25 Feb 2020

Is Bitcoin Really Being Adopted in Venezuela?

Venezuela is a nation that has been facing an economic crisis and political instability in the past few years, which has caused its currency to highly devaluate due to inflation issues.

Venezuela is a nation that has been facing an economic crisis and political instability in the past few years, which has caused its currency to highly devaluate due to inflation issues.

Since the prices have increased a lot, and the salary it’s not enough to cover the necessities, this has caused that many Venezuelan fled the country to find a better life in some other South American nations.

The bolivar is Venezuela’s official currency, but in the past 20 years, it has suffered devaluation to the point that the authorities had to remove 8 zeros to avoid handling huge amounts of money. This means that bolivars are now 10 bolivars, but this didn’t stop the hyperinflation and the prices continue to go high.

This scenario has caused a crisis in this country that has led to a high crime rate, corruption, humanitarian crisis, forced migration, and so on.

Why did Venezuelans start to adopt cryptocurrencies?

With a minimum wage of $4/month, Venezuelans have looked for a solution to their financial problems, this is why they have started to use the US dollar in daily transactions, as well as Bitcoins. The Venezuelan government led by Nicolas Maduro has also tried to find a way to fight the “economic war” so they’ve launched their state-backed cryptocurrency called Petro.

According to reports, Venezuela is the Latin-American country with the biggest volume of BTC trading. Every week the LocalBitcoin platform indicates that more than 540BTC are traded in this country.

Many Venezuelans that are still living in this country have recurred to Bitcoin mining to produce money to survive, but this is an illegal practice.

Because the Bitcoin price is unstable, this has also led people to recur to other currencies, but many claim that this cryptocurrency gives them total control over their money, this is why it is used in this country.

Although Venezuela might be trading Bitcoins in the platforms, the local exchange offices don’t manage a great volume compared with others from Latin America, so this means that the trading is merely from Venezuelans who are in other countries and send money to their relatives that are still living in the country.

Many people suspect that Bitcoin is also being used for illicit purposes in Venezuela since money laundering has increased hugely because of US sanctions and criminals try to avoid this by using this decentralized cryptocurrency.

Progress in the past few years

The adoption of cryptocurrencies in Venezuela has shown some progress in the past couple of years since the government has loosened up the regulations to trade with other currencies apart from the Bolivar.

Also, Venezuelans prefer to store cryptocurrencies instead of storing Bolivar that is permanently devaluating, so this has caused an increase in the use of Bitcoin, Dash, Ether, etc.

During 2019, many businesses have started to receive Bitcoins as payment for services or goods, and this is something that has grown exponentially. One of the first ones to accept cryptocurrencies was one of the country’s largest retail chains as well as some luxurious hotels.

Caracas, Venezuelan’s capital city, has two Bitcoin ATM installed, so residents can trade cryptocurrencies with cash dollars and make their payments without any trouble. There also 4 other mobile units in other cities of the country, so Venezuela has 6 Bitcoin ATM available in total.

Many businesses started receiving Dash, which is one of the main cryptocurrencies in the market, and according to some reports, Venezuela is the main country that trades with it. The adoption of Dash has led to these businesses to start accepting Bitcoin also, so there’s been an increase in the trading of this cryptocurrency in the country.

Bitcoin demand in Venezuela

While the Bitcoin trade volume in Venezuela might seem low in comparison with the one in other countries of this region, many people see the adoption of cryptocurrencies as a way to keep some value in face of the economic crisis.

The demand that Bitcoin is having in Venezuela is increasing slowly but some consider that it’s the right path for having an innovative economical system.

Amid the Bolivar devaluation, the use of the US dollar, and the effort of Venezuelans for having a currency that is not affected by inflation, Bitcoin has become a vehicle to Venezuelans for accessing foreign currency in a relatively easy way and without government supervision or control.

One of the advantages of Bitcoin is that people don’t need to make large investments, and they can keep small amounts that can later exchange for cash dollars to make payments, buy food and other goods.

Venezuela’s cryptocurrency: Petro

The state-backed cryptocurrency called Petro was launched by Venezuela as a way to evade US sanctions, and although its use it’s not as easy as with other cryptocurrencies, it has created more confidence in the people with the Blockchain technology.

However, is a cryptocurrency that is difficult to exchange, and not many businesses accept is a way of payment, so many Venezuelans don’t invest in this. The Venezuelan government has tried to implement it, and although it might be hard to achieve, it sparks a conversation about the generalization of cryptocurrencies in the country.

Future growth expectations

The fact that the Bitcoin is being adopted in Venezuela, it doesn’t necessarily mean that it has become in a “crypto-nation” this is very far from becoming a reality, so there are a lot of myths around this.

By looking at the official numbers of Bitcoin trading in Venezuela we see that this nation isn’t leading the cryptocurrency market, but that finds in this a way of exit to the economic crisis and financial issues.

This will cause the adoption of Bitcoin to continue increasing in the next few months if the nation doesn’t see a positive change in the economy, but the complete adoption of this cryptocurrency is something that is going to take a while, and it’s also going to be a difficult process because not many Venezuelans have access to them.