Hyperinflation has turned Venezuela into one of the hotspots for cryptocurrency mining and usage. The trend is highlighted by the exponential growth in LocalBitcoins purchases, as CoinDance data shows.
The weekly purchase volume surged from 6 trillion to 24 trillion bolivar in the past two months. The trend is obvious although the purchases are relatively small based the market price of the depressed Venezuelan currency.
Even more curious is the disparity in prices for Bitcoin. Because of the fluctuating bolivar, it is hard to determine the amount at which BTC is sold. The buying and selling prices on LocalBitcoins may, in fact, be highly inaccurate.
Bitcoin (BTC) trades on the international markets at about $6,420. Based on international data, one BTC in Venezuela is worth 1,590,982,638.21 bolivar, which equals $6,402.However, the price of LocalBitcoins varies wildly.
Venezuela is still struggling with the launch of President Nicolas Maduro’s project, the Petro, or Petromoneda - a digital token allegedly backed by oil reserves. The decision to tie the new sovereign bolivar to the still non-discoverable token may lead Venezuela further down the hyperinflation spiral, wiping out as much as 95% of the national currency’s value.
But the crypto community still believes the answer lies with fully decentralized projects, not with state-issued currency. Many Venezuelans on social media also view the Petro as a scam.
Curiously, Bitcoin Cash is using the crisis to make a foray into the country. Via donations and a local network, it is trying to see if a decentralized form of digital cash can replace the worthless national currency.
Turkey, another country having trouble with its national currency, has also seen recent spikes on LocalBitcoins. Turkish crypto communities are strong, and the ownership of digital assets may already be in use as a hedge against the fluctuating lira.