Venezuela’s going trough a really tough time now. The South American country has a currency crisis becoming the country with the biggest inflation in the world. While a few years ago the 100 bolivar note was the highest in the country – now it’s worth only 2 cents. As the annual inflation rate is expected to be 1,600% – people
People Turned To Bitcoin Mining As A Way To Survive
Venezuelans found a way to survive though. As Nicolas Maduro subsidized the electrical power until the point where it’s almost free, people turned to bitcoin/ethereum mining in order to live. The Bitcoin Venezuelans users skyrocketed from 450 in 2014 to more than 85,000 in November 2016. A venezuelan user who can run multiple mining devices per month can actually make $500+ which is enough to feed a family of four and purchase basic goods from overseas. The president Nicolas Maduro allows Bitcoin to be used in some economies, according to Forbes. But right now, the situation is not so good. People that are mining Bitcoin in Venezuela are getting jailed & their assets confiscated. The Venezuela’s government accuse them of money laundering, terrorism and computer crimes.
A few months ago, two brothers from Caracas were raided by the secret police. They found out more than 90 mining terminals and demanded a $1,000 fee for each machine. As the brothers declared, they paid the amount wanted. Another user posted on reddit the situation that he’s in. In debt, with some people knowing that he’s mining, afraid to go to jail and unable to sell the miners. Even with this risks, some people didn’t quit. CNBC made a documentary regarding Bitcoin’s situation in Venezuela.
“You can feed a family with one ether rig. It’s a fact.”
Venezuela’s probably the only country in the world where this statement is true. But there’s a good part in this. In the decline of their currency, Venezuelans preferred to store their money in cryptocurrencies rather than other fiat cash. This is more than a proof that the cryptocurrencies have the potential to be used in day to day life.
What Is Now Happening In Venezuela? What Could Be The Future There?
As Venezuela declared that they won’t accept USD payments for oil anymore and Trump declared that the democracy in Venezuela is dying and he cannot stand and watch – Venezuela is close to a conflict. Besides this, Daniel Osorio declared that what he saw in Venezuela might be the first bitcoinization of a sovereign state. And not because of educational or technological interest – but out of necessity. A vote of trust that the cryptocurrencies get in favor of fiat money in times of hyperinflation.
Francis Pouliot correctly observed that 1 satoshi is now equal to 1 bolivar on LocalBitcoins. This means the hyperinflation reached one of the highest points possible and that people would search for VEF alternatives and buy those at any costs. Moreover, the VEF/USD rate on the black market is 2000 times higher than the one presented by the government.
At this rate, people will try and exchange their bolivars to less volatile currencies. It’s great though that under extreme circumstances Venezuelans saw an opportunity in cryptocurrencies. No ones known what could be the future there, but hopefully more and more people will secure their funds by turning them into cryptocurrencies and waiting for this harsh period to end.
And indeed, Bitcoin could save Venezuelans. At least a part of them. By changing their funds into Bitcoin they’re not only securing their cash but also making an long time investment. Investment which can allow them to live properly in a country where common things are a luxury.