Venezuela’s economy has been struggling for years. The country has tried to address this with blockchain technology on several occasions. At a recent press conference, President Nicolas Maduro claimed that the government will use cryptocurrencies to enable free national and international payments.
Venezuela’s Crypto Solution
President Maduro appears to be looking for new payment methods for the Venezuelan population. He stated:
“The finance minister and Venezuela’s central bank have new instruments which we will activate very soon so that everyone can do banking transactions, as well as national and international payments through the central bank’s accounts. Venezuela is working within the cryptocurrency world.”
The country has reportedly been running internal tests to determine whether it can hold cryptocurrencies in its reserves. The idea is to send Bitcoin and Ethereum from the central bank to the state oil company’s suppliers.
The Situation in Venezuela
These alternative payment solutions are meant to help Venezuela circumvent restrictions imposed by the US that have isolated the country from the global financial system. Venezuela is experiencing one of the worst economic crises in its history, with the inflation rate reaching an all-time high of 815,194 percent in May of this year.
This isn’t the first time that Venezuela has looked to blockchain technology for help. The country is reportedly stockpiling Bitcoin and Ethereum, and it launched its own cryptocurrency last year.
Petromoneda, or simply Petro, was launched in February 2018 and was supposed to be backed by the country’s oil and mineral reserves. However, the project has yet to be utilized and has failed to deliver results.
With such turbulent hyperinflation, there’s a strong argument to be made for turning to Bitcoin. Unlike all other world currencies, Bitcoin has a fixed, predetermined inflation rate. As of now, the rate is 3.72% per year, and after the Bitcoin halving next year, it will go down to 1.80%.