Hyperinflation boosts the use of cryptocurrencies in Venezuela

Citizens in Venezuela use different types of digital currencies due to the hyperinflation in the country

Venezuelan citizens currently use dollars, euros, Colombian pesos for their transactions. Cryptocurrencies also have an important use in the market to cancel products and services as a result of the loss of value and confidence of the bolivar and the hyperinflation registered since 2017 in the country.

According to the economist Aarón Olmos, “in a situation of hyperinflation, lack of confidence in the monetary sign and shortage of bills, crypto assets found a place to take root”, to the point that the country has become the leader in the region in the adoption of digital currencies.

Olmos, who is a specialist in cryptocurrencies, explained that since the beginning of hyperinflation, the use of cryptocurrencies has increased. “Given the harsh economic situation, crypto assets, which are used as an alternative to money, began to attract Venezuelan citizens.”

Cryptocurrency advertisements can be seen at different bus stops, vehicles, facades of various establishments, light poles.

Venezuela leads cryptocurrency adoption

Cryptocurrencies have become the “anchor” of many Venezuelans to protect their resources in the face of the impossibility of saving in bolivars. As of 2018, when the national executive allowed the use of foreign currency, companies with P2P platforms and exchange houses arrived and the businesses started accepting cryptocurrencies.

According to the historical data of LocalBitcoins, the year 2019 became the year with the most operations in a year with an exchange of “303 million dollars, when in 2013 1,248 dollars were negotiated.”

In 2020, Venezuela led the Global Cryptocurrency Adoption Index to perform Chainalysis, as well as the third and seventh place of the 154 countries in 2020 and 2021, respectively.

Crypto mining in Venezuela

Olmos explained that in 2018 the Venezuelan government founded the Superintendency of Cryptoactives (Sunacrip) and the Treasury of Cryptoactives of Venezuela S.A. Then, in 2020 the country had orders, resolutions and regulations, issued by the Central Bank of Venezuela (BCV) and Sunacrip, to regulate the activity of digital mining, among other things.

In 2021 the company dedicated to the sale of equipment and mining Criptoávila began its operations and provided Venezuelan crypto miners with a base to expand activity in the country. According to Gilbert Monasterios, general manager of the company, “since that date there is an increase in the number of clients and in the credibility of this activity.”

Due to the crisis in the electrical system and the poor quality of the internet, considered the slowest in the world, Venezuelan miners face great risks when carrying out their activities because, according to Olmos, it could occur “an electricity interruption while a group is mining so the equipment get offline and some may even be damaged.”

On the other hand, the Criptoávila company plans to install ATMs to exchange currencies for cryptocurrencies, which would be a great advance for Venezuelan cryptomonetization.

M. Rodríguez

Source: bancaynegocios.com

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