Why BTC and ETH are replacing Gold and US Dollar in Venezuela?

09 Jul, 2019 | Updated: 09 Jul, 2019
by Manshi Soneji Mamtora
News
Why BTC and ETH are replacing Gold and US Dollar in Venezuela?

Crisis in Venezuela continues worsening as witnessed by the economic data released. This is coupled with the rising popularity of Bitcoin and Ethereum over gold, dollar and depreciating bolívar.

Hyperinflation and blackouts

As Venezuela is suffering from hyperinflation, the central bank has released new notes of domination of ten thousand, twenty thousand, and fifty thousand bolívar in an attempt to provide some buoyancy. 

However, according to the trade economics data, the Venezuelan economy shrank 22.5% year-on-year in the third quarter of 2018, following a 17.6% contraction in the previous period. This is the first data released by the central bank over the past four years. The least impacted sector of the economy remains oil.

Even electricity blackouts are becoming more common in the country. Public is attempting to protect their wealth amid fast dropping bolívar value, by preferring to hold dollar against the local currency. The US dollar too is seen depreciating about 2% average in a year. 

Virtual asset benefits

Bitcoin and Etherum are also becoming increasingly popular, with bitcoin volume averaging to about $10 million a week. Physical USD or gold could potentially be confiscated while crossing borders. This is not the case with digital currencies as it is not held physical. 

In Venezuela, they usually prefer Bitcoin for larger money transactions and Ethereum for comparatively smaller transactions.

Popularity of Bitcoin is also rising in the neighboring countries like Columbia as they are also impacted the worsening economic status. 

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