The people of Venezuela have been going through a horrid time in recent years, with the nation’s economic woes at the forefront of societal misery. As a result, the Bolivar—Venezuela’s national currency—has hyperinflated by an estimated 25,000% in 2018 alone.
Consequently, it comes as no surprise that Venezuelans have lost all faith in the Bolivar and therefore, are seeking an alternative means to exchange and store value. One such avenue that appears to be experiencing rapid growth is the use of Bitcoin, reports Cointelegraph.
The Rise of Bitcoin
In order to ascertain the effect that hyperinflation has had on the nation’s appetite for cryptocurrency, it is relevant to look at the amount of Bitcoin traded since the economic troubles began in late 2013. At the time and according to data extracted from LocalBitcoins, the trading of just 2 BTC occurred by those residing in Venezuela. In-line with the country entering severe inflation levels, this amount rose to an astonishing 64 BTC in December 2014. This is interesting, especially when one considers that Bitcoin had lost close to 66% of its value against January 2014’s high of $932.
With annual inflation levels entering triple figures in 2015, February alone saw more than 319 BTC traded on LocalBitcoins. The actual amount would have no doubt been significantly higher if one were to take trading volumes from SurBitcoin—which is one of the largest crypto exchanges in South America.
Moving forward in time, LocalBitcoins facilitated more than 21,556 worth of BTC trades in 2017, amounting to a 150% increase over the previous year. Once again, these figures do not take in to account alternative third party platforms.
To put things in to perspective, during the final week of December 2017, more than 281 billion VEF were traded on LocalBitcoins, which at the time equated to just over USD $2.8 billion (According to black market rates, which are often more reliable than official government rates)—not bad for a nation whose national currency is all-but worthless.
Suggested Reading : Learn more about Bitcoin in our Bitcoin beginner’s guide.
What’s Next for Venezuela and Crypto?
Many argue that the rise of Bitcoin trading in Venezuela is a unique example of a nation fighting back against the threats of hyperinflation. This makes sense, especially when one considers the rapid pace of devaluation that the Bolivar can experience in as little as 24 hours. Romania and New Zealand—two nations that the IMF places next to Venezuela when accounting for GDP—has seen LocalBitcoins usage increase by 2,400 and 875 percent respectively since 2013. In comparison, Venezuela’s usage has increased by more than 67,000 percent during the same period.
However, with the Venezuelan authorities recently moving forward with plans to prohibit the import of essential cryptocurrency mining equipment, alongside the introduction of the government-backed Petro, what will the future hold for Venezuela and Bitcoin?
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