NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, September 10, 2019

By Caitlin Reilly

Faced with hyperinflation and borders closed to humanitarian aid, Venezuelans are turning to cryptocurrency as a workaround of government control of money. Aid providers say digital currencies are becoming an important route to bypassing corruption or repressive regimes.

Digital currencies have no shortage of critics, who point to their use in scams, theft and money laundering. U.S. lawmakers blasted Facebook’s plans for a cryptocurrency, and regulators routinely warn of wild volatility.

In Venezuela, it’s a different story.

Digital currencies like bitcoin and ethereum are being used to protect against Venezuelan inflation, which could reach 10 million percent this year, according to the International Monetary Fund. The number of people using the cryptocurrencies is small relative to Venezuela’s population, but the use of bitcoin has soared from almost nothing in mid-2018 to the equivalent of 120 billion bolivar last month, according to cryptocurrency information site Coin Dance.

Photo courtesy of Kevin Keith.