Venezuela, once the richest oil producing nation in South America is currently facing hyperinflation coupled with severe food shortage. However, citizens like Carlos Hernández, an economist in the country has turned to Bitcoin to cater to his needs and that of his family. According to Hernández, Bitcoin has saved his family, reports the New York Times on February 23.
U.S. Sanction on Oil and Two Presidents Dictating
The U.S. sanction on oil, two presidents dictating at once, and the turn away of relief materials have contributed to Venezuela’s inflation. Reports reveal that this inflation goes as high as 3.5 percent daily, thereby devaluing bolivar, the country’s fiat currency. The yearly inflation rate was almost 1.7 million percent in 2018.
Despite this, some citizens have found a way to survive the harsh economic conditions. One of such is Carlos Hernández who told NYTimes that Bitcoin had saved his family. The economist recounted of how he converts a little amount of his virtual asset to bolivars before making purchases in the area.
Economist Resorts to Bitcoin to Meet Daily Needs
An instance of this, was when he used Localbitcoins, a cryptocurrency exchange platform, to sell some part of his Bitcoin. Here, he locates a listed buyer that uses the same bank as him to ensure a direct transfer of the fiat he will receive for his bitcoin. Both parties can then transact while he keeps the number of bolivars he receives at minimal. This is because the bank can freeze an account containing bolivars worth over $50, he said.
Nonetheless, the economist added that though he was able to exchange his Bitcoin for fiat, there was also the problem of locating stores that sold milk. After checking out 20 shops that hadn’t closed down due to the inflation, none offered the product for sale. He, therefore, had to settle for cheese in order not to hold onto the $5 worth of bolivars that may soon devalue.
According to the Economist:
Still, you could say that cryptocurrencies have saved our family. I now cover our household’s expenses on my own.I keep all of my money in Bitcoin. Keeping it in bolívars would be financial suicide
Family Member Also Relies on Bitcoin
Asides using cryptocurrency to get basic amenities, Hernández also outlined that his brother Juan, a lawyer had to leave Venezuela for greener pastures. He said the lawyer was making very little given that his clients’ wallets were not robust. Juan had to become a freelancer, but encountered troubles converting PayPal funds he received as payment into fiat.
With the help of bitcoin, Juan was able to meet expenses while leaving the country. In this case, there was no way for the virtual currency to be seized at the border by Venezuelan military personnel which is usually the case. All Juan had to do, is remember the password to his Bitcoin account and he was able to convert some of the digital currency to fiat to pay for goods and services.