As its economy descends deeper into chaos, Venezuela has once again broken its own BTC trading volume in the first week of August and will probably need a bigger chart for the months ahead.
Venezuela’s Walled Garden of Economic Hell
Venezuela has again set a new bitcoin transaction volume record, which has seen exponential growth since the start of 2016.
Bitcoin trading volume in the first week of August has reached 141,744,733 bolivars (about $141,000 USD), outpacing the previous week’s record of 117,116,539 bolivars (about $117,000).
Bitcoin’s rise in Venezuela contrasts with the nation’s economic woes and overall misery since the death of former president Hugo Chavez. The country has the highest inflation rate in the world for three years running, which is currently estimated to be somewhere between 186% to as high as 720%, according to the IMF.
In fact, a survey conducted by Bloomberg, measuring inflation figures and unemployment in each country, reveals that Venezuela holds the top spot for the most miserable country in the world. It’s also far ahead of Argentina and South Africa, the second and third countries on the list, respectively.
Bitcoin Bypasses Capital Controls
For the Venezuelan citizen, Bitcoin represents an escape hatch. The country’s economy has been asphyxiated by the devaluation of the bolivar and strict capital controls preventing people from converting to stronger currencies such as the US dollar, Euro or even the Colombian peso.
However, Bitcoin offers more benefits than even ‘strong’ fiat currencies for Venezuela. It can be used to purchase all types of goods online, store value as a form of ‘digital gold,’ and send or receive money from overseas. But more importantly, it helps the average citizen to avoid dealing with the nation’s notorious black market for foreign currency exchange, while offering new job opportunities online for the average citizen.
Meanwhile, Bitcoin’s legal status in the country is unclear. This is because Venezuela’s government treats Bitcoin not as a currency but as property; and while authorities have been putting pressure on Bitcoin exchanges in the country, this legal gray area has made it possible for SurBitcoin, Yabit and Cryptobuyer to remain operational.
For example, Venezuelan authorities approached SurBitcoin under the allegation of illegal money exchange. “Since Bitcoin is not considered money under Venezuelan law, we were fine,” says Rodrigo Souza, core developer at SurBitcoin’s parent company Blinktrade. “They did not take further action.”
Venezuela ‘Crossed Line of No Return’
The International Monetary Fund projects that Venezuela will face a deep recession in 2016, with a contraction of 8%, surpassing the 5.7% reduction in 2015. It also predicts that inflation will rise by 500% in 2016 and will continue to increase in 2017.
“For the last four years, Venezuela has been in constant crisis and it never blew up,” photographer Ybarra Zavala tells Time magazine. “But now, I’m very scared of how it will end. I think Venezuela crossed the line of no return. I’m worried what will happen next.”
There is indeed much uncertainty as the Venezuelan government has been imposing unpopular measures to help the economy recover with disastrous results. If the worst predictions about the future of the Venezuela economy are realized then Bitcoin may become the only functional means of exchange for the people in the country.
Will Bitcoin continue to grow in Venezuela? Share your thoughts in the comments below!