Venezuela has been hitting the crypto headlines for months now as the bolivar crashes to new lows, bringing to mind the catastrophic hyperinflation of Europe’s not-too-distant history. Incredibly, even the notoriously volatile crypto markets are a relative sea of calm compared to the bolivar’s plunge to the depths. But for many readers the background to the world’s biggest currency collapse may be something of a mystery, so we thought we’d explore the terrain in this country which is proving to be such a fertile testing ground for crypto.
Venezuela is a federal republic in South America with a population of 31 million. As early as 1983 the country was experiencing deep seated issues with its currency, and the 80s and 90s brought a series of crises culminating in the election of the Bolivarian socialist government in 1999. So economic woes are nothing new for Venezuela. But the financial life of its residents stepped down a few more rungs when controversial former president Hugo Chavez brought in capital controls in 2003. From this point on, Venezuelans could no longer exchange their bolivar for dollars or any other international currency. It’s clear that the current eocnomic crisis is just the latest in a long history of financial woes, and its into this context which crypto has entered.
The crypto charge in Venezuela has been led by Bitcoin itself and Dash, who’ve gained an impressive foothold in the country. The meteoric rise of the former can be seen through figures from LocalBitcoins.com. In 2016 the total was 8624 BTC, up over 300% from the previous year. By 2017 this had risen to an impressive 21,556 BTC. Dash, meanwhile, have made significant progress of a different sort. They’ve delivered a long series of conferences in Caracas, signed over 1000 merchants up for Dash payments, and scored a partnership with Kripto Mobile to build a dedicated smartphone for the crypto market in South America. Ethereum, Bitcoin Cash and Nano are just a few of the other coins making inroads in the Venezuelan market.
With Nicolas Maduro’s ongoing work to ensure serious adoption of the Petro, most recently claiming he will peg the value of the bolivar to the controversial state-owned cryptocurrency, Venezuela has become an unlikely forerunner in the scramble for real-world usage of digital currencies. Only time will tell if crypto can really save the beleaguered Venezuelan economy.
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