Venezuelans increasingly are looking for other ways to pay as their country’s economic meltdown worsens. Some have looked to the United States dollar, while others are relying on cryptocurrency transactions. Venezuela endured hyperinflation that rose to an unbelievable 100,000 percent in 2018. Official dollarization forced the national currency, the Bolívar, into near-worthlessness. Just as the economic landscape keeps crumbling, so too do the people bind to survive, finding more permanent banking or wallets that provide a stable currency.
The hyperinflation that hit Venezuela in recent years has led to circumstances where conventional monetary systems have not been able to withstand hyperinflation. With the Bolívar rapidly losing all its value, millions of Venezuelans have found solace in the US dollar. The dollar’s stability provides a false sense of security in an economy filled with economic risk and uncertainty. With this new financial technology, merchants and businesses are taking to the new dollar faster than ever. Yet this trend deepens the dollar’s position as a leading medium of exchange.
Aside from the US dollar, crypto has become a popular payment option for Venezuelans. People are already using digital currencies like Bitcoin and Ethereum to make transactions and store value. This change is indicative of an increased awareness, demand and receptiveness to alternative financial systems by the general public. Cryptocurrency offers a unique bulwark against hyperinflation. It expands access to global markets that the Venezuelan government’s oppressive currency maneuverings had long shut out.
The use of cryptocurrencies is picking up on multiple fronts among the diverse Keishion, for one, demographic makings of Venezuela. At the helm of this movement are young, entrepreneurial, and tech-savvy individuals. They routinely access decentralized finance DeFi platforms to facilitate international commerce. And by facilitating cross-border transactions, CECs empower small businesses to reach global customers and boost sales. Importantly, they can do so without being impeded by local currency constraints.
While the Venezuelan government has demonstrated resistance to cryptocurrencies, attempting to promote its own digital currency, the Petro, many citizens remain skeptical. It appears the Petro hasn’t gotten a warm reception from the masses. This is largely due to lack of consumer trust in government-sponsored programs. First, cryptocurrencies are attractive because they are anonymous and provide independence from the state. That makes it attractive to people who want to avoid the dangers of depending on a failing national currency.
The economic crisis in Venezuela is changing day-to-day. There is no sign that either the dollarized or crypto trend will reverse. Whatever the future holds, the financial strategies embraced by Venezuelans are a testament to human resilience and adaptability in the direst of circumstances.