Despite the extremities being experienced in their economies, Venezuelans are surprisingly leaning towards the usage of cryptocurrency.
This is the study released by Chainalysis, a blockchain data analytics firm. The news came as part of the company’s report entitled 2020 Geography Cryptocurrency Report.
The report also revealed that Venezuela is ranking third as “the country which has reached one of the highest rates of cryptocurrency usage in the world.”
“Venezuela is suffering through one of the worst economic crises in modern history, with its national currency, the bolivar, becoming practically worthless,” the firm mentioned.
They also added that “under these circumstances, cryptocurrency has taken on an important role in Venezuela’s economy … As the Venezuelan bolivar has lost value in the midst of hyperinflation, Venezuela has become one of the most active cryptocurrency trading countries on earth.”
Going down to the breakdown, the key driving factor why most of the crypto activity spiked in Venezuela is because of exchange activities driven by peer-to-peer (P2P), more particularly on Localbitcoins.
“Venezuela is the third-most active country on the platform, or second-most active when we scale by the number of internet users and purchasing power parity per capita. Venezuela ranks 3rd for P2P trading volume in USD, after the U.S. and Russia,” the report also told.
During the July 2019 and June 2020, it was reported that Venezuelans are also using Bitcoin.com’s P2P Marketplace to trade bitcoin cash.
Part of the discussed points is Venezuela’s national cryptocurrency, the petro, which was introduced by the country’s “contested government, with OFAC-sanctioned Nicolas Maduro at the helm.”
If one could remember, back in May, the U.S. spared a 15 million dollar reward for those who can surrender Maduro.
They also charged several top Venezuelan government officials with “narco-terrorism, corruption, drug trafficking and other criminal charges.”
The SUNACRIP which stands for Superintendencia Nacional de Criptoactivos y Actividades Conexas is the regulator of crypto activities in Venezuela.
As of press time, seven crypto exchanges have been recognized to trade the petro.
Also, the Maduro government, petro adoption has been recording upsurge these days. Recently, 305 Venezuelan municipalities concurred to use petro in taxation or paying taxes.
Cryptology, one of the approved exchanges, is Criptolago, is maintained by Venezuela’s Zulia state, with the state’s governor, Omar Prieto, lodging a top management position.
The assertions of Chainalysis is “Prieto is a staunch Maduro ally who is personally under U.S. sanctions for refusal to deliver humanitarian aid.”
Looking back to what the firm has done, Criptolago addresses established over $380,000 worth of bitcoin versus 3,916 transfers and sent more than $360,000 price over 2,297 transfers.
Albeit growing 13x in the past year, “it doesn’t appear that Criptolago is helping the Venezuelans struggling most,”
In the meantime, the firm defined that crypto transactions worth $1,000 or more accounted for more than 75% of total transfer volume, yet “the average Venezuelan earns just 72 cents per day, meaning very few of them could afford such transfers.” The firm added.
Various experts posit that “Criptolago’s transaction activity suggests the platform may be used primarily by individuals connected to the Maduro regime seeking to launder funds or move them out of Venezuela.”
In ending, Chainalysis refuted and belives “That (is what) fits with our interviews of cryptocurrency experts on the ground in Latin America — users not just in Venezuela, but in other countries facing harsh economic conditions, turn to cryptocurrency to preserve their savings in the face of monetary devaluation.”
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