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Venezuelans Avoiding Inflation and Corruption through Cryptocurrency

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Due to Venezuela’s unfortunate circumstance, burst-up of the inflation rate, and closed-borders for aid, the people are now focusing on Cryptocurrency to side-step from the government’s power to control money. To protect the trade from inflation outbursts, digital currencies, such as ethereum and bitcoin, are currently used. Still, only a few Venezuelans are using the digital money as we speak but now bitcoin goes sky-high with 120 billion bolivars as compared to last year.

Even charities are using digital resources as financial aid to bypass the stronghold of Venezuela’s President Nicolas Maduro. According to Joe Waltman, executive director of giving Crypto, he will not know of other ways to help Venezuela without using crypto. GiveCrypto is a non-profit organization that is based in the US which hands financial assistance directly to the Venezuelans with the use of the cryptocurrencies. The group has already allocated roughly 200,000 US dollars through local leaders who have the utmost say to the people’s current situation. The organization together with Eat BCH and Bitcoin Venezuela receives crypto donations then circulates food and medicine to ease the burden of the Venezuelans.

Evading the Government’s control over the country’s economy

According to Moises Rendon, head of Future of Venezuela initiative and a fellow for the Center for Strategic and International Studies, with the use of these technological advances such as cryptocurrencies, these groups have found a way to help a barred country received aid and evade the president’s firm hold of the economy and banking system of the country. He stressed out that the citizens should be one in using crypto assets in order to move finances and aids. Rendon further added that with Cryptocurrency, we can eliminate 30 percent of financial mishandling from the UN’s assistance therefore, there would be 30 percent more finances to distribute to the people.

The Chief Financial Officer of Give Directly, Joe Huston, foresees the capability of cryptocurrency in financial aids specifically for minimizing costs of moving money. According to Huston, GiveDirectly, a charity that helps people in Rwanda, Uganda, and Kenya through money transfer, uses 2 to 3 percent of the total budget for exchange in currencies and service charges of banks. Hypothetically speaking, with the use of cryptocurrencies, the organization could evade those extra charges. He further added that there is real potential to make payments for the most deprived people but thorough work still needs to be done to achieve such state.

Rendon agreed with what Huston said. For now, EatBCH and Bitcoin Venezuela’s infrastructure still cannot move millions into Venezuela while those that can do so also lack technical capacity.

GiveDirectly’s CFO, Joe Huston, further added that he would be more glad to see a cryptocurrency that is formulated for the less fortunate sectors of the community. It should be fit for their financial literacy at the same time it can withstand the volatile crypto market.

To skip unstable crypto markets, stable coins are a possible solution to such dire situations according to Huston, Rendon, and Waltman.

Further Drawbacks

According to Rendon, it would become more complicated especially in dealing with the legal systems of countries that have different standpoints regarding cryptocurrency. The closed-borders of Venezuela may even halt the crypto philanthropy.

For Huston, a strong and legal infrastructure would be of great help for philanthropies who would opt to use the digital money in their aid. Most especially for countries like Venezuela who prefer to undermine the administration’s control of the economy. But according to him, these crypto-assets cannot sustain a long-term role or a big role in world development.

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