The Venezuelan Bolivar Tanks 24% of its Value in One Day

Dictatorship, devaluation, hyperinflation, drama. Those are just a few words to label what’s going on in Venezuela. The country, formerly described as a “socialist paradise” by the leftists in the region, is now facing the consequences of eighteen years of fiscal irresponsibility and production decay.  The government has seized key industries.

But what prompted this disaster? Many people talk about the decay of oil prices, which comprises 98% of Venezuela’s exports, but that just doesn’t cut it. The administration is a conglomerate of public companies all suffering from the same illness; they are just a money sinkhole with no real turnover of profit or social benefits. Even PDVSA (the national oil company) was forced to invest in a chain of regulated food groceries stores. No wonder that the oil production fell 1 million of barrels per day!

Before Chávez started its mandate, PDVSA produced 3 million barrels of oil per day with a payroll of 40,000 employees. Now the company has 120,000 workers and is producing 2 million. This and the fact that the country’s central bank is everything but independent, are major ingredients for the “perfect storm“ that was unleashed after oil prices began to fall.

The Venezuelan Bolivar (VEF) plummeted by 24% in just 24 hours, amounting to a 400% loss in just two months. In Venezuela, the divulgation of the black market rate (the one used to price nearly all imports and goods) is prohibited by law.  However, millions of Venezuelans use the website DolarToday as a reference of the foreign currency price. The country’s main ISP, which happens to be government owned, went so far as to outright block access to the website, with other internet providers doing the same.

Bitcoin’s benefits are an often discussed topic among the currency adopters. However, few are the countries where the cryptocurrency has actual, practical uses, and Venezuela is one of those.

The statistics are overwhelming; Venezuelan citizens don’t hold savings accounts nor do they have a ‘savings culture’. Such behavior is explained by the economic crisis the citizens have endured over the last years.

Bitcoin became a miracle among tech-savvy people in the country, but now the user base has substantially increased, and ninclude businessmen, merchants, high-net-worth individuals, and freelancers.

The Bitcoin trading volume has been slowly growing in the past weeks, amounting to 87 BTC per day in LocalBitcoins and Surbitcoin markets, combined. Additionally, the bitcoin price has seen a 300% increase in merely two months–crazy figures in a crazy country.