Venezuela: more and more people are buying Bitcoins to protect themselves from devaluation of their currency.
Venezuela: how the biggest ones fall
Venezuela was once one of the richest countries in Latin America. The best evidence of this is the fact that it was referred to as the “Switzerland of America”. It boasted the highest standard of living on the entire continent. Its huge oil reserves were one of the largest in the world, even exceeding the resources of Saudi Arabia. Despite this, such an oil-rich country fell into a great economic crisis. Today, what is happening there resembles the situation related to hyperinflation from the times of the Weimar Republic. In fact, the currency crisis in Venezuela may be even worse than what happened in the 1920s in Germany.
The country’s problems began when oil prices fell significantly. The revenues from its sale were the main source of financing for social welfare programmes established by the former, deceased President of Venezuela Hugo Chavez. He initiated huge subsidies for food, housing and other programmes aimed at eradicating poverty.
Only when oil prices fell, social programmes and various subsidies began to exacerbate economic problems. The government tried to save the situation by printing the currency, but it did not limit the programmes on which many poor citizens depend.
Buy Bitcoin to save yourself!
In practice, almost everyone is poor today. Social programmes have been maintained, but what if Venezuela’s currency is worth nothing. So it shouldn’t come as a surprise to anyone that the people of the country have started to run away into crypto.
Larry Cermak notes the growing volume on local markets. Venezuela buys much more Bitcoins than other economies threatened by inflation, such as Argentina, Colombia, Turkey and Iran.
It is worth recalling that Venezuela has its digital currency, Petro, which was issued by the government but has not been warmly welcomed by the market. This shows a lack of trust in centralized solutions in the country. It is also possible that if Nicolas Maduro’s regime does not solve the country’s economic problems, the state will be “hyperbitcoinised”. It may even become the only salvation for its inhabitants.