It is no secret that the situation in Venezuela is by no means the best. The country has one of the highest corruption rates in the world with inflation already reaching high daily levels.
Imagine getting paid and thinking about spending all your money immediately because if you wait a few days, the prices will go up to levels you can't predict.
Venezuelans Don't Trust Their Fiat Currency
At the moment Venezuelans are resorting to 3 solutions to keep their purchasing power: Buy gold, buy "anything" to resell it later, or buy dollars.
However, since 2017, a new option is gaining more and more popularity among the population: Bitcoin.
The purchase of gold has become a popular option, especially in the south of the country, near the border with brazil. In the Bolivar state, it is common to see people shouting "GOLD GOLD GOLD GOLD GOLD", in shopping malls, streets, and public places.
The curse of the gold fever, destroys our land and gets into the city, causing death and mass arrests, as today in the Macrocentro Mall at Pto Ordaz city.
However, this option is dangerous as people are often deceived or followed and then robbed.
Likewise, the use of dollars has also been "contaminated" with the malpractice of Venezuelans. If you go to Venezuela, many locals will not accept $1 or $5 bills. Nor will they accept folded, marked, or merely old bills. In fact, if you would like to pay for a $100 product with an old $100 bill, you won't be able to because it costs less! You will have to pay an additional $20 (although the new $100 bill does costs 100$).
To avoid these problems, Venezuelans have resorted to the use of Bitcoin and other altcoins. DASH is one of the most important alts, and after the unilateral sanctions imposed by President Donald Trump on the Venezuelan people, BTC trading once again broke a historical record.
Bitcoin to The Rescue!
Recently the Ledger Journal published a study on the role of Bitcoin in times of economic uncertainty. The study by analyst Jackie Johnson revealed that Bitcoin as a universal value could be used to estimate the relationship between the bolivar and the dollar using the purchasing power parity theory.
Johnson explained that, in Venezuela, trading increased due to the need to have some stability when purchasing products, being more convenient than other options due to their ease of exchange:
"In countries where residents are under pressure from economic mismanagement, Bitcoin trading becomes critical. Two factors drive Bitcoin trading: one, there is pressure to purchase Bitcoin using local currency before it loses even more value; and two, there is a need to redeem for the local currency either past purchases or purchases made outside the country by friends/family, enabling residents to cope with rising prices. This results in an increase in Bitcoin trading in the local currency."
In five years, the unofficial exchange rate in Venezuela went from 85-89 bolivars per dollar to more than 80 million. During this time, the official exchange rate remained at 10 VEF/USD until May 2018, while the unofficial rate exceeded 827,000 bolívares fuertes per dollar.
Time... That's All It Takes
Although Bitcoin is growing in popularity, the truth is that it has not done so as a crypto per se but rather as a sort of fiat transaction facilitator. Danial Arraez, a Venezuelan expert economist, explains:
"In the country there is still not enough adoption of bitcoin, because with few exceptions, cryptocurrencies, including bitcoin and altcoins, are, in most cases, a proxy currency (substitute) to facilitate fiat exchange, with the USD-VES pair being the most traded, but without being able to set aside the VES-CLP (bolivars in Chilean pesos), VES-COP (in Colombian pesos), VES-ARS (in Argentine pesos), VES-BRL (in Brazilian real) and VES-PEN (in Peruvian sol) pairs".
Currently, the Venezuelan president has changed his policy regarding cryptocurrencies, but there is still a long way to go. Although Venezuela is the country with the highest trading volume in Latin America, for obvious reasons, it is not the most favorite among developers and startups to promote the ecosystem.