For many Venezuelans, Bitcoin isn’t just a financial network or an investment method. In fact, for most, Bitcoin is an important survivability tool that allows residents to support their families.
Bitcoin is one of the very few currencies or assets that is decentralized in nature. Within the Bitcoin protocol and network, administrators or mediators aren’t present and users are wholly responsible for their financial activities.
Benefiting the unbanked
In underbanked regions, Bitcoin is an efficient settlement platform and cross-border payment facilitation tool as it allows anyone to obtain a wallet and start transacting immediately with Bitcoin, unlike banking services that require a certain level of fixed income and lists of identifications amongst other requirements.
Residents in countries like Venezuela are struggling to obtain bank accounts and utilize financial services to either receive or send money to and from abroad. In fact, it is actually purposeless and insignificant to own a bank account in Venezuela because cash or government-printed money has been rendered worthless in a period of months.
Currently, Venezuelans are suffering from strict capital controls and hyperinflation rates as a result of the country’s economic and financial demise. Families are desperately trying to find basic necessities such as food, medicine and clothes in order to prevent their family members from dying of starvation, dehydration and sickness.
Hyperinflation and financial crisis within Venezuela worsened after the Venezuelan government released the new 100-bolivar banknotes in mid-December of 2016. The government announced that within 72 hours that all 100-bolivar bills, which according to the NY Times account for over three-quarters of all cash in circulation, would be worth nothing in value.
Burning cash, earning Bitcoin
At the time, residents who failed to obtain banking services had virtually no other choice but to see their piles of cash turn worthless as time passed. Within 72 hours, Western media began to broadcast footages of outraged communities and Venezuelans burning cash as a means to protest against the government’s incompetence.
Local residents including Alvaro sought out for alternative financial tools apart from cash and precious metals since both the inflow and outflow of gold and the USD were heavily restricted by border controls. Venezuelan officials and police seized gold and USD at their demand, to ensure capital doesn’t leave the country.
Naturally, the younger population of Venezuela began to turn toward Bitcoin as it eliminates the possibility of government intervention and regulation. In local exchanges including Surbitcoin and BitInka, Venezuelans bought Bitcoin and purchased food from online platforms such as Amazon to feed their families.
An increasing number of people also engaged themselves in Bitcoin mining to earn the digital currency instead of local money.
Alvaro wrote:
“At the end of the day Bitcoin has been a lifesaver for Venezuelans like me, trying to preserve the effort of our work, and an alternative to our regulated financial system, which gives people that decides to keep living in this beautiful country to continue struggling to survive without giving up and pushing forward our homeland.”