Venezuela is a country full of so many complexities – one that is naturally rich in so many ways yet appears to be bankrupt.
While a country with arguably the largest oil reserves in the world, it no longer produces this valuable global resource. It is deeply mired in debt thanks to a number of flawed economic decisions.
Yet Venezuelans have learned to make the best of the space — with all of the good and the bad that the country can offer. And in the midst of all of this, Venezuela has inadvertently emerged as some sort of unicorn for the crypto community.
A few years ago, everyone started talking about Venezuela evolving into a kind of “crypto-country.” But if you were to dig deeper, you would discover that there is something much more complex about this situation.
A Flurry of Crypto Adoption?
When crypto news sites review something about Venezuela, they always seem to get it wrong. They often talk about the huge amount of money moving around on Over-The-Counter (OTC) platforms. Or they’ll sometimes feature a story about how a new fast-food chain started accepting Bitcoin.
This kind of news has made the crypto world believe Venezuela is a country where mass adoption has already happened. And nothing could not be further from the truth.
In my view, a fast-food chain’s acceptance of bitcoin does not signify mass adoption. Even much less so if we’re talking about a stagnant economy.
While it is true that more businesses are accepting crypto here, it is also true that crypto is not a reality for most Venezuelans. The average citizen is unfamiliar with the concept of cryptocurrency, let alone keeping tabs on its price.
The Venezuelan Economy Data Hurts
Let’s put the data in context so that we can better understand what is really going on. The rate of inflation in the United States is close to 2% per year. In Venezuela, the inflation rate reached 15.3% in May of 2020.
And here’s the worst part? May was the month where inflation actually grew the least in three years!
This is why, week after week, we see news about how Venezuela is breaking its OTC exchange volume. But in reality, more money is traded but less value is exchanged.
What is the result of this hyperinflation process? Well, the answer is as simple as it is painful. In December 2020, the average Venezuelan earns $1.15. And we’re not talking hourly— the average Venezuelan earns $1.15 a month.
Here’s a little more context around how tragic this process has been. Today the minimum wage in Venezuela is less than two dollars. In January 2012 the Venezuelan minimum wage was close to 280 dollars a month — one of the highest in the region. The result of this abrupt fall led to an exodus, one where more than 5 million Venezuelans have fled their homeland.
Crypto: A Flicker of Light for Many Venezuelans
But every tragedy has a bright spot offering a bit of shelter. And for many Venezuelans still in the country that safe haven has been crypto.
Certainly, Venezuela has a reason for being one of the largest markets in LocalBitcoin, Binance P2P, and other exchanges. And, again, much of that is due to the exodus. Many people have found it easier to send remittances to their families with crypto than via traditional methods.
But the Venezuelan crypto movement goes much deeper than simple monthly remittances. Crypto has saved many families from falling into poverty.
The crypto community has given room to many Venezuelans. Many entered out of curiosity and today they are some of the most prolific writers for large crypto portals.
Others were early adopters. Many others have decided to embrace the adventure of trading.
There are hundreds of stories like these. We can talk about people who paid for the birth of their children with bitcoin. We can talk about other people who have conducted food donations whose funds came from this space. Others have simply used cryptocurrencies to protect themselves from inflation.
In conclusion, the truth is that crypto in Venezuela is far from what crypto Twitter or crypto news portals usually imagine. Not everyone has a cold wallet. The vast majority of businesses do not know what crypto is. Yet, a group of people is leading a revolution, a revolt that is slowly gaining more and more momentum by the day. A movement that can change the lives of many more people here.