The recent changes to Venezuela’s currency have yet to stop the nation’s economic free fall, leading many Venezuelans to resort to cryptocurrency. But not the one the government issued.
On Monday, Venezuela rolled out its new currency, the sovereign bolivar, which lopped five zeros off their previous currency. This new currency has been pegged to another recent creation, Venezuela’s official cryptocurrency, the petro. Though it’s too early to tell if the steps the country has taken to halt its runaway inflation have worked, the early evidence doesn’t look promising.
Banks were closed Monday to ease the transition, but by Tuesday shops remained closed in the country, with many citizens confused by the new currency. Some didn’t even wait to see the outcome before offering a verdict. Writing in Forbes, economist Steve Hanke declared President Nicolás Maduro’s policies a scam that had no hope of solving the crisis. He wasn’t the only one to use the word “scam” to describe the both the new policies in general and the petro specifically.
High inflation has been a problem for Venezuela since 2014. But the problem dramatically worsened in the following years, with rates increasing almost exponentially, reaching 4,000 percent in 2017. Estimates for the inflation rate for 2018 range from 5,220 percent to as high as 1,000,000 percent. It was during these last couple years that Venezuelans became more interested in buying bitcoin. After the country’s fiat currency became less valuable than toilet paper, it’s understandable that they sought an alternate store of value. But bitcoin, with its slow transaction times and high transfer fees, isn’t great for making purchases.
Dash recently claimed their cryptocurrency is the most used in Venezuela, at least for commercial transactions. According to a press release from Dash, it “is more widely used for commerce, both online and in person, throughout Venezuela than every other cryptocurrency combined.”
In an interview earlier this week, Ryan Taylor, CEO of the Dash Core Group, claimed Venezuela had become the cryptocurrency’s second largest market. Taylor claimed the number of retailers that accept Dash had been nearly doubling each month. The article contained a photograph from a Venezuela Subway sandwich shop, with a cash register that said “acceptamos Dash.”
This adoption is no accident. Dash is actively promoting the cryptocurrency’s use in the country. For months now, Dash Venezuela has been pursuing a “countrywide massive adoption strategy,” having held 11 conferences intended to train entrepreneurs, journalists, and community leaders. The next conference is to be held in September, pending a vote from the Dash community. An announcement on the proposed conference says:
“Dash Caracas was the first Dash Community in Venezuela, and since its foundation the Dash phenomenon in our country has been huge and without precedents. That is why we founded Dash Venezuela, an organization that works without a rest to make of Venezuela the 1st Dash Nation, helping all of the leaders of Dash Communities and projects in Venezuela to work in a collaborative environment, and making of Dash the most popular cryptocurrency in Venezuela.”
The phrase “the 1st Dash Nation” is ambiguous. Are they saying they want Venezuela to become the country where Dash is the most widely used? Or, more ambitiously, that they want Dash to become the de facto currency of Venezuela?
While grand, such an ambition may be achievable. With the collapse of the bolivar, and no confidence in either of its replacements – the sovereign bolivar or the petro – Dash may be positioned to become the most trusted currency in the country.
Tim Prentiss is a writer and editor for ETHNews. He has a master’s degree in journalism from the University of Nevada, Reno. He lives in Reno with his daughter. In his spare time he writes songs and disassembles perfectly good electronic devices.
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