The South American country of Venezuela is in serious economic mess. Grand scale corruption coupled with collapsing oil industry and ill-conceived socialist policies have plunged the economy into hyperinflation. Hyperinflation has triggered trading Bolivars for Bitcoins by Venezuelans as a means of liberation. The transition serves as a testament to Bitcoin’s core value.
The current president of Venezuela, Nicolás Maduro who succeeded Hugo Chávez, who died in 2013—has clung to power by eliminating rivals and dismantling the judicial system. His ill-conceived economic policies have not augur well with the Venezuelan economy. Serious economic disaster has greeted the South American country in his time. According to IMF estimate, Venezuela’s inflation stands at around 1.3 million percent for 2018, levels of inflation not recorded since the Zimbabwean dollar era. This cataclysmic levels of inflation mean that prices increase over twenty-fold in a single day.
In attempt to fix the problem, earlier this year, President Maduro created a dubious cryptocurrency allegedly backed by oil, the Petro. However, none of these efforts have made a noticeable difference in reversing the country’s myriads of economic problems.
To combat the effect of hyperinflation, Venezuelans have taken to trading Bolivar for Bitcoin for liberation. Bitcoin trading volume on LocalBitcoins by Venezuelans, a website for facilitating peer-to-peer BTC trades, has exploded. According to Cryptoslate, a single week of Bitcoin trades represents monthly wages for 1.3 million Venezuelans if the CNN Report in March that the monthly minimum wage in Venezuela is just over $6 is taken.
The situation in Venezuela may be a harbinger for things to come. As Bitcoin adoption soars in the country, the innovation will make it harder for Maduro to extract wealth from his citizens through irresponsible fiscal policy.
It’s a profound change for people in the country—now, monetary freedom is within reach through the programmatic guarantees of cryptocurrency.