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Venezuela Becomes 'Dollarized' as Citizens Seek Refuge in Alternative Solutions

Venezuela has been suffering from rapid inflation as the purchasing power of the sovereign bolivar has become near worthless. Over the last few weeks, Venezuelans have been dealing with blackouts throughout major cities, making credit card readers useless. Additionally, citizens are dependent on remittances from overseas and last month the country became ‘dollarized’ as more than 54% of all sales in the country were processed in U.S. dollars.

Also read: China Ranks 35 Crypto Projects as President Xi Pushes Blockchain

Sales in Venezuela Have Been Dollarized

For years now the Latin American country of Venezuela has been dealing with one of the worst economic and political crises in modern history. A corrupt government and failed central planning have destroyed the Venezuelan economy, causing food and medicine shortages, nationwide blackouts, and millions of Venezuelans have been left in poverty. According to citizens, remittances stemming from friends and relatives internationally have been a lifeline for the majority of residents.

Venezuela Becomes 'Dollarized' as Citizens Seek Refuge in Alternative Solutions

Statistics show that since 2016, the overall inflation rate has increased by 53,798,500% and the sovereign bolivar has hardly any purchasing power today. So instead of using the bolivar, Venezuelans are resorting to other payment avenues like barter and trade with precious metals, the USD, and a number of individuals are using cryptocurrencies as well. The USD has become so popular in Venezuela it overtook the bolivar in sales last month.

Venezuela Becomes 'Dollarized' as Citizens Seek Refuge in Alternative Solutions
The inflation rate in Venezuela is expected to peak at 10,000,000% this year.

Econoalitica, a Caracas-based research firm, revealed in October that more than 54% of all sales in Venezuela were processed in USD. Asdrubal Oliveros, director of Ecoanalitica, also explained that Venezuela’s second-largest city saw “86% of all transactions” measured in USD last month. Oliveros stressed that residents of the country are surviving from funds being sent to them from families who have migrated elsewhere. There’s now a divide of people who have “access to hard currency, and those without,” Oliveros stated.

“Venezuela lives in an economy dominated by dollar transactions,” the Ecoanalitica director said. “This excludes those who only have access to bolivars, whose ability to buy things is severely restricted.” With a significant dependency on the USD, Venezuela has become ‘dollarized,’ joining many other dollarized nation-states like Ecuador, East Timor, El Salvador, Marshall Islands, Micronesia, Palau, Turks and Caicos, British Virgin Islands, and Zimbabwe. Dollarization is a macroeconomic term that describes how the USD substitutes the country’s native tender when it becomes useless as a medium of exchange.

Venezuela Becomes 'Dollarized' as Citizens Seek Refuge in Alternative Solutions
The United Socialist Party of Venezuela’s leader President Maduro introduced the first nation-state issued cryptocurrency called the petro which has been scrutinized by Venezuelans.

Venezuelans Find Refuge in Alternative Payments

As an alternative to barter and trade and the use of precious metals, Venezuelans have also discovered cryptocurrencies. News.bitcoin.com recently reported on the Bitcoin Cash House in Barquisimeto, Venezuela run by Roberto Garcia. The local BCH hub educates Venezuelans about the benefits of cryptocurrencies and job opportunities tethered to the industry.

Venezuela Becomes 'Dollarized' as Citizens Seek Refuge in Alternative Solutions
“The project, called Bitcoin Cash House, is the brainchild of Roberto Garcia and is sponsored by Bitcoin.com and Sideshift.ai,” explains news.bitcoin.com reporter Graham Smith. “It exists as a physical location and online initiative, seeking to educate newcomers to the space on the acquisition, storage, and general use of crypto, as well as development and job opportunities.”

Another entrepreneur in the country spreading adoption is Oscar Salas, the organizer of the Maracaibo city Bitcoin Cash meetup. Salas has been relentlessly driving BCH adoption to businesses in the region and recently discussed his activism on episode 34 of the Bitcoin Cast show. On October 8, Salas shared a picture and a video clip of his talk with over 200 cab drivers in Maracaibo city who learned about BCH first hand. There are ground crews in Venezuela as well with organizations like Venezuela.Bitcoin.com and Aprendebitcoin.org spreading valuable information about cryptocurrencies.

Venezuela Becomes 'Dollarized' as Citizens Seek Refuge in Alternative Solutions
Venezuela.bitcoin.com is making strides in Caracas, Maracaibo, and throughout the rest of the Latin American country by bolstering bitcoin cash merchant adoption in Venezuela.

The nonprofit Eatbch Venezuela (@eatBCH_VE) continues to show the BCH community how it is feeding Venezuelans in need using a peer-to-peer electronic cash system. “Long time since we posted pics of these locations due to tech difficulties, but we’re still helping those in need,” Eatbch Venezuela wrote on November 7. In September, news.Bitcoin.com also reported on the team of committed researchers and activists called the Ryver Bitcoin Cash Group surveying Venezuelans regularly. In their weekly studies, Ryver Bitcoin Cash Group community manager Sofia Corona noted that most Venezuelans do not trust the bolivar so the group gives them educational resources about the benefits of bitcoin cash. Lastly, this week BCH fans celebrated the fact that there are roughly 360 bitcoin cash-accepting merchants in Venezuela today according to data derived from map.Bitcoin.com. Similarly to places like North Queensland, Australia, and Slovenia, BCH is accepted by more merchants in Venezuela than BTC-accepting retailers.

