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It’s Not Just China - Inflation-ravaged Venezuela Floods into Bitcoin

It’s Not Just China - Inflation-ravaged Venezuela Floods into Bitcoin

​The market-dominant Chinese get a huge slice of the Bitcoin community press these days, and for good reason. They control the vast majority of the Bitcoin trading and Bitcoin mining, so they get a lot of the coverage when things change in the community. China sets the Bitcoin global market price these days.

China is buying more and more Bitcoin these days, but they aren’t the only ones. Venezuela may be a fraction of the size and economic value of China, but they are making their own beeline into Bitcoin, for different reasons.

If your nation were hyper-inflating, you’d jump on Bitcoin too

Life in Venezuela is pretty tough these days. The Venezuelan Bolivar is in the throws of “hyper-inflation,” meaning its value is dropping like a stone, and the government is printing more of a currency nobody wants. Most people believe the definition of inflation is when prices rise and this is not the case. Inflation is when the amount of base currency increases and more currency units are added to an economy.

Hyper-inflation is just an amplification of this. The International Monetary Fund predicts Venezuela will suffer inflation rates of almost 500% this year and up to 1600% by next year. Maybe in a top Western culture, you may see inflation rates quoted at 1-2% when in reality they’re closer to 5% per annum.

That’s inflation, and it happens every year. If you are seeing 100% to 500% inflation per year, you see people stealing horses and killing them for food in Caracas. Welcome to the economic crisis in Venezuela, and Bitcoin is a digital golden parachute for some of the savviest Venezuelans.

Bitcoin pretty much provides the opposite effect, due to its deflationary (reduction in the number of currency units produced over time) nature. Bitcoin prices have risen over 60% this year after rising over 35% last year, and this almost instant value is very attractive to those suffering minor economic stress, like those in China.

If you are in Venezuela, this may be your last chance at economic salvation. Bitcoin trading in the country has gone from less than 50 BTC per week at the start of the year to as much as 370 BTC per week, recently. Bitcoin exchanges like SurBitcoin, the only Bitcoin exchange in the country, and Xapo’s Bitcoin app are seeing all-time highs for usage in the economically unstable nation.

It is unknown how, or if, this trend will continue, or even get worse. People are waiting all day in lines to buy basic items like flour or detergent. Many go all day without eating. Bitcoin won’t solve these daily problems right away, but for those that know enough and still have enough money to purchase, Bitcoin’s almost daily growing value can be the ray of hope some need to survive this economic superstorm.

Bitcoin is the world’s first global currency, and it is one of the last ways to protect the remaining wealth of those in economically troubled nations like Argentina and Venezuela. In China and the U.S., Bitcoin may be mostly an inventor’s tool. In places like Latin America, it may be one last shot at salvation.

This is why regulating Bitcoin is somewhat futile. There will always be nations, black markets, and “Dark Webs” where Bitcoin is not only available but unregulated and preferable to all other mainstream financial options. There will always be a place for Bitcoin trading going forward because it provides a service billions of people need every day.

Many right now are looking for protection from their state-run economies. If your nation-state is producing an economic fire sale on its currency, Bitcoin can be your fireman. That’s why Bitcoin was made in the first place, to be a free-market alternative to a falling U.S. Dollar in the throws of a 2008 “Great Recession.” This is its #1 business case. Protecting the proletariat from the silent form of taxation, inflation, perpetrated by The State.

Right now, Venezuela doesn’t want Bitcoin. Venezuela needs Bitcoin.