Venezuela’s journey to become a leading crypto nation started four years ago when the effect of hyperinflation started affecting the citizens and businesses in the country.
Early 2014, the inflation of the country’s fiat currency, Venezuelan Bolivar (VEF), hit over 50% and was above 100% by the end of the year.
The inflation continued to increase as sanctions from the U.S further affected the economy of the country. The inflation rate has hit an astonishing 46,000 percent and as the IMF predicted an inflation rate of 1,000,000 percent by the end of 2018.
Prior to February, 10 Bolivar would buy you 1 USD. Now, 248,209 Bolivar will buy you 1 USD.
The decision by the Venezuelan government to restrict people’s access to the U.S Dollars and other foreign currencies made things even harder for the citizens, and this is what pushed them to cryptocurrencies.
Bitcoin, Dash, and others rescue Venezuelans
With the sanctions in place, there was only one option left for the citizens, and it was cryptocurrencies. To avoid losing more than they already have, citizens and businesses in the country have opted to store their funds in cryptocurrencies.
Bitcoin and especially Dash have become very popular with locals, with Dash fast becoming a medium of exchange in the country.
To see how far the country has come, let us look at its Bitcoin trading history. Back in 2013 when the inflation rate was just 43%, only 2 Bitcoins were traded for VEF on the LocalBitcoins exchange.
That figure jumped to 64 BTC once the inflation rate started rising the following year.
Despite the volatility of cryptocurrencies, traders in the country considered them as better options compared to their local currency, the Bolivar.
By 2015, the inflation rate in the country has surpassed 300% and this led to 319 Bitcoin being traded on LocalBitcoins for VEF in the month of February alone.
The figure far exceeds that as Bitcoin was also traded on local exchanges such as Surbitcoin, which back then, was reported by Bitcoin Venezuela as being the second largest in transaction volume in Latin America after Brazil.
Bitcoin traded on LocalBitcoins in 2016 spiked by more than 300%, with a total of 8,624 BTC traded on the platform alone. By this time, the inflation rate has surged to more than 500%. The following year, the number of Bitcoin traded almost tripled.
A total of 21,556 BTC was traded that year. The astronomical rise of Bitcoin to reach $19,000 didn’t deter people in the country from buying more Bitcoin.
As the inflation rate continues to increase, so does the hardship in the country as the poverty level hit 82% in 2016.
14,886 Bitcoin have been purchased with VEF on LocalBitcoins since the start of the year. Trading volumes have continued to increase as the government takes more austerity measures to tackle the scorches of the inflation.
Dash leads the way in Venezuela
Despite the rise of Bitcoin, it isn’t the leading cryptocurrency in the country. That title belongs to Dash. Some factors like government regulations and high transaction fees have hampered the growth of Bitcoin amongst traders.
Dash first came into the country in 2016 when it was added to Caracas-based Cryptobuyer exchange.
There is no way of tracking Dash’s development in the country but Dash Core Group announced a few days ago that Venezuela was its second-biggest market, behind the U.S.
The low transactions fees and quick confirmation times have made the cryptocurrency a darling amongst merchants in Venezuela. Dash claims that over 800 merchants in the country use Dash, which is more than the 160 merchants using Bitcoin.
Dash’s rise hasn’t been without the team putting in some effort. The Dash Core Group has invested heavily in the country via Dash Caracas, with educational seminars and similar moves made to educate people about cryptocurrencies.
The government and its Petro cryptocurrency
It wasn’t only the people that realized that they are better off with cryptocurrencies, the government did too.
Despite the harsh regulations on Bitcoin mining in the country, the government revealed last year that it will be issuing its own digital currency, the Petro. This cryptocurrency will be backed by the nation’s oil, according to the Venezuelan government.
Even though the Petro has failed to gain supporters both in and out of the country, the move has made the country more acceptable for cryptocurrencies. The government even renounced its decision to ban Bitcoin mining.
Further, the government arranged classes to teach its citizens about cryptocurrency buying, selling and mining were the focus of the lessons.
With Venezuela’s current status in the crypto world, it is safe to assume to a lot of people turned up for the classes.
As the economic condition in the country worsens, there are expectations that more people and businesses will turn to cryptocurrencies.
Even though the middle class has been the most active group in the country, cryptocurrency adoption will soon spread to other classes.