“Bitcoinization” is beginning to arrive in some countries with hyperinflation problems. Venezuela or Zimbabwe are some examples of this “Bitcoinization”
The stories of hyperinflation in several countries have been increasing in recent days. As citizens face the reality that their country has devalued their currency, they are forced to take backpacks of cash to buy a loaf of bread.
We published a few weeks ago the large number of transactions carried out by Venezuela in the platform LocalBitcoins, which far surpassed the entire European continent and had increased exponentially. Today, in Venezuela, a simple lunch costs more than 200,000 bolivars ($ 8 / $ 10) and it must be borne in mind that the tremendous hyperinflation of Venezuela has reached such a level that a satoshi is now equal to a single Venezuelan bolívar. A satoshi, the name given to the eighth decimal place of a Bitcoin, written as 0.00000001 ฿, is Bitcoin’s smallest unit that is transferable. In dollar terms, a satoshi is currently worth $ 0.0000420842.
The main difference between Zimbabwe and Venezuela is that Venezuela does not have access to dollars. Therefore, the premises have gone completely to Bitcoin to function economically. Since Bitcoin is independent of the Bolivares black market, it represents a fixed exchange platform for business. To give you an idea, Venezuelan users in Reddit report that working in “faucets” (taps where they give away bitcoins from time to time) they earn more than the minimum wage in the country.
Many Venezuelans have already resorted to the mining of Bitcoin and other cryptocurrencies that can be exchanged by Bitcoin. The use of Bitcoin does not require the user to have a bank account, so those who do not have access to a bank can use it since they only need a mobile phone and a wallet application. Although adoption is currently low, it is a solution that Venezuelans are already using and with its current parity of satoshi-bolívar, it makes the calculation and adoption come from an easier perspective.
As in Zimbabwe, travel agencies, rents and vehicle sales and a large number of businesses of the style have been almost forced to accept Bitcoin as a payment method. And in both countries, there have been arrests of miners, who were surprised due to the high consumption of mines.
Amid such chaos, Bitcoin’s price on Zimbabwe’s local exchange, BitcoinFundi, has skyrocketed to $ 7,200. This figure reflects a frantic desire to find ways to negotiate within an economy in which government controls have made traditional media impossible.
All these events indicate a great increase in the use of Bitcoin. Citizens have been forced to resort to non-governmental sources for commercial purposes and for their own survival, suggesting that such economies may be facing “bitcoinization”.