Venezuela is listed as the third country to have the most cryptocurrencies in the world by Chanalysis in its 2020 report. With its citizens losing crippling inflation and purchasing power, the country has taken a turn for these assets to survive. But what is the real number behind this crisis that has changed the way Venezuelans live.
How Venezuela Adopted Crypto: Number
It is a popular fact that Venezuela is one of the countries that has adopted cryptocurrency with the most force in LATAM. this was it Adorned In the Geography of its latest 2020 cryptocurrency report by Chainalysis, where it is stated that Venezuela is actually the third country to have the most cryptocurrency in the world. There is no doubt what caused it: the economic disaster that was the result of years of wrong monetary policies, exchange controls and corruption.
But how deep are the people of Venezuela living today? How did Venezuela become a mess of inflation from one of the region’s richest countries in just a few years? The numbers behind this disaster are difficult to ascertain as official institutions have been holding them back for years. But many non-official sources can help us understand the magnitude of this crisis.
Inflation in Venezuela: one of the world’s highest
While the Venezuelan economy has always had a tendency to have significant inflation numbers, it reached a point in 2014 with no returns. The annual 69% increase. Since that year, inflation figures worsen every year, but the Central Bank of Venezuela stopped giving official numbers in 2015, making it difficult to follow exactly what was going on in the country. For 2018, International Monetary Fund an estimate That annual inflation would be 100,000%, a number that put Venezuela in one of the worst hyper-inflation growth of all time.
This led the Venezuelan people who saved in their local currency, to a state of poverty in less than a decade and destroyed the national currency as a storehouse of value.
Monetary Policy, Devaluation and Exchange Control
The country was The establishment Since 2003 with the creation of CADIVI, an exchange control, an institution that deals with the distribution of dollars to the population and entrepreneurs according to the limits set by the government. An official price for the US dollar was set by this organization. This created a black market, which offered the dollar freely but at a higher exchange rate than the official dollar price. This approach would no longer prove feasible and the system evolved into a moving band system in 2016.
However, exchange controls and the government’s policy of devaluing its currency by increasing the price of the dollar / Bolivar pair led to a de facto dollarisation in the country, turning the Bolivar into a purely transactional currency. The value of the boliver fell even more as a result, making cash almost worthless. To face this entire crisis, the government took three zeros out of its currency in 2008, and ten years later, in 2018, again took three zeros, in a process Called Currency Re-conversion. However, this has not resulted in a more solid posture. In fact, out of every 1000 emitted bolivars, only 1 is in cash, with the bankless Venezuela having almost no choice but to use the dollar.
Cryptocurrency usage is on the rise
All these factors have created a turbulent situation in the country, which is perfect for the adoption of new assets such as cryptocurrencies, which are not linked to the emissions policy of local governments and are not affected by other local problems. Number from Local bitcoins And Binance has confirmed the trend, these two being the most used platforms for exchanging Bolivar or dollars in Venezuela.
While the dollar is now the most commonly used currency in the country for retail purchases, ६७% of sales are being paid with dollars according to a Study Created by a local firm Ecoanalitica, cryptocurrency is becoming more and more Popular Among a significant part of Venezuela, who see it as an opportunity to preserve (and even regain) part of their purchasing power.
What do you think about Venezuela which is the third largest crypto adoption country? Tell us what you think about this topic in the comments section below.
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