For decades now the dollar has been the go to money for countries in financial crisis to escape high inflation or in the case of Venezuela, hyperinflation.
Fiat in the oil reach South American country is now good only for trash bins. Hence they no longer use cash, only digital Venezuelan Bolivars.
The situation there is so desperate electricity blackouts are becoming more common, with the country effectively in a state of collapse. According to Trade Economics:
“The Venezuelan economy shrank 22.5 percent year-on-year in the third quarter of 2018, following a 17.6 percent contraction in the previous period, according to the first economic data release in nearly four years from the central bank.
The non-oil sector shrank 22 percent, after contracting 16.2 percent in the second quarter of 2018, mostly due to construction (-67.9 percent vs -47.7 percent), finance & insurance (-52.5 percent vs -35.8 percent), manufacturing (-46.1 percent vs -30.3 percent), trade (-42.3 percent vs -29.2 percent), transport & storage (-30.8 percent vs -23.1 percent), real state (-13 percent vs -10.9 percent) and utilities (-16.2 percent vs -15.6 percent).
Also, a slowdown was recorded in mining (6 percent vs 10.3 percent). Meantime, the oil sector fell 25.8 percent, after shrinking 26.7 percent in the prior quarter.”
This is tragic with smart Venezuelans scrapping to protect whatever wealth they may have by usually still using dollars, but bitcoin is becoming more and more popular due to it being easily accessible because of mining and because of its peer to peer nature.
Bitcoin trading volumes have been only up and up in Venezuelan money partly due to inflation, with the country trading on average about $10 million worth of bitcoin a week.
That translates to about half a billion a year for only the peer to peer Localbitcoins exchange.
Partly due to Venezuela, bitcoin’s popularity has been rising in Colombia and other neighboring countries, with it difficult to estimate the total volumes, but a Venezuelan bitcoiner says in broken english:
“Cash USD (Euro not too much) is much more used to save money instead of bitcoin, but the thing is that there is people who have fiat money in USD, for easy usage, and the rest of their money in BTC… and indeed there is each day more people using BTC to save money because of the profits it could give just because of how bullish it is at this moments.”
Physical USD could potentially be confiscated if you’re moving through the border, as can gold. For bitcoin, all you’d need is an easily memorable seed phase, with the coins then effectively stored on literally one’s memory.
Apparently in Venezuela they use bitcoin for big money transfers, and eth for smaller ones because the latter currently has lower fees.
Then the dollar is used for spending because although it loses value far more slowly than bolivar, it does still fall by about 2% every year. Cryptos thus so increasingly kept for savings.
Meaning bitcoin is starting to become a real alternative both to the dollar and gold in preserving wealth as millennials in particular can far more easily access crypto than foreign money or actual gold.