For months Venezuela has been fighting hyperinflation. A new currency is intended to curb the decline in value of the Bolivar, but until then, the Bitcoin enjoys more and more popularity.
Hyperinflation in Venezuela
The International Monetary Fund (IMF) anticipates an inflation rate of more than 13,000 per cent for the current year. Some economists even assume much higher values, but the exact rate is difficult to determine.
For years, the country has been suffering from US-imposed economic sanctions. A state cryptocurrency created by President Nicolas Maduro was supposed to flush fresh money into the coffers of the troubled country, but the petro could not stop inflation. It is also unlikely that investors will trust the “new” currency more than the Bolivar.
Venezuelans are more likely to use Bitcoin
Without dollars in Venezuela currently you can pay nothing. Food, doctor visits, medicines, apartment rentals and even groceries are paid in dollars . But not only the dollar is enjoying greater popularity. Due to the ongoing monetary devaluation, the Venezuelans now seem to increasingly rely on Bitcoin to make payments or to use the cryptocurrency as a store of value.
Bitcoin / Bolivar trading volume has skyrocketed over the past few weeks, according to LocalBitcoins , a service that allows off-exchange local currency trading for Bitcoins.
In advanced economies, cryptocurrencies such as Bitcoin had little use and served mainly as a speculative object. As Venezuela shows, Bitcoin can offer an alternative value store compared to the local currency in countries where the monetary system and financial structure are crumbling.