No one is certain if Venezuela’s economy will see the bustling growth it once saw decades ago before the reign of the United Socialist Party of Venezuela. The oil-rich nation does have proven oil reserves, but production is worse than three decades ago. To make matters worse, estimates reveal that the inflation rate in Venezuela may surpass 10,000,000% this year. President Maduro’s socialist regime also introduced the petro, a cryptocurrency allegedly backed by oil and gold reserves. Residents say the average citizen doesn’t use the petro at all and only crooked government officials utilize it to bypass economic sanctions. Maduro’s regime also whimsically raised the value of the petro twice, just like he raised the minimum wage rate 26 times. Despite Maduro’s efforts, Venezuelan citizens are seeking refuge in alternative payment systems like the USD and digital assets.

What do you think about the situation in Venezuela? Do you think cryptocurrencies like bitcoin cash (BCH) can help people? Let us know what you think about this subject in the comments section below.


Image credits: Shutterstock, Twitter, Investopedia, Pixabay, and Venezuela.bitcoin.com.


Venezuela.bitcoin.com is also making strides in Caracas, Maracaibo, and throughout the rest of the Latin American country by bolstering Bitcoin Cash merchant adoption in Venezuela. Did you also know you can buy and sell BCH privately using our noncustodial, peer-to-peer Local Bitcoin Cash trading platform? Our Local.Bitcoin.com marketplace has thousands of participants from all around the world trading BCH right now.

Jamie Redman

Jamie Redman is a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open source code, and decentralized applications. Redman has written thousands of articles for news.Bitcoin.com about the disruptive protocols emerging today.

Jamie Redman , 2019-11-12 17:30:28 ,

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NewsBlock © 2019 - 2020. All rights reserved.


While Bitcoin’s price seemingly moves without rhyme or reason — collapsing by dozens of percent and embarking on face-melting rallies on a whim — the cryptocurrency market is filled to the brim with fractals.

Related Reading: Analyst: Bitcoin Price Likely to Fall to Low-$8,000s as Chart Remains Weak

A brief aside: A fractal, in the context of technical analysis and financial markets anyway, is when an asset’s price action is seen during a different time. This form of analysis isn’t that popular, but it has proven to be somewhat valuable in analyzing Bitcoin.

One recent fractal popularized by a well-known cryptocurrency trader is implying that BTC is going to return to the low-$7,000s in the coming days.

Bitcoin Fractal Implies Retracement to Low-$7,000s

A well-known crypto trader going by “Tyler Durden” on Twitter recently posted the chart below, which shows that a Bitcoin price fractal may be playing out. The fractal has four phases: horizontal consolidation marked by one fakeout, a surge above the consolidation phase, a distribution, then a strong drop to fresh lows.

If the fractal plays out in full, BTC could reach the low-$7,000s again, potentially as low as $7,100. This would represent a 20-odd percent collapse from the current price point of $8,800.

It isn’t only a fractal that is hinting Bitcoin has the potential to visit its lows. As we reported on Saturday, Bloomberg believes that if the GTI Vera Convergence Divergence Indicator flips red, a downtrend could push the cryptocurrency back to $7,300.

Related Reading: Stephen Colbert Pokes Fun at Bitcoin in Monologue: Mainstream Gone Wrong?

Can Bulls Step In?

But again, many believe it is irrational to have such bearish interpretations of the cryptocurrency’s chart at the moment. As reported by NewsBTC earlier, Popular crypto trader Mayne recently noted that the “people waiting for $6,000” are irrational. He quipped that Bitcoin retracing and consolidating after its fourth-biggest bull move in history ($7,300 to $10,500, a 42% gain) is perfectly par for the course, but noted that it’s totally possible we can go lower from $8,800.

The medium-term technicals support this.

Trader and CoinTelegraph contributor FilbFilb found that by the end of November or start of December, the 50-week and 100-week moving averages will see a “golden cross,” which he claims is far more significant” for the Bitcoin market that other technical crosses.

Also, a Bitcoin price model created using Facebook Prophet machine learning found that the leading cryptocurrency is likely to end the year at just over $12,000. What’s notable about this model is that it called the price drop to $8,000 months in advance, and forecasted a ~$7,500 price bottom for BTC.

To put a cherry on the cryptocurrency cake, Crypto Thies observed that when Bitcoin bottomed at $7,300, it bounced decisively off the 0.618 Fibonacci Retracement of the move from $3,000 to $14,000, which correlates with the two-week volume-weighted moving average. He added that summer 2019’s consolidation was marked by Bitcoin flipping major resistances into support levels, implying that a bullish reversal and subsequent continuation is likely possible in the coming weeks.

Featured Image from Shutterstock


Nick Chong , 2019-11-10 12:00:38

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