It’s no secret that Venezuela is in an economic tailspin. The country famously sought to end corruption (a la India in November 2016) by removing the 100 Bolivar note from circulation.
The widespread panic that the already nearly valueless currency would now be worthless led to massive lines and protest from citizens seeking the protection of assets.
At that time, many Venezuelans began seeking refuge from the economic turmoil by investing in cryptocurrencies. The market responded and Venezuela’s first Bitcoin exchange was opened.
However, according to a recent report by Bloomberg this week, the demand for cryptocurrencies in Venezuela has continued to soar. This week’s trading volume on Bitcoin soared again to over $1.3 mln, nearly doubling the levels from two months ago.
The volatility of cryptocurrencies is minimal, compared to the massive devaluation of the country’s local currency (6000 Bolivars to $1).
But cryptocurrencies are not only being used for safe haven investments. Consumers are also using Bitcoin and others as a means of settling accounts and continuing business in the uncertain and volatile economy.
Because cryptocurrencies are decentralized, they are seen as a simple and safe solution to the need for stable currency in countries where government practices have destroyed currency values.