How cryptocurrencies impact and how to use in Venezuela

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Traditionally, society has perceived the use of money as the physical representation of it, however, with technological advances; the use of cards was achieved through a database registered with a bank to handle balance movements.

However, the global economy is adapting to new technological and social developments that have led to a new structure: blockchain technology. Turning economic transactions into decentralized, transparent and incorruptible exchanges.

As seen in the documentary Banking on Bitcoin, original by Netflix and released in 2017, which tells through interviews with various experts how cryptocurrency produced a market and destabilized the monopolization of banks with respect to the world economy.

Presenting this scenario, and looking to Venezuela, a country that is currently on a very high price rise, what Professor Philip Cagan of Columbia University called in his 1956 article as hyperinflation, because the rate of price increase is more than 50% per month, positions the South American country as one of the 56 documented cases in the world with this type of inflationary decontrol compared to that suffered by Germany in 1920 when the exchange rate reached 2 billion German marks for every US dollar.

Venezuela, with an estimated inflation rate of 1000000000 per cent per annum by August 2018, has a hyperinflationary stability that includes not only the state of the economy, but also politics, social welfare and a general crisis in the control of prices of basic necessities.

This scenario provoked protests in the country last year 2017 in which many people took the streets to express their discontent, demanding an acceptable quality of life, however, the result of these protests was approximately 127 dead, 3000 wounded and more than 2500 detained.

At the end of that year, the re-elected president, Nicolas Maduro, proposed in December the launch of the Crypto currency Petro as part of the economic measures to solve the economic crisis that the country was going through, which would have the value of a barrel of oil according to the OPEP balance.

However, the U.S. government enacted a sanction for those who would like to invest in this crypto, being Americans, because of the various diplomatic conflicts between the countries. This influenced the other countries not to invest in this project.

Due to this initiative on the part of the Venezuelan government, the cryptocurrency were positioned in the public opinion and diverse people saw this as an opportunity of business, generating great amounts of dollars with the import of machines to mine bitcoins in the country, this phenomenon had a rise, product of the high profitability of the basic services like the electricity and the gasoline, that in comparison with the rest of Latin America and the world are positioned far below.

Parallel to the emergence of this business Satoshis are sold for dollars through groups in Telegram and those dollars are exchanged for Sovereign Bolivars, currently 1$ = 100 sovereign Bolivars. Perhaps this is the first step for the adoption of cryptocurrency in the Venezuelan economy as a sustainable alternative to generate greater accessibility to the purchasing power of Venezuelans.

Achieving the adoption of cryptomonedas in Venezuelan society offers the following benefits:

1 — Venezuela have a large number of people who decided to leave the country in search of a better quality of life. Usually, they send remittances to their relatives from abroad but the commission is very large for making the transaction, which is why crypts are an excellent way to send money, instantly, securely and without intermediaries.

2 — Due to hyperinflation, banks do not offer their customers the opportunity to withdraw enough money in banknotes. To understand this subject a little, here is an article. Usually people line up long lines to withdraw money. Thanks to crypto currency, this system can be erase it to achieve exchanges and reciprocal digital fluctuation between traders and customers… Directly to people with the QR code.

3 — It can act as a humanitarian channel to help people buy food or medicine through donations. In spite of the scarcity of food and medicine, this has proved to be an excellent channel that allows the solidarity of the communities that make up the kryptonite movement worldwide.