Why is Venezuela the third country in the world ranking in the use of cryptocurrencies?

Five years ago, crypto-currencies were used in Venezuela by small groups that communicated via electronic forums and via WhatsApp or Facebook, but with previously approved access, but transactions with this type of currency are gaining strength among users. who's looking protect your resources of the hyperinflationary spiral which, according to the International Monetary Fund (IMF), will end 2018 with a rate of 1 000 000%.

"Venezuela is becoming a cryptonation," said José Ángel Álvarez, president of the National Private Cryptocurrency Association in Venezuela, which does not lose sight of the exponential increase in transactions under this mechanism. .

Although the Venezuelan cryptocurrency market remains cautious, the National Constituent Assembly (NCA) sent a signal of confidence by adopting the Global Cryptoactivity System Act on November 20th.

The norm, recorded in the legislative chamber by President Nicolás Maduro, makes Venezuela "the first country with a cryptoactive law already approved, "says Álvarez.

The legal instrument reflects the relevance of virtual currencies in relation to the depreciation of bolivar, the current physical currency in Venezuela, a reality illustrated by the increase in transactions in three of these cryptocurrencies: Bitcoin, Dash and the Petro .

Petro, the cryptocurrency 'different & # 39;

Petro is one of the most prominent virtual currencies in Venezuela. It was officially launched last February as the first digital currency created by a government – Venezuela and sustained in energy and mineral reserves from the South American country: 50% in oil and the rest in gold (20%), iron (20%) and diamond (10%), indicates an official report.

Because of these characteristics, Petro has been controversial, critics stressing that it does not respect the "virtue" of cryptocurrency: not depend on governments and central banks.

However, to the National Association of Cryptocurrencies yes, they view it as a digital currency. Alvarez explains what, according to his judgment, occurs in this controversy: "What is happening in Venezuela is that many economists, politicians and opinion leaders do not even know how bictinin works and talk about petro" .

During the interrogation, the Venezuelan government indicates that the users have confidence in this new mechanism of exchange. According to the national authorities, in the period preceding the sale, Petro obtained more than 171 000 certified offers, of which 83,761 were made by natural persons.

To further stimulate its use, Caracas has announced the possibility of saving petros through the Patria electronic platform, a system that collects socio-economic data from more than 17 million Venezuelans receiving social assistance.

In the same way, it is already possible to buy petros with bolivars and, soon, other cryptographic currencies can be acquired by means of a digital wallet activated for this purpose.

The first stage of oil marketing was focused on attract foreign currency. More than 3,000 million dollars were recorded during the presale in February, said the Vice President of the Economic Zone, Tarek El Aissami.

The government plans to create five economic zones to attract more resources thanks to this cryptocurrency, which will be located on the island of Margarita, in the state of Nueva Esparta; in the Los Roques archipelago; in the peninsula of Paraguaná, Falcón; on the border of Ureña-San Antonio, Táchira; and in Cumaná, State of Sucre.

Bitcoin, the most used

Although Bitcoin recently announced a 9% drop in international markets, the opposite is true in Venezuela: the Coin.Dance report, dated November 10, indicates that transactions in this virtual currency reached $ 1.7 billion in sovereign bolivars , equivalent to more than $ 20 million calculated at the official rate.

According to these data, the use of bitcoin in Venezuela had a strong recovery since late October 2017, when the process of hyperinflation accelerated.

With the currency reconversion, which began on August 20, bitcoin continued on the rise in Venezuela. Until the first days of November, the transactions of this virtual currency they have increased six times.

Until September of this year, Bitcoin specialized portals have examined Venezuela as the world's third-ranking country for the use of this cryptocurrency, overtaken only by the United Kingdom and the United States. -United. and Russia.

In South America, bitcoin is mainly marketed via a platform called Localbitcoin, a company created in 2012 and currently based in Helsinki, Finland.

On this platform, users register and, depending on the price of the day, buy and sell bitcoins from registered money changers belonging to the same digital ecosystem and under conditions that all must fulfill.

Given the impossibility for many to buy a bitcoin, it is usual to sell and buy fractions called "Satoshi", with reference to the assumed name under which the creator of this currency is known.

Dash, the emerging currency

Dash is a virtual currency created in 2014 and present in Venezuela since this year. According to its administrators, its use has increased so much that the South American country has become your second market.

