Venezuela: Record Bitcoin buying spree continues amid hyperinflation
Hyperinflation is currently uncontrollable in Venezuela as the volume of bitcoin trading hits new records each week. While the authorities wonder how to rein in the burgeoning, albeit underground industry, like ways to crackdown on the importation of cryptocurrency mining equipment.
What’s the exact scenario in Venezuela?
Venezuela was one of the first nations which launched a state-issued-virtual-currency in February called ‘Petro’ to circumvent international sanctions on the regime of Nicolas Maduro.
The sales figures for Petro have come under fire amid allegations the government could be fudging the numbers, mainly due to zero transparency surrounding the cryptocurrency. Most people don’t trust it as failed socialist policies and capital controls have led to massive hyperinflation with the Venezuelan bolivar.
The International Monetary Fund estimates Venezuela’s inflation could surpass 13,000% in 2018. The vast majority of the nation’s citizens are mired in abject poverty, forced to spend millions of bolivars on staples like bread, as prices keep rising fast.
Leading universities in the country estimate that 87% of the population is officially poor.
To avoid hyperinflation the state sells subsidized food in some poorer neighbourhoods, but many goods are priced according to a black marker dollar – which most citizens don’t have.
President Maduro announced on June 20th that the minimum wage would triple to $1.14 per month to help citizens, but critics say increases rarely stay in line with the bolivar’s depreciation.
Yet, people are opting for cryptocurrency. Government officials in early June said the country’s currency overhaul plans have been put on hold until August 4th, and consequently, trading volume has jumped significantly in recent weeks, according to LocalBitcoins.
Few feel the interest in crypto is due to it being an alternative store of value. A Reddit user points out how hyperinflation in the country means someone who bought Bitcoin at the all-time high price of $20,000 would still be better off than them holding bolivars.
Few crypto-projects like – People on Margarita Island are reportedly working on a cryptocurrency called PerlaCoin and a blockchain observatory was opened right after Petro was launched, although it’s relatively obscure.
Details on Ban
Cheap electrical power makes Bitcoin mining much cheaper than in nations like the United States and China, but few feel government wants to know people’s involvement with cryptocurrencies and mining, since unofficial data points to just 2% of the nation’s miners being registered with authorities.
Venezuelan news outlet Noticiero Digital reported in early May about a ban on items like computers, cards, power plants, processors, mobile phones and other electronic equipment. The government is prohibiting the importation of cryptocurrency mining equipment.
But businessmen are confused due to uncertainty about the exact scope of the ban.
A manager told Noticiero Digital that he stopped sea and air shipments because he was unsure about what was being prohibited.
But, there’s no more information on the ban and for now, officials are just following the orders at border crossings.