despite the fact that the Maduro regime, in its bid to back up its political hold of the country has been making efforts to control the economy and curb international aid, cryptocurrency has continued to thrive. The technology is providing a kind of external aid through P2P cash mechanisms. Citizens are sending remittances on the blockchain platform, eliminating a third party institution and thereby reducing cost. Also, there has also been donation to NGOs within the country from foreigners through the blockchain platform in order to buy and distribute food within the country. The most traded cryptocurrencies in the country are Bitcoin and Dash, with the Venezuelan government launching its own crypto project known as PetroDollar recently.
Bitcoin and Dash
In the year 2016, the number of Bitcoin traded via LocalBitcoins in Venezuela was 8624. This was a a 318.8% increase over the previous year, a year that Venezuela’s inflation rate hit an all-time high of 700%. The following year, it rose to 21,560, a whopping 150% over the 2016 increase. This is just one of the many indicators of the growth of Bitcoin in the country even as the inflation rate continued to rise higher. This growth portrayed in details does not in any way suggest the government didn’t try to crackdown on the cryptocurrency. Apart from that, it is not the only cryptocurrency that the Venezuelans know, hence when the king of cryptocurrency took a nosedive in 2017, Venezuelans fond solitude in Dash.
The cryptocurrency company (Dash) in its report in 2018 made it known that Venezuela was its scond biggest market. So big that it is more popular than even Bitcoin in the country. Its superiority over Bitcoin in terms of confirmation times, transaction fees is what made it popular in Venezuela. Also, because of the relative price of Bitcoin to the bolivar, it is believed that Bitcoin is not good for micro-transactions. Hence, a lot of merchants in the country opt to trade with Dash. Dash has also made concerted efforts to drive its adoption by the people of Venezuela.
You will probably think that the government of Venezuela is not in support of cryptocurrency. But despite the crackdown it carried out of Bitcoin miners in the country, they had to consider the situation they were in and then decided that it was time to change the story of hyperinflation. In 2018, the government introduced the first state owned cryptocurrency; Petrodollar. The PetroDollar is an oil backed cryptocurrency that the government hopes to leverage in solving the issue of the devaluation of its cryptocurrency. It is going to be measured in terms of barrels and from the news on ground, a Petrodollar is an equivalent of a barrel of oil.