Venezuela Citizens Turn To Bitcoins In Record Numbers

By Etanllah | Bitcoin News

Nov 02

Bitcoins are becoming an increasingly popular form of digital currency, especially in areas that are suffering from currency devaluation. Unlike other forms of currency, the bitcoin remains relatively stable and isn’t likely to suddenly drop in value at the drop of a hat.

This explains why Venezuela, a country that has been suffering from severe economic problems, is increasingly turning to bitcoins over there own currency.

The Root Of The Problem

Over the last year, Venezuela’s currency, the bolivar, has lost at least half of its value when compared to the American dollar. This is an astonishing drop and one of the worst in the world. Coupled with this is a stunning increasing in inflation, which is estimated to have grown by as much as 15 times.

This creates a perfect storm of conditions that has driven the bolivar to nearly worthless levels. It isn’t uncommon for Venezuela citizens to carry a wheelbarrow of cash to the store simply to buy a few items.

Some are even using their currency as a form of paper or stuffing it in their heating and cooling items. As a result, the country is in a state of crisis which has been historically difficult to escape.

Where Bitcoins Come In

According to recent date released by LocalBitcoins (an online page that helps bitcoin buyers and sellers communicate), trading volume in Venezuela is at an all-time high. Some in the country have purchased as many as 370 bitcoins in a single week, which translates to about $224,000 USD. Though this process is difficult to manage, it is one that an increasing number of Venezuelans are undertaking, especially on their exchange, Surbitcoin.

Once a buyer gets control of bitcoins, they have a few different options. Many will simply keep the bitcoin and hope it increases in value over the years. In this way, they are basically investing in a huge upswing and hoping that their currency stays at its low level. This is a bit of a gamble, though, as it requires holding into currency for an extended period of time.

However, many more buyers are converting their bitcoins into American currency. Having lost all confidence in the bolivar, they are transforming it into a more stable and reliable one. However, there are some dangers with investing too heavily in bitcoins, especially in a struggling nation.

Hacking Is A Possibility

The thing that many people in Venezuela may not realize is that bitcoin hacking is a real possibility. Exchanges and wallets have been hacked and emptied of billions of bitcoins, devastating the holder’s account.

Thankfully, anti-hacking procedures are available for bitcoint wallets including storing bitcoins in air-gap servers stored in secret locations. This option is not likely viable for many Venezuelans, however.

Truthfully, the small amount of money the average person holds in their bitcoin wallet makes it highly unlikely that their account will be hacked. It is a danger, however, that is worth understanding.

Potential Fallout

One interesting thing to consider is the possibility of other countries turning to bitcoins in the future. For example, the economic crisis that impacted Greece could have seen them turning to a stable form of digital currency, rather than their own devalued one.

Could a major economic depression across the world raise bitcoins to worldwide prominence? If so, this would cause most of the world’s currency to be focused in the hands of those that could produce and distribute bitcoins. This is a strange possibility and one that is hard to imagine actually occurring.

But as countries like Venezuela continue to watch their currency’s value drop, it is one that is worth taking seriously.

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