Among troubled economies of the world today, Venezuela holds a special place. Disastrous economic policies coupled with a slide in the price of oil have produced rampant inflation in the country.
The International Monetary Fund recently stated that Venezuela is on track to reach one million percent inflation by December. Simultaneously, the value of its national currency, Bolivar, has crashed, Investopedia reported.
The circumstances have provided an opportunity for growth of bitcoin and other cryptocurrencies. According to latest reports, the price of bitcoin is doubling every 18 days in the country.
Bitcoin is trading now for 1.3 billion bolivar per pop there. For context, a cup of coffee costs 1 million bolivar in the country.
While the symptoms of Venezuela’s current economic crisis have been festering for some time now, bitcoin became a popular investment option only towards the end of last year. That is when its price began shooting up and attracted the attention of mainstream media. Since then, the volume of bitcoin trading in Venezuela has surged.
The main attraction of the cryptocurrency to Venezuelans is that it claims to be inflation-free. Fiat currencies are at the mercy of central bankers, who can increase or decrease its value by flooding or withdrawing its numbers from the market. With a supply capped at 21 million, bitcoin is not at the mercy of central banks.
The cryptocurrency also offers an avenue for earnings in a troubled economy. Venezuelans have become among the world’s most prolific miners of cryptocurrencies. They are taking advantage of the country’s low electricity rates to, quite literally, mine for profits. The popularity of cryptocurrencies has become such that the country even launched a national cryptocurrency, the Petro, to circumvent sanctions imposed by the United States.
Meanwhile, Venezuela announced late July that it is replacing its national currency, the bolivar, with a new one that will reportedly be tied to its controversial “petro” token.
The new bolivar soberano (or sovereign bolivar) is to enter use in the country in August, according to an announcement from the country’s president, Nicolas Maduro.
As well as stating that the sovereign bolivar will be “anchored” to the oil-backed petro–which was launched in February–Maduro said the country will strip five zeroes from the bolivar rather than three as had been initially planned, Reuters said.
