An economic crisis puts the lives of people in misery, especially in third world countries in which citizens do not earn enough money to fight the increasing inflation rates. What’s interesting is that the recent economic crises show that suffering nations are turning to crypto as a means of exchange and storing of value. Perhaps this is a telltale sign that cryptocurrency, amidst all the speculations, will ultimately replace fiat. Struggling national currencies find more reasons each day to convert their cold-hard cash into digital currencies.
The case of Venezuela
One of the most interesting cases of a national economic crisis prompting people to turn to crypto is in Venezuela. The adoption rate of Bitcoin in the country started in October 2014. When President Hugo Chavez imposed capital controls back in 2003, Venezuelans started to look for alternative stores of cash as it became more and more difficult to get access to US dollars. This event led to an absurdly high inflation rate, peaking at 68.5 percent.
When Bitcoin grew in popularity a few years back, locals started to purchase and mine Bitcoin. In October 2014, Bitcoin’s value was at $388. The citizens continued to store their wealth in crypto despite the 49% decrease in value compared to the early months of the same year. This also marked the time when day trading became more popular among investors, with Venezuelans being one of the most active users of crypto trading robots like Bitcoin Code.
Continuous Bitcoin Market Growth
After being early adopters of Bitcoin, Venezuelans never looked back and continued to invest heavily in the Bitcoin market. Bitcoin trades were some of the highest in the world, proving that locals have turned to crypto as an alternative store of value. On December 17, 2016, figures show that Bitcoin trades were worth VEF 527,945,763, an equivalent of $105,589 at the time.
Because of these numbers, Venezuelans realized that cryptocurrencies can be a genuine alternative to their national currency and the US dollar as well. In many ways, it has become the savior of the Venezuelan economy.
Despite the lack of crypto exchanges in the country, the Bitcoin market has thrived because of the consistent trades between miners and investors. Most Bitcoin miners in the country limited their trades to those they can trust, choosing to prioritize their privacy above anything else. As they accumulate more wealth, they want to maintain their privacy instead of being out and open in public.
It’s worth noting that other than Bitcoin, other digital currencies have found success during the economic disaster in Venezuela. Venezuelans are also among the biggest holders of Dash, Litecoin, and Ethereum. The first two are popular in the country because of their lower transaction fees coupled with faster confirmation times. An increasing number of merchants in the country now accept Dash and Litecoin as a means of payment.
What happened in Venezuela tells a lot about the real power of crypto. An economic crisis spurred the citizens to turn their assets into digital currencies, and they have benefited immensely from the surge in prices of Bitcoin and other virtual coins.