Venezuela uses cryptocurrencies to fight crisis and inflation

While most of the world is trying to avoid recession, Venezuela is one of the few countries that is going through a severe economic crisis. The country depends on oil for almost 90% of its exports, and this has resulted in a deficit of more than $15 billion, which is the main reason Venezuela has been battling with inflation.

When the political crisis began in 2014, Venezuela’s Government-backed cryptocurrency was introduced to the public as a tool to help alleviate the nation’s economic crisis. As a medium of exchange, the petro (Pataca) was to be backed by oil, while the bolivar (Bs) was to be tied to the exchange rate for the Venezuelan currency, the Bolivar Fuerte. However, this has been far from the case, with the government failing to even control most of its own money supply. The petro has been traded at a fraction of its official value, while the bolivar is losing value even when not in the shadow of the government.

The Venezuelan government has recently started to accept the Bitcoin as an official currency, which has to do with various economic and political problems that have been affecting the country. The economy has been in a crisis for some time now and the government has been unable to provide sufficient financial aid to the people, so they started accepting Bitcoin to do so. The cryptocurrency has also been used by people to try and evade the high inflation that has been in the country for some time now.. Read more about venezuela cryptocurrency and let us know what you think.

Summary of the situation

  • Fast food chains accept cryptocurrencies as payment.
  • Venezuelan migrants send their money through LocalBitcoins or Binance.

Pablo Toro, a Venezuelan food truck driver, is interested in cryptocurrencies and uses them to send money to his family members. Although there are thousands of alternatives for sending money from abroad to a South American country, cryptocurrencies are the most popular option.

Toro, who immigrated to Colombia in 2019, uses the Valiu mobile app to receive Colombian pesos for his work. Toro exchanges them for Venezuelan bolivars which he sends to his family. However, Venezuela’s economy is subject to hyperinflation and the government has a vested interest in these transactions.

The Valiu app uses Colombian pesos to buy crypto-currencies, specifically bitcoins, which are then sold on LocalBitcoins. Toro’s platform is much more reliable than unofficial exchanges and the cost is lower.

Other options for sending money to Venezuela

According to Toro, the loss of electricity and internet in Venezuela affects the sending of money. Therefore, residents have turned to crypto currency alternatives that allow them to send money without fear. Toro trusts that he can transfer money to his family members and they will receive it in their cryptocurrency wallets or bank accounts within seconds.

With US sanctions and hyperinflation plaguing the Venezuelan economy, cryptocurrencies have become a solution. Virtual currencies have become a way to transfer money from abroad, save money and avoid devaluation.

Crypto currencies gain popularity after bitcoin launch in El Salvador

Although cryptocurrencies have been on Venezuelans’ radar for a few years now, the South American market is back on track. A few weeks ago, the government of El Salvador accepted bitcoin as legal tender. Moreover, the Argentine authorities have shown their sympathy for decentralised currencies.

Transfers in bolivars to LocalBitcoins are the largest in value among Latin American currencies. However, the performance of the cryptocurrency platform has declined with the introduction of Binance in the Latin American country.

Binance shows a 75% increase in bolivar transactions since May. This makes Venezuela the only country in Latin America where cryptocurrencies are traded, even though the market is declining.

Fast food chains like Church’s Chicken and Pizza Hut accept bitcoin as a form of payment. Some tech companies have also been affected by this boom in crypto currency, including USDT and Dash.

Venezuelans are using cryptocurrencies to avoid the devaluation of their money. Although bitcoin is unstable, that doesn’t stop residents from buying tokens when they get the chance. Although the country’s government has not officially launched a decentralized marketplace, Venezuelans are adamant about using tokens.The crisis in Venezuela has been devastating for the country’s citizens. When President Maduro took office in 2013, it was seen as a coup, but he was democratically elected. Still, the government failed to fulfill promises made during the campaign. Prices skyrocketed, inflation was at over 1,000,000% and the economy collapsed. The only way to stop the collapse was to print money, which led to hyperinflation. The government has tried to fight the crisis by implementing control of the local currency. In the first half of 2018, the Venezuelan Bolivar was 19,000,000 VEF, but today it’s 1,000,000,000,000,000,000 VEF. With the Venezuelan Bolivar so worthless. Read more about venezuela currency and let us know what you think.

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