Bitcoin Could be an Alternative Solution for Venezuela’s Economic Crisis
June 30, 2018 11:43 am
This is the case in Caracas, Venezuela, right now, where it currently costs one million bolivars to purchase a cup of coffee. It is because of the hyperinflation of the past 12 months in the once-rich OPEC country, which has now climbed to 43,378 percent.
In April 2018, The country’s President, Mr. Nicolas Maduro, ahead of the presidential elections reported an increase of 155% in the minimum wage. Even then, the rise represented a 13% fall in dollar terms as Nicolas Maduro accused his country’s predicament on an “economic war” waged against his government by Washington and the nation’s opposition.
In spite of Nicolas Maduro claims, poor economic policies, falling oil prices, and bad governance have been identified as reason Venezuela’s economic woes. It goes back to the days of Nicolas Maduro’s predecessor when the nation failed to gain on the boom in oil revenue back in the 90’s.
Thinking of the declining economic conditions, residents naturally seek alternative modes of storing value. Early 2017, the nations experienced a digital currency boom which observed a record exchange of 805 bitcoins in a week. This figure fell afterward, yet has grown again in the first quarter of 2018 as unveiled by trading volumes on LocalBitcoins.
Regardless of the ongoing hyperinflation of the Bolivar lately, one would assume that bitcoin trading volume will increase in coincidence. But this isn’t the case as the weekly trading volume has remained roughly at the same level. As per the Founder of BitcoinVenezuela.com, Randy Brito, this may be as a result of the recent regulations imposed by the government, among other reasons.
Randy Brito told to CCN:
“Logic would make us believe that the volume measured in BTC against the USD should increase with the rampant inflation of Venezuelan’s Bolivar, but it doesn’t seem like it is happening. This could be because of the real number of users hasn’t increased much, or the total value they transact hasn’t increased much. Maybe caused by the stricter trading and mining regulations imposed by the Government recently.”
There are plans on the ground to restore the Bolivar by the Venezuelan government by excluding three zeros and depreciating the currency. It is now slated to occur on 4th August 2018. The impact that this will have on the economy continues to be seen as residents keep on seeking an alternative store of value.
Meanwhile, the government works on its own plans to save the economy; other independent sources are taking steps that they think would be helpful for the citizens who have been the immediate victims of the situations. One such initiative is Jonathan Wheeler’s project, which is intended at raising a lot of bitcoins and getting it into the hands of Venezuelan residents via a massive mobile airdrop.