logo |

News

    Home   >     Industry    >     Main body

    Why are Venezuelans seeking refuge in crypto-currencies?

    Abstract:Image copyrightMegan JanetskyImage caption Eli Meregote uses crypto-currencies to send money home t

      Image copyrightMegan JanetskyImage captio

      Eli Meregote uses crypto-currencies to send money home to Venezuela

      Crypto-currencies have faced a lot of criticism since Bitcoin first came on the scene 10 years ago. But for one group of people, they're proving very useful.

      Venezuela has seen its currency rendered practically valueless after suffering one of the worst periods of hyperinflation since World War Two.

      A cup of coffee now costs 2,800 bolivars (21p; 28 cents), up from 0.75 bolivars 12 months ago - an increase of 373,233%, according to Bloomberg data. And that's after a 2018 devaluation that knocked five zeros off the currency.

      More than three million Venezuelans have left the country, as essential goods such as toilet paper and medicine have become unaffordable and crime has soared.

      As a result, many are turning to digital assets such as Bitcoin as an alternative to the Venezuelan bolivar.

      And given how volatile Bitcoin is - its value has plunged from nearly £15,000 in 2017 to less than £3,000 now - it's an indication of just how desperate people have become.

      Image copyrightGetty ImagesImage caption Bitcoin may be volatile but the Venezuelan bolivar has been losing value much faster

      Even the government has launched its own crypto-currency, the Petro, supposedly backed by oil, to provide a solution to the economic crisis.

      But critics say it is a sham and there is no evidence of anyone using it.

    •   Gold, rabbits and crypto: Venezuela's strange economic pla

      Eli Meregote, 28, has been using Bitcoin and other crypto-currencies as a way of sending money home from Colombia where he now lives and works, avoiding the fees usually associated with money transfer services such as Western Union.

      “I first discovered crypto in 2017 when I lost my job in Venezuela,” the CCTV technician says. Even if I had my job, it would've been useless anyway, because the minimum wage was $4 a month."

      Cryptos offered him “total control” of his money “without banks or third parties”, he says. With Bitcoin and other crypto-currencies, I can send money home faster and without obstacles."

      Media playback is unsupported on your device

      Media captionVenezuela blackout crisis: It's like living in the apocalypse"

      Bitcoin was designed to be a global, digital currency that governments and banks couldn't interfere with. Like many other crypto-currencies it works by recording all transactions permanently on a distributed ledger called the blockchain.

      Critics say Bitcoin and other cryptos - there are more than 1,600 globally - are unstable, use too much energy, and are used by money launderers or those wanting to buy illicit goods on the web.

      But for Venezuelans, storing their money in a digital wallet in the form of Bitcoin, Litecoin, Dash or any of the others, is still a better option than holding on to the national currency.

      Adoption has rocketed, with trading volumes on Localbitcoins.com - a person-to-person Bitcoin trading platform - rivalling those of the US.

      Media playback is unsupported on your device

      Media captionMuch of the country, including Caracas, was plunged into darkne

      Although trading volumes dipped in March due to a power cut that plunged the country into darkness for days, February saw trading levels reach £6.84m ($8.76m) per week and nearly £1m per day, according to crypto-currency data tracker Coin Dance.

    •   In pictures: Seeking water amid power cut

      “Many Venezuelans are using Bitcoin to convert their bolivars, which are being permanently devalued by hyperinflation, to keep something of value,” says economist Asdrubal Oliveros of Caracas-based consultancy Econanalitica.

      It is practically a vehicle for buying foreign currency and to conserve value, as it is relatively easy and you can keep small amounts which do not involve large investments."

      Image copyrightAFP/Getty ImagesImage caption Venezuelan bolivar notes are now useful only for making handicraft gift

      Mr Oliveros points out that in Venezuela many people work as freelancers, receiving their pay in bitcoin since in most cases they do not have accounts abroad that allow them to make transfers in dollars.

      “Receiving payments in bolivars does not make much sense,” he says.

      Matt Aaron, who works for Bitcoin.com, the Bitcoin news and trading platform, in Venezuela, says: We pay our team members in Caracas in Bitcoin Cash. Transactions are instant and cost less than a cent to make."

      Ricardo Carrasco, 29, an IT engineer who is paid in bitcoin, is a fan of the crypto-currency.

      “It has given me access to the financial world outside Venezuela,” he says. We are not free to exchange our currency for US dollars or any other currency. We don't have access to the banking services of the world, so crypto allows you to bypass those barriers."

