Recent measures by the Venezuelan government to taper massive hyperinflation by devaluing their currency by 95% has also seen the new sovereign bolivar tied to a cryptocurrency. This appears to have piqued the interest of citizens.
The petro, launched in February of this year, links to the value of oil in the fuel-rich South American nation and has a value of around USD $60.
However, other cryptocurrencies are grabbing the most attention as locals look to rely on a more stable currency to provide guaranteed financial transactions.
Before the changes, the Venezuelan bolivar had gotten so out of hand that the IMF expected it to hit an inflation figure of 1,000,000% by the end of the year. Everyday items had become unaffordable, so tying the new sovereign bolivar to the petro will hopefully provide more stability.
This new link to digital currency appears to be the first for a nation state, and this train of thought seems to be spreading to Venezuelan residents.
The main beneficiary appears to be a relatively under-the-radar cryptocurrency called Dash, which has reported a greatly accelerated rate of adoption. An impressive 200 merchants each month are signing up to accept the currency in stores as residents and shop owners look for more stable ways of facilitating transactions and carrying out purchases. The paper bolivar currency had begun to make this difficult.
Ryan Taylor, CEO of the Dash Core Group, said that Venezuela has made huge moves toward its digital currency and has rushed into the second spot in terms of Dash’s country market share. It broke in above the core markets of China and Russia.
Taylor also confirmed that Dash is “seeing tens of thousands of wallet downloads” from Venezuela each month. This suggests that more citizens are looking to eschew a state currency that they regard as unfeasible for storing and maintaining any value while also looking to guarantee the purchase of key goods.
A BBC report described the economic changes in Venezuela as having “paralyzed” the country, with few citizens having exact certainty of the implementation of new measures and cash withdrawals and transactions being severely limited.
Dash is the fourteenth most popular digital currency available, with a circulation of $1bn. It offers the benefits of low transaction fees and very quick processing times, both of which have significant value to Venezuelans.
The cryptocurrency itself runs on a payment network that owns the Dash Core Group. In turn, the group keeps the network running and gets its funding from the mining fees that the network generates. This allows for a relatively stable “in-house” feature, whose output is unlikely to dampen through external organizations encountering their own problems.
While wallet downloads are flourishing, Taylor said that merchant downloads have also taken off exponentially in the month since the Venezuelan economy tipped into freefall. Leading brands such as Calvin Klein and Subway have opted to accept payments through Dash, which is likely to help normalize the idea quickly.
Taylor added that one of the main benefits of Dash is that its super-quick processing allows for its value to be the same at the point of payment as when it arrives on the other side. Because credit card payments can take three days to reach accounts, a volatile currency could massively change in value.