Published in El Pais, May 7th 2019.
Of course, everyone is familiar with the dire situation in Venezuela. Hyperinflation, blackouts and a population struggling to keep itself fed. I can only imagine the situation they are going through and whatever the outcome I hope the country returns to stability once more. In the meantime, Venezuelans no longer wish to use the Bolivar and rather than switch to the American Dollar they are buying up every bitcoin they can get their hands on. Last week alone almost 36 billion Bolivars were exchanged for the digital currency and this trend will not slow down.
The reason they do not want the Bolivar is obvious. The annual inflation rate is around 1.9 million percent and Venezuelans do not want to see if this trend continues. The reason Bitcoin is becoming more popular is due to the mistrust in the banking system. As the cryptocurrency is sort of a modern-day version of hiding your money under a mattress, people can exchange and store Bitcoin without having to rely on financial institutions.
So, is this the solution to the country’s hyperinflation? Unfortunately, no. While the currency is a safer alternative to the Bolivar, the reality is Venezuela, like the rest of the world, do not have the infrastructure for widespread use. Few businesses are accepting it as payment, much of the population do not even know how to acquire it or use it in a store. This coin may be a lifesaver for some, but its far from capable of helping the rest of the population.
Now, normally, the government could start promoting its use and help businesses learn how to accept it as a payment. But we all know both Venezuelan governments have other things on their mind. For now, I feel the rest of the world should see this as a sign of caution and proactively start to embrace cryptocurrency in their countries by setting up ATMs and teaching its population how to use it. Many other economies in South America are feeling their own inflation problem. If they act now, should things get really bad, they may have a chance to survive the ordeal.