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Venezuela has been in political and economic crisis for some time now, putting massive pressure on those who live there. In 2018 the borgen project reported that nearly 90% of Venezuelans live in poverty; they are currently experiencing one of the worst inflation rates in world history and the Economic Times has estimated that the country’s inflation rate will reach 10 million percent in 2019. The situation of those who live in Venezuela is bleak and many families are struggling to survive.
Desperate times call for innovative solutions in order to raise the status of those in the country, and that is what some Venezuelan’s are trying to do. Some Venezuelan’s have taken to using Bitcoin as their main way of saving and storing currency, and only exchanging into the native Bolivar when the need strikes. Venezuelan economist Mr. Hermandez in an essay in the New York Times on the subject says:
“I keep all of my money in Bitcoin. Keeping it in bolívars would be financial suicide: The last time I checked, the rate of daily inflation was around 3.5 percent. That’s daily inflation.”
For Venezuelan’s who do this, they need to keep their money in Bitcoin, and then convert it to Bolivar’s to purchase groceries in order to live.
“[B]efore I can buy milk, I need to convert Bitcoins into bolívars.
Actually, that part is easier than you might think. I go through the listings on LocalBitcoins.com, the exchange that most Venezuelans seem to use, looking for offers to buy my Bitcoins from people who use the same bank I do; that way the wire transfer can go through immediately. Once I accept the offer, the Bitcoins get deducted from my wallet and are held in escrow by the site. I send my banking information to the buyer and wait.”
This is something that is gaining traction within Venezuela. Venezuela currently ranks second after Russia for volume of activity on LocalBitcoins.com (which recently stated that it would fully comply to strict anti-money laundering regulations).
For the Venezuelan’s who use this method, Bitcoin isn’t just a fancy new way of propelling us into the digital age, but a means to survival; in a sense, it is saving lives, validating the main argument of a recent article in Time Magazine.
“Still, you could say that cryptocurrencies have saved our family. I now cover our household’s expenses on my own. My father is a government employee — in a printing department with no paper — and earns about $6 a month. My mother is a stay-at-home mom with no income. And cryptocurrencies helped my brother Juan, 28, escape Venezuela last summer.”
Even under this method, there are still ways people have to be careful. The government monitors Bolivar transactions and any transactions worth over $50 will be a red flag for the watchers, leading to account freezes.