Venezuela's Central Bank Explores Cryptocurrency Options

Venezuela, going down a spiral to becoming a failed state, has turned to cryptocurrencies for solutions. Its monetary system almost completely wiped out, the Bolivar traded for one Satoshi.

The Central Bank of Venezuela has convened a symposium of blockchain experts to gather expertise on jump-starting the economy. As the country slid into disarray, the unofficial information held that one Venezuelan Bolivar would trade for one Satoshi, 100-millionth part of a Bitcoin. 

Ángel Salazar, CEO of Venezuelan blockchain firm OnixCoin, suggested the government may be ready to turn to cryptocurrency solutions for its economic woes. 

The bank convened the Currency Exchange System Complementary Floating Market (DICOM) to find solutions to the deep devaluation of the national currency. 

"The DICOM wants to take advantage of the blockchain. The US blockade of Venezuela is very strong and they want to use criptomonedas to sustain the economy for lack of dollars," said Salazar.

There is still no knowing of Venezuela considers a government-issued cryptocurrency. In a way, it would be cheaper to produce, as trillions of units could be minted without investment in printing money. But even then, a government-issued cryptocurrency would need adoption, and no one knows if Venezuelans are ready to use crypto-wallets and pay through the blockchain.

Using Bitcoin or another cryptocurrency, even DogeCoin, would put Venezuela back on the economic map, as cryptocurrencies know no borders. 

Bitcoin mining is also popular in Venezuela. In this, the South American country resembles Russia, where mining and cryptocurrencies spread like wildfire, on the tails of political unrest and hyperinflation spanning over more than a decade. 

As it is seen on the map, Venezuela runs much more full nodes compared to neighboring countries, signaling relatively widespread Bitcoin adoption. And in a country where wages have been wiped out, a reward of 25 Bitcoin every 10 minutes means instant access to the closest thing resembling a "hard currency". 

Both mining and trading Bitcoin remain in precarious balance in Venezuela, with negative statements from president Nicolas Maduro. So Venezuelans are switching to Ethereum mining, as a gaming PC is easier to conceal than an ASIC machine for Bitcoin mining. Dogecoin has also enjoyed increased interest, as it can be co-mined with Litecoin.

The biggest benefit is that while Venezuela is in crisis, its electricity grid still offers reliable, state-subsidized energy. 

And since Venezuela has acquired something of a cult status in the crypto-community, it is no wonder scams are cropping up. Remain cautious before sending in any cryptocurrency to help Venezuelans.