Bitcoin: A Solution For Venezuela’s Economic Crisis

By Kapil Gauhar

Venezuela is reeling under severe economic crisis and prices have been growing exorbitantly. According to sources, the inflation rate is such that a single cup of coffee costs a whopping one million units. This instance has been noted in Caracas, the capital city of Venezuela where a single cup of coffee costs one million Bolivars (currency of Venezuela). The country has witnessed a hyperinflation of a colossal 43,378 percent over the past 12 months. Venezuela was once an economically rich country being a part of OPEC nations.

With inflation being the biggest cause of concern for the country, the entrance of cryptocurrency has seen the situation ease to some extent. This is due to the fact that with digital currencies, the prices remain unchanged.

Though Venezuela’s President Nicolas Maduro had announced an increase of 155% in the minimum wage, the situation is still very frightening.

This has made Bitcoin really favored in Venezuela. Due to this in the year 2017, the country witnessed a cryptocurrency boom and saw a record exchange of 805 Bitcoins in just one week. The figure dropped but picked up again in the first quarter of 2018 as reported by volumes of LocalBitcoins.

The founder of BitcoinVenezula.com said that this has largely happened due to the regulations imposed by the government. He said, “Logic would make us think that the volume (measured in BTC against the USD) should increase with the rampant inflation of Venezuelan Bolivar, but it doesn’t look like it is happening. This could be because the real number of users haven’t increased much, or the total value they transact hasn’t actually increased much. Maybe caused by the stricter trading and mining regulations imposed by the Government recently”.

Though the government is doing it’s every bit to restore the economy, people are hopeful that cryptocurrencies will keep their savings steady.