By The economic crisis in Venezuela has worsened significantly over the last few months. Vast volumes of Venezuelans have fled the country, as a direct consequence of the financial instability within the region. Consequentially, the Venezuelan Bolivar has plummeted this year. The fall of the Bolivar was a catalyst for the increased demand for bitcoin and other virtual currencies by the Venezuelan people.
CoinDance has reported that the Venezuelan trade has reached an all-time high, as bitcoins worth nearly 300 million bolivars were traded last week. It is expected that this record-high will be broken again in the upcoming week, as an excess of 292 million bolivars has already been traded. This is in continuation of a trend on the BTC/VES pair that began earlier in the year.
The economic burden on Venezuelan persons due to the financial crisis is enormous. Inevitably, many people have left the country in large numbers on foot and by bus in the hopes of improving their quality of life in neighboring countries such as Colombia, Peru, Brazil, and Argentina. The International Organization for Migration has published statistics which reveal that since 2015 around 1.6 million have fled Venezuela and that this number is still on an upward trajectory.
100% inflation despite the sovereign bolivar being two months old
Bitcoins have served as a hedge to mitigate the consequences of inflation, in Venezuela. The Bolivar has recently depreciated, which explains the record high trading volumes in the BTC/VES pair. According to a CCN report, 10 August saw the removal of five zeros from the Bolivar. Bloomberg said something similar when they stated that this seems not to have solved matters, as the rate of inflation is estimated to have reached a 100% despite the ‘new’ Venezuelan currency being less than two months old.
Venezuelan president, Nicolas Maduro, recently renamed the Venezuelan Bolivar the sovereign bolivar. The president has also announced that the bolivar will be attached to the Petro cryptocurrency which was presented earlier in the year. In addition to addressing the relentless hyperinflation, Maduro hoped to circumvent sanctions and gain access to international finance options.
Petro Cryptocurrency and the Venezuelan, state-owned oil company
People are generally skeptical of the Petro cryptocurrency, with some questioning whether it exists at all. The government has remained steadfast in propagating their efforts to boost the cryptocurrency by, for example pronouncing that it would be the official currency of Petróleos de Venezuela, S.A. (PDVSA), the state-owned oil company. In late August, CCN stated that Maduro has also pushed for the Petro to become the second unit of account.
“As of next Monday, Venezuela will have a second accounting unit based on the price, the value of the Petro,” Maduro remarked on national television. “It will be a second accounting unit of the Republic and will begin operations as a mandatory accounting unit of our PDVSA oil industry.”
Do you think that Bitcoins will be useful in managing inflation for Venezuelans? Do you think that the Petro cryptocurrency is an appropriate solution? Do you believe that the Petro cryptocurrency even exists? Let us know in the comments section below!
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