Amidst the worsening economic crisis and financial turmoil, Venezuelans are in search for alternative assets and stores of value to finance their daily living. The imposition of excessive regulation on physical assets such as gold has pushed the demand for Bitcoin in the struggling country.
The death toll of starving Venezuelan children is rapidly increasing in Venezuela, to the point where military personnel resort to trafficking food into the country and residents are struggling to acquire basic necessities like medicine.
Bags of money
In December of 2016, the New York Times provided extensive coverage on the devastating financial and the economic state of Venezuela. Some of the stories including Nicholas Casey’s article entitled “Hungry Venezuelans Flee in Boats to Escape Economic Collapse” accurately demonstrated the collapsing economic and monetary systems of the country.
Earlier this month, the Associated Press released a report on the severity of cash shortage, which has disallowed Venezuelans to purchase enough food and medicine to support their families. As a result, people escaped the countries in boats across borders to migrate to neighboring countries such as Colombia and military personnel were trafficking food into the country to feed the hungry population.
Associated Press’s coverage of the military food trafficking case demonstrated the level of corruption and unlawful operations led by the government. Military personnel that had specific orders from President Nicolas Maduro to distribute food to the general population of Venezuela were profiting from the national financial crisis, selling food from butter to flour on the black market at a price that exceeded the government-set price by 100 times.
Jose Campos, a grocer interviewed by AP stated:
"The military would be watching over whole bags of money. They always had what I needed."
People are turning to Bitcoin
Venezuela is a small market for the Bitcoin industry. It accounts for a tiny fraction of the global Bitcoin exchange market due to the current financial situation in the country.
However, an increasing number of people are turning to Bitcoin in an attempt to obtain a currency that has an actual real-world value in order to obtain basic necessities.
Individuals from students to company owners have reported their success in mining Bitcoin and using the digital currency to purchase items like food and medicine through online marketplaces that accept Bitcoin. Some students were ordering food through Amazon using Bitcoin accepting service providers like Purse.io.
Some outlets also reported that Google searches for the keyword “Bitcoin” in Venezuela increased exponentially over the past few months, as people sought out for alternative currencies or assets to support their living.
In consideration of the current financial trend of Venezuela, it is entirely possible that a currency like Bitcoin could replace the national currency, which does not have any significant value anymore. A decentralized currency does not require permission from the authorities to settle transactions and send payments from one another.