Venezuela: Cryptocurrencies as an escape from collapsing currency and inflation

Venezuela: Cryptocurrencies as an escape from collapsing currency and inflation

In a country plagued by hyperinflation and the collapse of the bolivar, the Venezuelan economy is changing dramatically. Several years have passed since 2018, when the government introduced its own digital currency, the petro, and the situation has only worsened. However, Venezuela is currently experiencing an unexpected surge in interest in cryptocurrencies, which are becoming an important part of the lives of local residents.

Cryptocurrencies in the everyday lives of Venezuelans

From small merchants to large chains, cryptocurrencies are now widely accepted. Shops and services, including universities, have started using stablecoins, such as USDT, for payments and payroll. More people are planning to store cryptocurrencies as their savings. "I plan to hold my savings in cryptocurrencies one day," says Victor Sousa, who paid for phone accessories with USDT.

Growing adoption and global ranking

According to the Chainalysis 2024 report, Venezuela ranked 13th in the world in cryptocurrency adoption, recording a 110% increase in its use. This trend is a response to the sharp decline in the value of the bolivar, which has lost over 70% since October. Inflation in the country reached 229% in May, forcing citizens to look for alternative ways to preserve value.

A necessity, not a choice

Economists point out that the use of cryptocurrencies is now primarily a necessity. Citizens face a shortage of foreign currency, low wages, and difficulties in opening bank accounts. Although some services are restricted by US sanctions, the cryptocurrency ecosystem in Venezuela is resilient. However, the government remains contradictory—while it launched its own digital currency, the petro, in 2018, the project collapsed after scandals.

Cryptocurrencies as a safety net

Residents are increasingly using cryptocurrencies for money transfers, as traditional services such as Western Union are burdened by high fees and delays. In 2023, digital assets accounted for 9% of the total $5.4 billion transferred home, equivalent to approximately $461 million.

Political tension and an uncertain future

As a result of growing tensions between the US and Venezuela, the Venezuelan military has increased patrols along the coast, while Washington has sent warships to the region. This conflict and the economic crisis create a complex situation in which cryptocurrencies represent not only an escape from inflation but also a strategic weapon in geopolitical games.

Conclusion

Venezuela is an example of how cryptocurrencies can help people in crisis situations. Although their use is still limited and faces political and sanctions barriers, the situation shows that digital assets are becoming an essential part of life in one of the world's most troubled economies.

*This is not investment advice.

The Coingarage Team