In a country where basic living necesities like toilet paper and sugar are almost impossible to find and a liter of gasoline is $0.01 (yes you read that right, 1 cent); Venezuela's economy is crumpling while the world is watching, and doing nothing to say the least.
Hyperinflation and a present dictatorship-like government are the root cause of this disaster. People have to line up for hours at a time for bread, salt, flour, and other cooking ingredients simply because the government is keeping tabs on how much is going per family.
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The Outcome?
Venezuelas currency, the Bolivar is worth currently 10,111 to a US Dollar. Just imagine carrying all that fiat money to buy anything, people are literally carrying bags of cash with them, but what is it worth?
Since Cryptocurrency started becoming mainstream early 2013 in Venezuela, people are buying and selling cryptocurrency simply because its safer to use and manage, and won't loose as much value as the Venezuelan Bolivar due to inflation.
"Bitcoin is literally saving my family from hunger and giving them the financial freedom to emigrate in the near future — Thanks to the rising price of Bitcoin and its relative stability (compared to the Venezuelan economy) my family is part of a very small fortunate minority that can afford to help feed their community and also potentially emigrate to another country."
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Stories
(All names have been kept anonymous)
-A computer scientist living in Maracay, imports basic staples to help feed his family. He purchases Amazon gift cards through the bitcoin-friendly website eGifter , and then channels his orders through a Miami-based courier service.
-A miner who lives in Valencia, says he uses his monthly revenue to buy insulin from overseas for his diabetic father.
-A repair shop owner in Caracas, uses bitcoins to import goods that are no longer available in Venezuela and resupply his store's shelves.
The three, who all agreed to speak on the condition of anonymity through encrypted channels out of fear of getting caught, illustrate how a growing number of Venezuelans are using bitcoin to overcome the daily hardships of a collapsing society.
Cryptocurrency mining in a dictatorship-like country
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While bitcoin mining isn't illegal in Venezuela, early last year the government began a crackdown on miners, painting the activity as a subversive practice that bypasses the capital controls and is linked to "cybercriminals".
They fear being discovered by the Servicio Bolivariano de Inteligencia Nacional, or SEBIN, the country's secret police.
"Not only the SEBIN, the national police has also raided miners," Brito says.
According to some accounts, agents with the secret police have extorted miners, threatening them with arrest.
Miners who have been arrested have been charged with tax fraud, money laundering, electricity theft and other crimes.
Electricity is also a major issue. Two-thirds of the country's electricity comes from hydropower, but dam water levels are at an all-time low. To conserve power, the government has introduced planned power cuts and scaled back the working week for public employees to two days.
From a currency perspective, Brito believes the benefits of mining outweigh concerns over electricity usage.
"Bitcoin mining is definitely a good use of electricity in Venezuela," Brito argues, "because it's giving the country a relatively stable currency with several advantages over paper currency."
Thank you for reading.
Happy Steeming!