Inflation in Venezuela has led many citizens to seek alternatives to protect their wealth, and cryptocurrencies have emerged as a relevant option. Here I explain how they can be used and what considerations to keep in mind:
1. Protection of purchasing power:
* Stablecoins (Stable Cryptocurrencies): These are cryptocurrencies whose value is pegged to a reserve asset, such as the US dollar (e.g., USDT, USDC). In a high-inflation environment, where the local currency loses value rapidly, stablecoins allow Venezuelans to maintain their savings in a more stable currency, thus protecting their purchasing power.
* Bitcoin (BTC): Bitcoin is considered by many as "digital gold" due to its limited supply (maximum of 21 million units) and its decentralized nature. Unlike fiat currencies that can be printed without restrictions, Bitcoin's scarcity makes it a deflationary asset, making it attractive for preserving value in the long term against inflation.
2. Ease of transactions and remittances:
* Sending and receiving remittances: Cryptocurrencies facilitate sending and receiving money from abroad, avoiding the restrictions and high costs of traditional banking channels. This is especially useful for Venezuelans receiving support from family members abroad.
* Payments and commerce: Although widespread adoption is still a challenge, some businesses and individuals in Venezuela accept cryptocurrencies as a means of payment, allowing for more efficient and faster transactions, bypassing the limitations of the local currency.
3. Decentralization and evasion of controls:
* Independence from traditional institutions: Cryptocurrencies operate on a decentralized network, meaning they are not controlled by any government or central bank. This provides users with greater control over their assets and allows them to bypass some government restrictions and regulations.
* Anonymity (relative): While transactions on the blockchain are transparent, the identity of users can be pseudonymous, offering a certain degree of privacy that can be valuable in contexts of capital control.
How to start using cryptocurrencies in Venezuela?
* Education: It is essential to understand how cryptocurrencies work, their risks, and their benefits.
* Choosing an exchange platform: There are international and local platforms operating in Venezuela that allow buying and selling cryptocurrencies with bolívares or dollars. Some of the most used include:
* Binance: Popular for its volume and variety of cryptocurrencies, including P2P options.
* Bybit: Offers a wide range of cryptocurrencies and trading options.
* Kraken: Noted for its security and transparency.
* OKX: Another high-volume platform with P2P options.
* Local P2P platforms: Like LocalBitcoins (although it has undergone changes), El Dorado, NoOnes, AirTM, and Cryptobuyer Venezuela, which facilitate direct exchange between users.
* Setting up a wallet: Once you acquire cryptocurrencies, you will need a digital wallet to store them securely. They can be online wallets (hot wallets) or hardware wallets (cold wallets) for added security.
* Consider the volatility: While stablecoins are stable, other cryptocurrencies like Bitcoin can experience significant fluctuations in value. It is important to be aware of this volatility before investing.
Important considerations and risks:
* Volatility: Although cryptocurrencies can serve as protection against inflation, most, except stablecoins, are highly volatile. Their value can fluctuate drastically in short periods of time.
* Regulation and legality: While the use of cryptocurrencies is widespread in Venezuela, there are regulations and laws, such as the Law on Tax on Large Financial Transactions, which taxes operations in foreign currencies and cryptocurrencies. It is important to stay informed about current regulations. The Venezuelan government even launched its own cryptocurrency, the Petro, although its adoption and functionality have been questioned.
* Security: Cryptocurrencies are susceptible to scams, hacks, and fraud if proper precautions are not taken. It is crucial to use reliable platforms, enable two-factor authentication, and protect the private keys of wallets.
* Technical knowledge: Although they are becoming easier to use, cryptocurrencies require a minimum level of technical knowledge for safe handling.
* Availability of services: The infrastructure of internet and electricity in Venezuela can be unstable, which could affect the ability to conduct transactions at certain times.
In summary, cryptocurrencies, especially stablecoins and Bitcoin, offer a viable alternative to face inflation in Venezuela by allowing citizens to protect their savings, facilitate international transactions, and evade some restrictions. However, it is essential to approach them with knowledge, caution, and awareness of the associated risks.