As the situation in Venezuela gets intense with the passage
As the situation in Venezuela gets intense with the passage of time, a local bitcoin user tells how he and his family use the flagship digital currency to survive the country’s ongoing crisis.
Keeping all his money in Bitcoin, the man exchanges only the small amounts into the hyperinflating bolivar as and when necessary.
Bitcoin Not Bolivars
A Venezuelan living in Ciudad Guayana, Carlos Hernández, told his story in The New York Times on Saturday about how bitcoin is saving him and his family throughout the crisis in Venezuela.
Citing the Bolivar’s regular inflation rate of around 3.5%, he wrote –
“I don’t own bolívars, Venezuela’s official currency. I keep all of my money in bitcoin. Keeping it in bolívars would be financial suicide.”
He revealed that he doesn’t have a bank account abroad, and “With Venezuela’s currency controls, there’s no easy way for me to use a conventional foreign currency like American dollars.”
Hernández explained that cryptocurrency has enabled him to cover his expenses on his own, noting that his father earns $6 a month and his mom has no income. Even his brother relies on cryptocurrency.
Hernández detailed –
“In times of hyperinflation, everyone is constantly getting poorer, including a lawyer’s clients. My brother had to turn to cryptocurrencies to get paid since he couldn’t use PayPal due to exchange controls here allowing Venezuelan banks to use only local currency.”
Moreover, cryptocurrency helped Juan avoid his money being seized at the border when he attempted to move to Colombia.
Overall, he concluded –
“You could say that cryptocurrencies have saved our family.”
Converting Cryptocurrency into Bolivars
For buying everyday necessities like Milk, Hernández explained that cryptocurrencies must be converted into bolivars. He utilizes Localbitcoins to find buyers who use the same bank. He does so because the wire transfer can go through immediately.
He elaborated –
“I can’t change too many bitcoins at once, though. The government doesn’t monitor cryptocurrency transactions (yet), but it does monitor transactions in bolívars — and any worth about $50 or more will automatically freeze your account until you can explain to your bank where the funds come from.”
Localbitcoins has been a famous platform for Venezuelans. The trading volume on this exchange has been gradually rising, hitting a record high to 2,487 BTC for the week ending February 9 before settling at 1,939 BTC last week.
Another international exchange platform, Paxful, too saw record volume in Venezuela, that increased 74.66% as compared to the last year. Additionally, the number of trades on the platform increased by 118% to an average of 61,534 transactions on monthly basis.
The government of Nicolas Maduro recently published decrees for regulating cryptocurrency activities in Venezuela, including the taxing remittances.