Bitcoin Rapidly Gaining Popularity In Countries With Failing Currencies
Iran, Turkey, Venezuela, Argentina and Zimbabwe, countries facing economic and currency crises, have all seen a surge in Bitcoin trading activity.
The economic crisis in countries like Venezuela, Zimbabwe, Iran, and Turkey has led to hyperinflation of their currencies. This situation has led to more people living in the affected countries to turn to cryptocurrencies both as a store of value and for transactions.
Just like Venezuela, Iran has been plagued by U.S sanctions over the past few years. Its local currency, the rial (IRR) has also been affected by inflation, but its 18% inflation rate is modest compared to the 82,766% recorded by the Bolivar.
The Iranian government has followed a similar path to Venezuela as it announced the development of a state-run cryptocurrency. By May this year, the trading volume in the country was over $2.5 billion.
Despite the ban placed on cryptos by the government in April, the IRR/BTC trading volume has increased over the past few months by 109%, rising from IRR 9.467 billion to IRR 19.796 billion.
The same cannot be said for Thailand which has a similar GDP with Iran as it only experienced a 27% rise over the past few months.
Due to government regulations and other factors, Bitcoin plays second fiddle to Gold which has risen by 300% against the IRR over the past few months as it has replaced the U.S Dollars in local Iranian markets.
Turkey’s hyperinflation problems is a recent one, with the currency hitting an all-time low last month. Turkish lira (TRY)’s inflation rate rose by 11.9% last year and decisions by the government subsequently turned things sour.
The Turkish people began looking to cryptocurrencies though the initial trading volumes were low, compared to other countries with similar GDP. The inflation rate rising above 15% this year saw the cryptocurrency trading volume rise even further.
Cryptocurrency trading volume witnessed a 131% increase since July with the BTC trade volume in Turkish lira rising from 327,295 to 759,026 over the past few weeks.
The rise comes despite the Bitcoin price recording losses during that period. There is a belief that Bitcoin surviving this turbulent times at a stable rate validates it as a store of value and is now a viable option to the Lira.
Despite the rise of cryptocurrencies, the country’s meager inflation rate of 15% isn’t enough to lead to massive crypto adoption like in Venezuela and Zimbabwe.
Turkish citizens still have access to the U.S Dollars, thus the situation is not as extreme as in the above-mentioned countries.
The major catalyst behind cryptocurrency adoption in Venezuela is the economic crisis and the hyperinflation which has plagued the country for more than four years now.
The economic crisis began when President Hugo Chavez in 2003 imposed capital controls, making it very hard for citizens to access the U.S Dollars. Subsequent sanctions and devaluation of the currency have affected the Bolivar even more.
Since 2014, the number of Bitcoin traded on LocalBitcoins peer-to-peer (p2p) crypto-exchange has been on the rise in Venezuela.
In the week of Dec. 12, 2014, 625,573 Venezuelan Bolívar (VEF) was traded for Bitcoin on LocalBitcoins which was equivalent to about $99,403.55. With the rising inflation, the amount traded increased.
In the week ending on Dec. 17, 2016, there were Bitcoin trades worth a total of VEF 527,945,763 which was around $105,589.15.
Bitcoin awareness and preference became noticeable in the country around that year, with some individuals of the view that Bitcoin could become a genuine savior for the country’s economy.
Cryptocurrency exchange Surbitcoin revealed that the number of Bitcoin users in the country rose from around 450 in 2014 to 85,000 in 2016. Even though it is a small figure, it shows that more people are entering the cryptosphere in the country.
Despite the entry of the state-controlled and oil-backed Petro cryptocurrency, Bitcoin and other cryptocurrencies continue to be preferred by citizens of the country. A report by Reuters revealed that no exchange is trading Petro and no merchant is accepting it.
It is unclear how fast the trading volumes will continue to rise in the country considering the fact that the government has recently devalued the Bolivar again.
However, it is expected to keep growing, with its growth rate much higher than that of New Zealand and Romania, two countries with similar GDP.
Venezuela isn’t the only South American country to be enjoying Bitcoin, with Brazil and Argentina also becoming major players in the region.
The title of the leading cryptocurrency in the country belongs to Dash, with its low transaction fees and fast confirmation time features that appeal to merchants in the country.
Despite the inflation rate currently at 31% and expectations that Argentina is ready for cryptocurrency adoption, the journey has been rather slow. On the LocalBitcoins exchange, the highest number of Bitcoin bought in 2018 using Argentine pesos in a single week was 31 BTC.
Sweden which has a similar GDP records higher Bitcoin trading volume. Even though Argentina has the sixth largest inflation rate in the world, it is the 45th largest Bitcoin trading country. That is way down the list considering its economic situation.
However, there are expectations that things would turn around as the country is one of the early adopters of Bitcoin. There are numerous merchant stores that accept Bitcoin and other cryptocurrencies, and it is a matter of time before they are traded more.
The African country has been hit by one of the worst inflation in recent history. It got worse that the government had to ditch its own national currency (the Zimbabwean dollar) in 2009 following the introduction of a trillion-dollar note.
The government has allowed its citizens to use other currencies like the South African Rand, the Euro, the U.S Dollars, and others. This situation, however, led to the scarcity of foreign funds and forced the government to impose capital control.
This regulation led to the rise of Bitcoin in the country, with Zimbabwean Golix exchange even trading Bitcoin above the global average.
The military coup and regime change have further strengthened the case for cryptocurrencies in the country.
Cryptocurrencies possess huge potentials
Recent events have shown that cryptocurrencies have a huge potential and will play key roles in global finance. However, the path of crypto adoption will always be blocked as long as the strong fiat currencies still remain stable and widely in circulation.