Venezuela Turns To Bitcoin As Inflation Skyrockets

The search for inflation hedges and stability of purchasing power in a world of hyperinflation has led some in Venezuela to turn to the digital currency known as bitcoin.

The state of “economic emergency,” as it has been termed by some observers and officially by President Nicolás Maduro, is so acute that the International Monetary Fund has estimated that the inflation rate could be as high as 480 percent this year and grow to as much as 1,640 percent next year. In an effort to settle debts, all private companies have been required to give up assets, ranging from actual goods to property held. The seizure is only part of the landscape, as demand for external currencies — most notably, the dollar — has grown.

The fact remains that bitcoin, too, has been in demand for the past year. The actual confiscation of dollars has led some investors to turn attention to bitcoin due to its status as an alternative to tangible currency.

Bitcoin Magazine reported that the growth has been “explosive” for currency trading in Venezuela devoted to bitcoin, notably Local Bitcoins Venezuela and SurBitcoin, which allows bitcoin transactions to be finalized using traditional payment conduits from banks. SurBitcoin has been seeing growth in its buying activity, said observers. That popularity comes even as the firm has had its share of legal issues, noted the publication, with a dispute tied to an unnamed individual who had threatened the exchange’s most highly rated officers.