Venezuelans use cryptocurrencies during economic crisis
Mary Triny Mena
Cryptocurrencies are gaining ground in Latin America as a payment method, and one country stands out among them. Venezuela’s economic crisis has pushed many people there to turn to crypto to preserve their weakened incomes. Across the country, large and small businesses are increasingly adopting online payment systems to allow customers to pay using cryptocurrencies. That’s benefitted both business owners and customers.
Thirty-one-year-old Richard Romero runs a grocery store in Naiguatá, a small town located in La Guaira State, about 30 kilometers from the capital Caracas. At Romero´s store, all kinds of payments are welcome - bolivars, dollars and even crypto coins. Over the last two years, he has been using RESERVE, an online platform that allows him to exchange and save cryptocurrencies that can then be converted into dollars. He says he’s found it allows him to protect his daily sales from losing value.
“It allows me to trade with different currencies and since many local banks and many people here in the town where I work are using the app, I can give them change if necessary. Most importantly, I can secure my income on a platform that helps me to save my money in dollars," he said.
Even street vendors like 58-year-old Rosaura Mejia are beginning to accept digital payments using cryptocurrencies for small purchases like candies or cigarettes. Mejia says adapting to this new technology is helping her to survive.
“It is a solution, because if the customers do not have the dollars in hand, we open my user code and they can do the purchase and that ends up in my account," Mejia said.
Struck by hyperinflation and targeted by U.S. sanctions, Venezuela is facing a de facto dollarization.The local currency lost nearly all of its value in just over a decade, and in just 13 years, the Venezuelan government has removed 14 zeros from the value of the bolivar.
Frequently bolivar bills are scarce. And while the U.S. dollar is widely accepted, not everyone has a bank account abroad. Platforms with blockchain technology are functioning like a virtual exchange.
According to Chainalysis, a blockchain analytics firm based in New York, in 2020, Venezuela ranked third in the world for crypto adoption only surpassed by Ukraine and Russia.
And the trend is growing rapidly. It’s often used by some of the five million Venezuelans living abroad. Cryptocurrencies have become a practical method for them to send remittances to relatives still living in Venezuela, and a financial lifeline for those who receive them.
Venezuelan graphic designer Kellyn Maldonado is a crypto enthusiast and an active user of RESERVE. He says the process to send remittances using crypto accounts is fast and convenient.
“If somebody is in Colombia and wants to send money to his family, if they have an account in Colombia and his family has one in Venezuela you can do it right away, without having to go to the bank or look for a third party who is able to send money," Maldonado said.
And for those who remain in the country, peer-to-peer sites for trading tokens are helping Venezuelans to charge for their services.
Samuel La Rosa is a fitness trainer and nutritional consultant. Some of his clients live abroad and pay him using BINANCE, one of the most popular cryptocurrencies exchange companies in the country.
La Rosa says at first it seemed complicated, but it’s really a simple process.
“No matter how far people are, I can do my job and the payment arrives immediately. It means I can have an independent source of income," he said.
Digital payments are helping to alleviate the economic crisis for many people in Venezuela, but in most parts of the country, people struggle with online infrastructure and chronic power outages. Despite those challenges, Venezuela is becoming a cashless economy, and crypto coins are playing a large part in that.