Hyperinflation Produces Surge In Bitcoin Trading In Venezuela

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Hyperinflation Produces Surge In Bitcoin Trading In Venezuela

Venezuela is one of the world’s most problematic economies today. The country’s disastrous economic policies, along with a drop in the price of oil, have resulted in severe inflation. According to the International Monetary Fund (IMF), Venezuela is on pace to exceed one million percent inflation by December. Concurrently, the value of its national currency, the Bolivar, has plummeted. The conditions have created an opportunity for bitcoin and other cryptocurrencies to develop. According to recent sources, the price of bitcoin in the nation doubles every 18 days.

Bitcoin is now going at 1.3 billion bolivars each pop there as of this writing. In the nation, a cup of coffee costs 1 million bolivar. (Also see: The Effect of Venezuelan Bolivar Exchange Rates.)

Why Is Bitcoin Popular In Venezuela?

While the indicators of Venezuela’s current economic crisis have been there for some time, bitcoin just recently become a popular investment choice. That is when its price started to rise, attracting the attention of the mainstream media. Since then, the amount of bitcoin trade in Venezuela has increased dramatically.

Venezuelans are drawn to the cryptocurrency because it purports to be inflation-free. Fiat currencies are at the discretion of central bankers, who may manipulate their value by flooding or withdrawing their supply from the market. Bitcoin is not at the mercy of central banks since its supply is limited to 21 million units.

In a shaky economy, Bitcoin also provides an opportunity for profit. Venezuelans have become among of the world’s most prolific cryptocurrency miners. They are actually mining for money by taking advantage of the country’s cheap power tariffs. The popularity of cryptocurrencies has grown to the point that the country has developed its own national cryptocurrency, the Petro, in order to avoid US sanctions. (Also see: Venezuela Launches New Oil-Backed Cryptocurrency.)

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Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is very dangerous and speculative, and this article is not a suggestion by Investopedia or the author to do so. Because every person’s circumstance is different, a knowledgeable specialist should always be contacted before making any financial choices. Investopedia makes no guarantees or warranties about the accuracy or timeliness of the information provided on this site. The author holds a minor quantity of bitcoin and litecoin as of the date this article was published.

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