Venezuela, a nation facing down one of the deepest economic crises ever recorded, saw hyperinflation soar above 100,000 percent in 2018. This economic crisis rendered the national currency, the Bolívar, nearly worthless, forcing citizens to seek alternative methods for conducting transactions.
When the value of the Bolívar tanked, almost any basic good or service quickly became out of reach. As a result, prices inflated exponentially, forcing countless Venezuelans to leave their bolívar behind and adopt other currencies. The US dollar became a defacto standard, offering relief and stability from equivalent runaway inflation. Citizens started to use dollars to do everyday transactions, requiring them to use dollars to pay for everything from food to rent.
Along with the US dollar, cryptocurrencies emerged as a popular payment alternative. In the Bolívar’s case, it’s proving nearly impossible to keep their value on par. Consequently, digital currencies serve as a unique tool for individuals seeking to shelter wealth and conduct transactions. Venezuelans have turned to Bitcoin and other cryptocurrencies to overcome their economic woes. At the same time, they’re using this new technology to transact with the world around them and across borders.
This pivot towards these new kinds of currency is just one aspect of Venezuela’s long and tumultuous economic collapse. A large percentage of citizens have adopted a dual-currency economy. Here’s how they use both dollars and cryptocurrencies to survive the day-to-day trauma of hyperinflation. This trend isn’t limited to big cities. Residents of remote areas are using cryptocurrencies more and more to fulfill their different requirements.
Cryptocurrencies are easily accessible on smartphones, making it easier for Venezuelans to access this alternative financial system. As traditional banking services struggle to operate in the hyperinflationary environment, digital currencies present an accessible option for many who have been excluded from the formal economy.
Hyperinflation has led to an entire cavalcade of disaster to Venezuela. The story of the ascent of the US dollar and cryptocurrencies is how wonderfully resourceful and elastic the Venezuelan people are. By embracing these alternatives, they’re discovering new routes to resilience in an economy that has mostly left them behind.