As Venezuela Crisis Worsens, Many Turn to Bitcoin for Basic Needs
Prices in the country may soar to 14,000% this year.
By Joanna Prisco
Cryptocurrency may be a hot investment in North American financial markets, but for cash-strapped Venezuelans it’s become a lifeline to obtain basic daily needs.
When President Nicolas Maduro’s socialist government announced this month that it would postpone a currency overhaul to remove three zeros from the devalued bolivar, the International Monetary Fund (IMF) estimated that consumer prices in the region could rise nearly 14,000% this year, baiting catastrophe, reported Quartz.
In the meantime, citizens are taking matters into their own hands — and electronic devices.
In past years, when citizens felt discouraged from carrying large quantities of cash due to high crime, the country saw a rise in credit card transactions, according to the Washington Post.
Now, because new banknotes have not been printed fast enough to keep up with price increases in Venezuela, it has led to an increased use of phone apps for transactions, reported Reuters.
As a result, Bitcoin in bolivar denominations is trending at an all-time high — so much so that now Maduro’s government is considering replacing the bolivar with its own oil-backed cryptocurrency.
But that act alone would only be a stopgap.
This will be the second monetary reconversion undertaken by the country in 10 years. Socialist leader Hugo Chavez executed a similar shift in 2008. As such, critics have argued that in order to effect true change, deep reforms must be made to the current currency controls and the country’s history of excessive money creation should be stemmed.
In the meantime, financial instability has not proved enough of an incentive for the administration to welcome outside support.
Despite rising hunger throughout the country that has led to a child health crisis, Maduro has refused to accept humanitarian aid from neighboring countries, NGOs, and charities, alleging that it is part of a conspiracy to overthrow his government, as cited in an earlier Miami Herald report.
The average Venezuelan is reported to have lost more than 11 kilograms (or about 20 pounds) of weight, according to survey results published in February.
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