      Image copyrightRicardo CarrascoImage caption Ricardo Carrasco likes Bitcoin's borderless nature

      Mr Carrasco sells small amounts of Bitcoin on Localbitcoins.com and other exchanges, and receives money in bolivars to his Venezuelan account. He is then able to buy goods with his card as and when he needs to.

      “It is a pretty simple, straightforward process,” he says.

      But Venezuela's government is intervening, recently launching a remittance service that caps the amount of crypto-currency someone inside the country can receive. It has started earning commissions from the transactions.

      More Technology of Busine

    •   Meet Tengai, the job interview robot who won't judge you

    •   How quantum sensing is changing the way we see the world

    •   The world's fastest road car revealed - and it's electric

    •   Control your world with just your fingerti

    •   Would a 'digital you' make buying clothes online easier?

      One thing is certain: despite the Bitcoin crash and loss in value of other crypto-currencies, Venezuelans have more interest in digital assets than ever before.

      In the Colombian border town of Cucuta, which sees tens of thousands of fleeing Venezuelans arrive every day, a new crypto-currency cash machine (ATM) was opened in March.

      It is designed to make carrying funds safer and more convenient.

      Image copyrightReutersImage caption Security services have clashed with looters panicking about short supplies of good

      “With the ATM, Venezuelans can receive bitcoin from anywhere in the world and cash out in Colombian pesos right away,” says Matias Goldenhörn from Athena, the company that installed the machine.

      “A Venezuelan family of four, getting on a bus in Cucuta to emigrate to Argentina, was carrying all their life savings in cash on their 14-day bus journey,” he recalls.

      They just exchanged all the money into bitcoin and, once they arrived at their final destination, sold the crypto for the local currency, hence not risking travelling with the money on them.

      It made life a lot easier for them."

      At least there is one country in the world where Bitcoin is serving a practical value for ordinary citizens rather than speculators.

      Follow Technology of Business editor Matthew Wall on Twitter and Facebook

    Latest News

    Malaysian Ringgit

    • United Arab Emirates Dirham
    • Australia Dollar
    • Canadian Dollar
    • Swiss Franc
    • Chinese Yuan
    • Danish Krone
    • Euro
    • British Pound
    • Hong Kong Dollar
    • Hungarian Forint
    • Japanese Yen
    • South Korean Won
    • Mexican Peso
    • Malaysian Ringgit
    • Norwegian Krone
    • New Zealand Dollar
    • Polish Zloty
    • Russian Ruble
    • Saudi Arabian Riyal
    • Swedish Krona
    • Singapore Dollar
    • Thai Baht
    • Turkish Lira
    • United States Dollar
    • South African Rand

    United States Dollar

    • United Arab Emirates Dirham
    • Australia Dollar
    • Canadian Dollar
    • Swiss Franc
    • Chinese Yuan
    • Danish Krone
    • Euro
    • British Pound
    • Hong Kong Dollar
    • Hungarian Forint
    • Japanese Yen
    • South Korean Won
    • Mexican Peso
    • Malaysian Ringgit
    • Norwegian Krone
    • New Zealand Dollar
    • Polish Zloty
    • Russian Ruble
    • Saudi Arabian Riyal
    • Swedish Krona
    • Singapore Dollar
    • Thai Baht
    • Turkish Lira
    • United States Dollar
    • South African Rand
    Current Rate  :
    --
    Amount
    Malaysian Ringgit
    Available
    -- United States Dollar
    Risk Warning

    The Database of WikiFX comes from the official regulatory authorities , such as the FCA, ASIC, etc. The published content is also based on fairness, objectivity and fact. WikiFX doesn't ask for PR fees, advertising fees, ranking fees, data cleaning fees and other illogical fees. WikiFX will do its utmost to maintain the consistency and synchronization of database with authoritative data sources such as regulatory authorities, but does not guarantee the data to be up to date consistently.

    Given the complexity of forex industry, some brokers are issued legal licenses by cheating regulation institutes. If the data published by WikiFX are not in accordance with the fact, please click "Complaints "and "Correction" to inform us. We will check immediately and release the results.

    Foreign exchange, precious metals and over-the-counter (OTC) contracts are leveraged products, which have high risks and may lead to losses of your investment principal. Please invest rationally.

    Special Note, the content of the Wikifx site is for information purposes only and should not be construed as investment advice. The Forex broker is chosen by the client. The client understands and takes into account all risks arising with Forex trading is not relevant with WikiFX, the client should bear full responsibility for their consequences.