- Venezuela’s hyperinflation and restricted access to foreign currencies makes it a hotbed for Bitcoin adoption
- A surge in Bitcoin demand has led to a new Bitcoin ATM being launched in the country, but can it survive if it openly threatens to upend the government issued Petrodollar?
By now it’s no secret that the people of Venezuela have been facing significant hardships regarding access to a useful and stable national currency.
In the last year, we’ve seen headlines of the Venezuelan Government engaging in hyperinflation (where the inflation rate was projected to surge by 1 million percent by the end of 2018) as well as enforcing severe travel and foreign exchanges restrictions that have made it almost impossible for its citizens to live normal lives.
Citizens have been forced to spend barrels of money to buy everyday groceries like bread and eggs.
To make matters worse, the Government has been peddling its very own cryptocurrency (the Petrodollar) to its citizens and the rest of the world as a way to raise money to pay back their massive debts and refuel its economy.
Out of desperation, many citizens have turned to Bitcoin, with reports stating that the price of Bitcoin in Venezuela is now doubling roughly every three weeks, and that bitcoin trading volumes keep hitting record highs at citizens try to retain what they can out of their failing national currency.
All of this has led to the recent news that Venezuela will now see its first Bitcoin ATM open in 2 weeks. The ATM is in the final stages of being set up in the national capital, Caracas. However, is the Venezuelan government ready to accept its citizens trading their national currency for Bitcoin out in the open?
Venezuela’s History of Forex restrictions could be bad news for Bitcoin
The country has had a poor reputation of restricting the ability of private companies and individuals’ ability to convert their local currency (Bolivars) into foreign currencies. These restrictions make it difficult for local businesses to claim profits generated in Bolivars by converting them to foreign currency, or to convert Bolivars to foreign currency when they need to buy supplies or pay debts in those foreign currencies.
For citizens, the restrictions have made it easy for Venezuela’s Government to exploit peoples desperate need to claim money sent home from family members aboard by charging exorbitant fees and offering phony exchange rates.
These are just a few examples of how the Venezuelan Government suppresses its people and businesses regarding the exchange of local fiat currency for foreign fiat.
Will Bitcoin exchanges threaten Petrodollar the same way foreign fiat threatens the Bolivar?
Now we are seeing a similar situation occur with cryptocurrencies, as the Venezuelan Government is reportedly forcing citizens to pay for essential products like passports using the new Petrodollar.
At the same, time, there have been reports that LocalBitcoins was no longer accessible in Venezuela. It would be no surprise that the government would try to limit citizens’ access to Bitcoin to force them to rely solely on the Petrodollar.
To that end, the Bitcoin ATM, although incredibly useful, may not last if it begins to attract too much attention and Government sees it as a threat to the value of their national cryptocurrency.
At this time it’s too early to tell, but it will be interesting to see what comes out of Venezuela’s ATM in the next year.