Venezuelans Turn To Bitcoin As Hyperinflation Rages.

Venezuela is a country in crisis. In particular, the price of oil has plummeted in order to make way for new technology. As this has happened, people have turned to cryptocurrency as their unit of exchange and preservation.

Venezuelans are using bitcoin and other cryptocurrencies as the functioning currency is not worth anything.

Have you heard about Bitcoin and other cryptocurrencies? Read this article to learn more about cryptocurrencies, the current state of cryptocurrency, and how they can help solve some specific problems in Venezuela.

Venezuela: Introduction Nature of Hyperinflation

The country has suffered from high inflation rates and excessive currency-supply for several years. This hyperinflation, however, tends to run away when using the country's own currency. Instead of lowering prices, this problem usually leads to higher and higher debt levels required to repay the loans. Making matters worse is their lack in foreign reserves. Due of all this, people have changed their faucets from depreciating bolivars to bitcoin.

Hyperinflation is a deadly problem faced by many countries. Venezuela has been battling high inflation for years. This in turn has brought about a steep decline in the country's economy and government revenue. The World Economic Forum predicts that within five years, Venezuela will have shrunk by 60% due to hyperinflation. Many Venezuelans have seen such financial ruin first-hand. About 20% of the population owns 100% of the currency and prices are rising so quickly that people can't afford to buy even essential goods at affordable rates. As it went more and more black market, people turned to cryptocurrency for help in buying food, medicines, and other necessities.

Venezuelan ancial Crisis Scenario

Venezuelan President Nicolas Maduro announced that he would declare a 60-day "economic emergency" which includes enacting emergency measures on his own without prior consultation with the Venezuelan Congress. This news caused investors to rapidly flee Venezuela. Although President Maduro has taken notice of Bitcoin, it's not nearly enough to save the country from it's problems.

Major Cases of Hyperinflation in the World

Venezuelans are no stranger to extreme inflation. Venezuela is constantly battling hyperinflation and the Bolivar's value plummeted from 100,000 BsF to 1,600 BsF over a short three month span. Recently on February 21st 2018, prices began to be dispensed by the Smartmatic ATM in government-issued currency called Pood while the price of an avocado fruit that was bought with $1 Venezuelan bolivars was worth 16 million more than one year ago. Now Venezuelans have begun to turn away from their money towards a safer and more stable store of value: Bitcoin.

Case Study: Venezuela: How it Works

In Venezuela, people are turning to cryptocurrency as the country is facing great economic turmoil. The country is currently experiencing hyperinflation with no sign of slowing and nearly 5 million citizens have been forced to look for a new place to live. Citizens are finding that cryptocurrencies like Bitcoin offer an alternative to paper currency which hyperinflates at a drastic rate. This increased demand has caused Bitcoin's value in Venezuela to increase by 200%.

People in Venezuela are turning to Bitcoin because of the unpredictable hyperinflation. This is how it works: people such as doctors and journalists use Bitcoin to buy imported basic products as well as local produce. These goods are then sold at exorbitant prices in Venezuela's black markets.

Bitcoin, A Currency with Potential?

Economists all around the world are scrambling to find a solution to Venezuela's economic crisis. One major solution is Bitcoin - a cryptocurrency, that can be used for international and domestic money transfers, payments for government services and bills, and as a store of value. The reason why Bitcoin is becoming significant in Venezuela is because currently their currency, the Bolivar, has become so devalued that citizens cannot afford to purchase what they need; some economists explained how inflation will cause greater use of Bitcoin as cash. Venezuelans have turned to alternative resources in the past when faced with these problems, such as gold and U.S.-based Liberty Reserve, but ultimately those solutions did not provide them with long-term solutions.

Conclusion

The country has been suffering from a crisis that began with falling oil prices. Some people started using Bitcoin because it's hard to get rid of the currency and because it's a way to get out of the increasingly destructive economic system.