Venezuela's inflation is so crazy that local Bitcoin trading volume has reached a new high

Since the beginning of this year, the value of Venezuela's currency has shrunk severely. Now Venezuelans are unwilling to count the cash when buying things, and instead use weighing to measure!

So far, the black market exchange rate of Venezuela's bolivar against the dollar has fallen by nearly half, while inflation has soared 15 times. Moreover, this estimate is very conservative because the government currently refuses to release inflation data.

This is reminiscent of the hyperinflation that occurred in Germany's Weimar Republic after World War I, Yugoslavia in the 1990s, and Zimbabwe more than a decade ago.

Jesus Casique, head of finance at consultancy Capital Market Finance, commented:

“When they start weighing cash, that’s a sign of hyperinflation… But Venezuelans have no idea how serious this is.”

Tragedy in capital letters!

When a national currency performs as badly as the bolivar, suddenly a borderless cryptocurrency sounds very attractive. It seems that at least some Venezuelans are converting their bolivars into Bitcoin, not only to escape the downward spiral of the Venezuelan government-issued currency, but also to benefit from Bitcoin, which has had a very strong price performance this year.

Converting rapidly depreciating fiat currency into Bitcoin is not a Venezuelan phenomenon; Argentinians have long been experimenting with this safe-haven strategy, as The New York Times (paywall) has reported.

Meanwhile, Bitcoin trading volume on LocalBitcoins in Venezuela has surged, reaching 370 BTC in the past week, worth about $224,000.

Of course, such trading volume still seems insignificant , and the amount of money that changes hands in the global market every day has reached trillions of dollars. But for Venezuelans, it is necessary to know the Bitcoin market and currency exchanges. Currently, there is a major exchange in Venezuela, called Surbitcoin.

After a user converts bolivars into bitcoins, she can hold onto the cryptocurrency or she can use a wallet service or exchange it for dollars or other more stable currencies. One such service, Xapo, was founded by Argentine entrepreneur Wences Casares, who said he saw a lot of Venezuelan users taking advantage of his app.

Of course, a reminder is also needed: Bitcoin exchanges are not safe. Hundreds of millions of dollars worth of Bitcoin have been hacked in history, and the best choice is three words - Maimaiti.