Hyperinflation in Venezuela has led to intense volumes of bitcoin trading in the country. The developments follow the Maduro government’s decision to hike the minimum wage sixty-fold and the IMF’s announcement that the country’s rate of inflation will hit over 1.3 million percent this year.
Venezuela’s rate of inflation will hit a remarkable 1,370,000% for 2018, according to the IMF. The hyperinflation and seemingly endless dive into economic crisis in the country have triggered record volumes of exchange, where Venezuelans are trading in their bolivares for bitcoins.
According to Coin Dance, more than 930 million bolivares were sold this week on LocalBitcoin, and last week 830 million bolivares were sold.
Inflation was expected to hit 1 million percent just a few months ago, but the IMF changed its forecast as the Maduro government forced a sixty-fold increase in the country’s minimum wage. As a result of the delusional economic policymaking of the Maduro government, the IMF is already anticipating inflation to hit 10 million percent by the end of 2019.
The intensified bitcoin trading has come just a few weeks before Venezuela introduces the public sale of its Petro cryptocurrency.
Maduro noted on television last week that, “If you have bitcoins you can buy Petros, if you have Ethereum you can buy Petros, if you have dollars or euros you can buy Petros. And from November 5, the Petro … will go on sale to the Venezuelan public in sovereign bolivars.”
When Maduro announced the change in the country’s permitted minimum wage, he also encouraged the people of Venezuela to prepare to invest in gold and the Petro.
The Petro is cause for skepticism
An investigative piece in Wired from August accused the Maduro government of fabricating a “scam on top of another scam” with its release of the Petro cryptocurrency.
The Petro has attracted suspicion because of its alleged backing by the Venezuelan state oil company that has more substantial debts that the cryptocurrency’s market cap.
Maduro seems unfazed by allegations that the cryptocurrency is a total scam. In the same television interview, he encouraged Venezuelans to invest in it to help “strengthen the family economy.”
With Venezuela’s economy in an unstoppable free fall and hyperinflation only set to intensify, Venezuelans will only grow more impoverished – cryptocurrencies should not be seen as the solution to save the country’s economic woes.