The company said in a report that since last July, there was "a massive Dash's attention among the merchants" of Venezuela. Álvarez specifies that the company has more than 900 affiliated companies that participate in the purchase and sale of their products and goods.

In the opinion of Christian Diaz, director of technology and security of Dash Venezuela, this country of South America is among the first in the world to use this digital currency, brings together Globovisión.

After the boom, the group that manages this cryptocurrency now proposes to transform Venezuela into a "Dash Nation" for which it has invested more than $ 800,000 to strengthen its position in commercial transactions.

What can you buy with these crypto-currencies?

The marketing of oil is still in its infancy. For the moment, it is only possible to buy them on the official website of this cryptocurrency and in a government office in Caracas. It is bought with bolivars, rubles, yuan, rupees and euros. It can be traded for Dash, Bitcoin, Litecoin and Ethereum.

However, the petro user manual provides that the following operations can be performed in the future:

• Payment of taxes and services.
• Purchase of goods and products for private use throughout the national territory.
• Sending funds
• Purchase of raw materials and their processed.

With regard to Bitcoin and Dash, the operations in practice they are advanced. Today, with these virtual currencies, you can pay for all kinds of products and services. An application called "Criptolugares", available in the Google virtual store, facilitates research on smartphones companies that accept this method of purchase.

The list of affiliated stores is long: there are kiosks, department stores, small shops, fast foods, clinics and even hairdressers who accept payments by Dash or Bitcoin. In Caracas, some stores display a label with the logo that identifies them as being allowed to cancel goods and products with both virtual currencies.

In order to increase its commercial operations, Dash has recently activated a SMS payment with a private telephone operator in Venezuela, which will no longer be necessary to use a virtual wallet.

Is this an alternative to hyperinflation?

One sector of the population uses cryptocurrencies in Venezuela to support price increases. There are even those who prefer to pay fees with This exchange mechanism before the depreciation of the bolívar and the decrease in purchasing power that we know with dollars.

The cryptocurrency expert, Juan Blanco, considers that the upper middle class is the most favored: "It is the sector that harbors some of its assets, its savings, its bitcoins and other cryptocurrencies "he told the media.

In a context of economic crisis, according to Álvarez, cryptocurrency in Venezuela will become "a determining point" for the consolidation, in the near future, as a financial alternative for the population.

Something special happens: the young people who are not banked they are the most loyal users of crypto-currencies. In the virtual forums, they buy and sell these digital currencies, which they then exchange for bolivars or dollars, and on Youtube, the videos are not lacking to attract followers of this exchange system. It's a segment of the population where there are children who already have savings in 'Satoshi', says Álvarez.

"Venezuela's economic situation is the ideal breeding ground for take a step forwardThus, with innovation, we use cryptocurrencies and young people are undoubtedly at the forefront, "said the president of the Association.

Parallel market in gestation

One of the outstanding aspects that should stimulate the market is that of cryptoactive exchange houses.

As with the parallel dollar, they start to to emerge illicit markers (Web pages and accounts in social networks) which fix the daily prices of the most used digital currencies.

In order to curb this new type of speculation in Venezuela, now crypto-monetary, several exchange centers have expressed interest in starting operations as determined by the National Superintendency of Cryptoactives and related activities.

"This is important because it will enable all Venezuelans and state-sponsored private and public companies to scan your money via a safe, new and legal method, and can also exchange it through any cryptocurrency, "explained Alvarez.

At present, the regulator says on its website that there are seven registered cryptoactive homes, figure that will be ushered in with the newly approved law.

Ignorance, main barrier of use

Although Venezuela is among the first countries in the world where virtual currencies are used, Álvarez considers that the main barrier that exists in the country is misinformation.

"We worked hard for the crypto-currency massification, it's the biggest barrier not only in Venezuela but around the world," he added.

At Petro's initiative, the Venezuelan government posed the question of crypto-currencies in the public agendathrough forums, community assemblies and numerous audio-visual materials disclosed in public media and social media.

But according to Álvarez, the country must deploy more efforts to "move towards the naturalization" of digital currencies in commercial transactions and thus obtain "true financial freedom".

For now, what is evolving rapidly is the emergence of local digital currencies, considered alternatives: ArepaCoin, BolivarCoin and Onixcoin are the three companies that are starting to emerge and their leaders promise to "fight" in 2019 to to grow in the stores.

Manuel Palma