Despite the country’s own crypto currency Petro and the efforts of President Nicolás Maduro, Venezuela’s economy looks very bleak. Analysts expect an inflation rate of one million percent by the end of the year – higher than in the Weimar Republic.
Can Cryptosoft and other crypto currencies help save the country’s economy?
A Reddit user answers cryptosoft questions. In South American Venezuela, the cryptosoft situation is anything but rosy. Already at the beginning of the year, the International Monetary Fund predicted an inflation rate of 13,000 percent. But that’s not all – the United States of America already imposed a trade embargo on Venezuela last year.
Then the Venezuelan president had the apparently rescuing idea: his own crypto currency had to be found. Without further ado, Nicolás Marduro issued the Petro. According to official figures, each petroleum should be covered with a barrel of oil, and the country and its ICO flushed 735 million US dollars into the state coffers in the preliminary round. However, this was never confirmed – neither the revenue from the funds nor the coverage of the petroleum with the oil reserves. On the contrary, doubts arose as to whether the whole story was not about cooperation with Russia in order to wipe one out of the USA.
The milky coffee index
The Café con leche Index: A latte costs one million bolivar in Venezuela.
Petroleum, oil and the USA or not: Venezuela’s economy continues to go downhill. As Bloomberg reports, the inflation rate will rise to 1,000,000 percent by the end of the year – the country’s hyperinflation is higher than in the Weimar Republic. Bloomberg uses the “Cafe con Leche” index for clarification. According to the index, the price of a latte is currently over one million bolivar [as of 24 July, and could be significantly higher by now].
So while the government continues to print worthless banknotes the population is wondering how to escape the misery. How can you keep your wages (if you have one) and buy some a day later without the price dropping dramatically? Similar to Zimbabwe, Bitcoin and other crypto currencies can help here. In spite of the high price fluctuations, the Bitcoin cash exchange rate promises a certain stability that can far outdo the national currency. In a Reddit Ask me Anything (AMA), a Venezuelan Bitcoin Cash user describes the current situation in Venezuela:
“I believe that the younger population still in the country […] needs Bitcoin Cash to support their families. I would say that 40 percent of the population has access to the Internet. About 30 percent of Venezuelans, but especially people under 35, use crypto currencies in my country. Students, whether they study economics or medicine, use crypto currencies to attend courses.”
As Bibi489 further explains, Venezuelans use crypto currencies primarily to preserve value.
But also in some cases to pay with them:
“They [crypto currencies] are used to store value. But there are also companies that accept crypto currencies. […] But you have to exchange crypto currencies to get food, gasoline or cash […] – only for money you need for the bus, the bank or taxes.”
First change, then pay: Crypto currencies as a store of value
It also addresses the lack of acceptance of petroleum:
“[…] One could buy Petros… But: Who would do this? So I’d rather not buy them. I think that’s the only thing you can buy directly with crypto currencies at the moment. I think there is a hairdresser in Caracas who accepts Bitcoin Cash. And in Carabobo there are still a few small shops. When I trade [crypto currencies] in Bolivar, I mainly buy food, soap, clothes and try to invest in education […]”.
Another problem besides the inflation rate is the country’s lack of technical infrastructure. First and foremost, there is a lack of a comprehensive Internet so that more people have access to crypto currencies and thus have a way of protecting their salaries from inflation:
“The Internet is a privilege in Venezuela. This is mainly due to the fact that cables are stolen and it takes a very long time until there are new ones again.
The Bitcoin cash rate is currently 861 US dollars. This is a monthly A