Venezuela's economy is in trouble, Bitcoin is expected to help people get through the difficult times

Venezuela is facing its worst economic crisis in history. This article focuses on how most Venezuelans are using Bitcoin to survive this economic crisis.

In the past, Venezuela, a South American country, has always been a benchmark for economic development and political stability. It is an important oil producer and exporter in the world and also has rich mineral resources.

Latin American countries have long been mired in dictatorships, but Venezuela is a democratic country. Today, it has the highest inflation rate in the world. In 2015, the inflation rate was as high as 275% , and the International Monetary Fund (IMF) predicts that by the end of 2016, Venezuela's inflation rate will reach 720% .

In addition to inflation and currency devaluation, Venezuela has many other problems. Since 2003, the government has implemented capital controls and restricted the purchase of foreign currency, with each person being limited to 1000美金per year.

These controls have become increasingly strict, and today Venezuelans are completely prohibited from buying foreign currency. The Venezuelan central bank bears some responsibility for the economic crisis, as it has been issuing currency to cover up the government's fiscal deficit.

In addition, Venezuela is facing a severe economic recession (economic growth fell by 8% in 2015), food shortages and lack of infrastructure (such as drinking water and electricity resources). People have to queue for more than 8 hours to buy food and other necessities at the prescribed price. Many people take these items to the black market and resell them at prices 500% higher than the original price.

Therefore, it is not surprising that many Venezuelans who are tech-savvy have chosen Bitcoin technology to help them through the crisis. Cryptocurrency technology facilitates the safe storage of property.

So what is the situation of the Bitcoin market in Venezuela? Most of the transactions are conducted on Surbitcoin, a large domestic Bitcoin exchange. Surbitcoin uses the BlikTrade platform to create transactions, and the daily trading volume reaches 50BTC . Compared with the serious situation in Venezuela, this trading volume is already a lot.

Other trading platforms include LocalBitcoins, and some people choose P2P trading. Venezuela is well-known in the Bitcoin mining community because the country's electricity is cheap (cheaper than China). Although two miners were recently arrested for "smuggling" and "money laundering", Bitcoin is still legal in Venezuela. However, corruption at the top of the government is serious, so innovation in the fields of finance and technology is difficult to achieve.

Due to government policy restrictions, many Venezuelans can only buy foreign currency on the black market. In contrast, buying Bitcoin is safer and more convenient because buyers do not need to provide detailed bank transaction records and do not have to worry about fraud and robbery.

The economic crisis has made many young Venezuelans see the opportunity to make money online - online office. Artists, programmers, musicians and freelance writers use online employment platforms such as Freelancer and Upwork to make a living.

The wage level in Venezuela is very low, with a minimum wage of 30美元per month. However, it takes at least 184美元to buy the necessities of life (meat and vegetables) each month. Some Venezuelans rely on online trading platforms such as Paypal, Neteller, and Payza, but these platforms have high transaction fees, and the procedures for exchanging Venezuela's official currency, Bolivar, on these platforms are very complicated, and as mentioned above, foreign currency exchange is illegal.

Therefore, many platforms have emerged on the Internet to help Venezuelans solve their problems. For example, the online employment platform XBTFreelancer pays wages in Bitcoin; the Ethereum blockchain startup Colony provides a platform for people to establish decentralized online companies, and employees are paid in Nectar, a unique token developed by Colony that can be converted into Ethereum at any time if necessary.

There is no doubt that Venezuela is a strong potential market for Bitcoin trading. According to a survey by Garrick Hileman, a researcher at the London School of Economics, Venezuela's Bitcoin trading potential index ranks second, second only to Argentina (since Argentine President Mauricio Macri took office and introduced a series of capital control policies, many people have to choose Bitcoin).

There are still many problems for Bitcoin to be popularized in Venezuela. One of them is the technical barrier, but we believe it will be overcome soon because many young people in Venezuela are proficient in the use of smartphones and computers.

Bitcoin use cases in Venezuela are limited to mining and the exchange of goods and services. Despite the dire economic situation in Venezuela, there is a strong and loyal Bitcoin community with more than 8,000 members (data from the Venezuelan Bitcoin and Ethereum Facebook group).