For citizens of the United States and most other Western democracies, the idea of triple-digit inflation, a crashing currency, and a lack of basic goods is almost impossible to comprehend. That’s the reality for millions in Venezuela, however, where nearly two decades of socialist rule has brought a nation with the world’s largest oil reserves to the brink of economic collapse. As that country continues to be mired in a seemingly endless crisis, ordinary Venezuelans are becoming increasingly interested in cryptocurrency.
At first glance, that interest might seem counterintuitive – especially given digital currency’s price volatility in recent months. However, with the Venezuelan economy on life-support and the Bolivar greatly debased, more and more Venezuelans are eager to seek refuge wherever they can find it. As Dash Core CEO Ryan Taylor observed in recent remarks quoted by Bloomberg,
“If you’re going to be in something volatile, you might as well be in something that’s volatile and rising than volatile and falling. We’re seeing huge demand in Venezuela through inquiries in our support line, as more and more people join our forums and chat rooms, even on how-to Youtube videos that have popped up.”
According to reports, trading volume for Bitcoin has doubled within the last two months, and thousands of new Venezuelan cryptocurrency users have joined the Cryptobuyer exchange. Some are purchasing Bitcoin and other digital currencies to protect wealth as the bolivar continues its decline. Others are buying digital currency to make online goods purchases for essentials that they can no longer find in the nation's stores.
For Venezuelans, Bitcoin can offer a more reliable store of value than the bolivar. The fact is that the nation’s currency has been so debased that its exchange rate against the dollar renders it all but useless; it takes more than six thousand bolivars to purchase just one U.S. dollar on the black market. Still, many Venezuelans cannot take advantage of the opportunity that cryptocurrency provides, as more than a third of the nation’s citizens lack internet access and four-fifths are mired in poverty.
Meanwhile, the situation in Venezuela seems likely to go from bad to worse. In addition to rampant corruption, an ailing currency, and an economy trapped in an apparent death spiral, the country has endured months of violent protests in the streets of its major cities. Opposition leaders continue to organize protests against President Nicolas Maduro’s regime, and the government’s response has left scores dead and thousands more in hospitals and jails.
Maduro has also drawn criticism for his plan to rewrite his nation’s Constitution through a process that would set aside the required public referendum. As Venezuelans continue to fear additional deprivations of both personal liberty and the basic necessities of life, it’s likely that their interest in Bitcoin and other digital currencies will only increase with time.