Protests have been ongoing in Venezuela as the country’s economic crisis has only grown far worse over the past three years. In the meanwhile, Bitcoin has been adopted by many in the country to survive.
As her foreign reserves fall to $10 billion, Venezuela is on the frontier of where Bitcoin and failing governments collide. The nation’s poverty rate of 82% is double the 46% rate in 2014. Surbitcoin, the nation’s most popular bitcoin exchange service, was forced to cease trading in early February when its bank account was closed. This has since led to a spike in Bitcoin trading on Localbitcoins.
The fact that people have turned to black markets to procure goods amid hyperinflation could have led to the growing interest in the digital currency there. The situation has led to an official exchange rate of 9.900 bolivars per dollar, though on the black market the exchange rate is 4,000 VEF/USD, which includes the bitcoin for bolivars rate. Some have turned to selling the nation’s coins for scrap metal, since it offers a better return than holding onto the money for its fiat value.
“Some people eat twice per day at most, and very few calories in food,” says Venezuela native Randy Brito. “Some people know about bitcoin, and they can buy food and medicines with it, but they prefer to be quiet and not make that public to avoid being arrested and to avoid the government taking more action prohibiting bitcoin. This means others don’t learn about bitcoin so it depresses its value due to the lesser demand.”
Mr. Brito, who now lives in Spain, says everyone knows corrupt Venezuelan police are raiding mines to extort miners and to take the mines for themselves to generate bitcoins or sell the equipment on the black market. He says authorities also trade bitcoins they seize on the black market.
“Just like they do with the dollars and food,” Mr. Brito says. “Everyone knows that, that’s how life works in Venezuela. Corrupt officials import things people need or steal them from importers, then sell them on the black market. They are doing the same thing with mining devices.”
There was an 11,000 mining farm earlier in 2017, as well as another raid on a bitcoin mining farm in Caracas around the same time. Surbitcoin’s banking partner, Banesco, closed the firm’s account, according to the Venezuelan exchange. But, this is common for Bitcoin businesses worldwide, including in the United States and Europe.
In a social media group dedicated to Bitcoin in Venezuela, Bitcoin.com fielded comments by members about the most unique aspects of Bitcoin in Venezuela when compared to other countries.
“Bitcoin is illegal according to the government,” replied one commenter sarcastically, evoking recent events in the nation. Others complained of the government’s actions against Surbitcoin, lamenting now needing to travel to the nearest cities in order to exchange bitcoin for bolivars.
Mr. Brito believes that many of Venezuela’s most influential people, if they learned about Bitcoin, could help the plight of Venezuelans by educating them.
“They are not leaving the country, but they are also not calling for disobedience, nor for people to buy bitcoin or other hard currencies,” he laments.
What do you think about the recent events concerning cryptocurrency in Venezuela? Let us know in the comments below.
Images courtesy of Shutterstock, Coin.Dance